From Promises to Proof: How to Demonstrate Value to Your Customers

Whitepaper

From Promises to Proof: How To Demonstrate Value to Your Customers

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Table of Contents

Executive Summary ................................................................................................................................. 3

The Value of Reporting ........................................................................................................................ 5

Flexible Reports for Diverse Audiences ............................................................................................... 5

Executive-level reports .................................................................................................................... 7

Operation-level reports .................................................................................................................... 7

Technician-level reports .................................................................................................................. 8

N-compass: Demonstrating the Business Value of Managed Services ..................................................... 9

Track Metrics that Matter Most ............................................................................................................ 9

A Simple, Efficient Reporting Architecture ............................................................................................ 9

Four Comprehensive Analysis Features ............................................................................................ 10

Better Information = Greater Value .................................................................................................... 12

Conclusion ............................................................................................................................................ 13

From Promises to Proof: How To Demonstrate Value to Your Customers

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Executive Summary

Managed services is one of the fastest growing sectors of the technology industry. This trend towards more predictable, proactive IT services is providing tremendous opportunities to IT service providers, particularly those targeting the small- and medium-sized business (SMB) market.

This move towards managed services is occurring for two reasons. VARs, system integrators (SIs) and IT service providers are under severe pressure from high customer turnover, low technician utilization rates and shrinking margins to change the way they do business. As a result, more and more IT service providers are moving away from time-based, break-fix service models and transitioning to managed services — value-based engagements that provide predictable and proactive business-focused IT services.

The second impetus in this trend has been SMBs. They want IT service providers that can deliver better services, more efficiently, and can help mitigate compliance and security risks, all at more predictable costs. And because SMBs make up 48 percent of overall U.S. IT spending, according to a recent Forrester report, they wield considerable power. By 2007, Forrester expects SMB spending to eclipse enterprise IT spending.

The challenge with managed services, though, is that while they offer customers true value by seamlessly fixing problems before they impact a customer’s business, demonstrating and proving this value has traditionally been problematic. The simple reason for this is that many of the aspects of managed services are delivered in an automated, behind-the-scenes fashion; customers don’t see what it takes to keep their business running smoothly.

To combat this problem, MSPs must regularly report their activities and successes to managers at all levels of the customer organization — technician, operations and executive — as well as to authorities outside the organization such as auditors. While each audience cares about different issues, they all need to understand the value that managed services provides both on a daily IT basis and for a company’s long-term operational and fiscal health. Such reporting needs to be fully integrated and flexible to ensure that different managers receive the information that matters most to them in a format that is both informative and actionable. When successful, a consistent reporting effort can literally transform a customer’s perception of managed services from a vendor who promises value to a partner who delivers value.

While most reporting solutions targeting MSPs are focused on operational technical reports, one solution delivers the reports needed by the different stakeholders in the organization. N-compass™ MSP Performance Reporting solution from N-able Technologies® provides extensive reporting capabilities that allow you to leverage predefined IT services, managed VoIP and security reports, incorporate data from multiple sources and create unique customer reports. The ability for an MSP’s customer to easily view and understand IT performance data helps them make better, more informed decisions for the successful operation of their business. Also, by showing customers that their IT infrastructure is performing at an optimal level under the MSP’s management, customer satisfaction increases – and, most importantly the MSP has the history and credibility to take on the role of trusted advisor.

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Getting More from Managed Services

The Move to Managed Services

As a business and service delivery model, managed services is revolutionizing the way VARs, system integrators, and IT service providers are doing business. A desire to deliver predictable and proactive, business-focused IT services, rather than relying on the traditional reactive break-fix service approach, is prompting more IT service companies to transform themselves into true MSPs.

For most MSPs, the fastest-growing source of new customer accounts is the small- and medium-sized business market. According to Gartner, the SMB IT services market was estimated to be worth $220 billion (USD) in 2003 and is expected to grow at a compound annual growth rate (CAGR) of 7.6 percent from 2004 to 2008. A recent study by Forrester cited the SMB market at 48 percent of the overall U.S. IT spending, stating that it will surpass enterprise IT spending by 2007. And channel partners–the very companies transforming themselves into MSPs–influence more than 90 percent of IT purchasing decisions in the SMB market, which totals $374 billion.

But that’s not to say that the SMB market for traditional hardware and software sales is a guaranteed source of instant profit. In the increasingly competitive race to attract SMB customers, IT service providers find they must cut their prices. The price of commodity hardware is plummeting, so VARs, SIs and others have seen their profit margins steadily wane. This has forced MSPs to lean more on their service offerings, thus changing their business model.

There’s also pricing pressure on the services side. New market entrants, ―trunk slammers‖, Telco’s, the ―big boys‖, and point solution providers are undercutting prices on delivering reactive services. And because most IT service providers have time-based engagements with their customers, instead of ones that are value-based, they fail to establish tight bonds with customers — the kind of bonds that protect them from losing lucrative accounts to lower-priced competitors.

This increase in competition has forced many IT service organizations to evolve and mature in order to increase their productivity, efficiency, service levels and market differentiation.

The Irony of Managed Services

With the help of the business transformation services developed and delivered by N-able Technologies, hundreds of MSPs have evolved their businesses beyond the strictly reactive, break-fix model to one that proactively anticipates and prevents failures. More than 900 MSP partners rely on N-able solutions to deliver managed services to more than 30,000 customers worldwide.

Solutions like N-able’s N-central® remote monitoring and management (RMM) platform have helped these companies track the status of their customers’ ongoing IT operations. RMM solutions provide notifications and reports about specific incidents, devices and services that can impact overall IT performance and the management tools to remotely remediate these issues. RMM solutions like N-central are invaluable guides to telling the MSP where to prioritize its attentions to ensure that problems are mitigated as soon as, and sometimes before, they occur.

But a successfully implemented and maintained RMM solution may result in unintended consequences for MSPs. A well-designed RMM platform can so effectively keep problems at bay that operational and, especially, executive personnel may lose sight of the value that MSPs provide. Even if a problem does occur, it is often fixed remotely with little or no impact. The customer may not even know that a problem had occurred.

In the break-fix model, the customer calls the service provider when they have a breakdown. The provider sends out a technician to fix the problem. The customer recognizes the problem and sees the technician fixing the problem, so there is no overlooking or forgetting the pain and the value delivered.

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When IT problems are so well managed that they rarely reach the radar screens of C-level executives, the ―pain‖ once caused by regular IT failures is quickly forgotten. Indeed, the irony of managed services is that a job well done may cause customers to wonder just what they’re paying for. And as the service delivery gets even smoother and more sophisticated, the less visible the value becomes.

The Value of Reporting

For MSPs striving to build lasting, loyal relationships with their SMB customers, the importance of illustrating the value they bring has never been greater. In other words, properly communicating the genuine value of MSP offerings can reveal the savings that your service is providing for your customers every day: like reduction in security risks, elimination of emergency IT services or a reduction in costly server down time.

Today’s end customers aren’t really interested in knowing which components make up their IT infrastructure but they are very concerned with how the system as a whole performs. Poor performance or any degradation of responsiveness will often lead end customers to find a new service provider. To retain these customers and attract new ones, MSPs need to distinguish their service by ensuring they can deliver high-level performance.

The challenge for the MSP isn’t just delivering a high-level of performance; it’s also demonstrating its value. MSPs create value very differently from the typical break-fix approach by continuously monitoring the end customers’ environment and proactively fixing incipient problems. Most value-creation activities occur offsite and so are not visible to the SMB decision maker; unlike the break-fix approach where the technician is always onsite and therefore visible. This is why service level agreements (SLAs) and scorecard views are critical to an MSPs success.

SLAs are contracts between service providers and customers that define and outline:

The scope of work to be provided

Acceptable and unacceptable service levels

Problem management actions

Compensation

Customer duties and responsibilities,

Warranties, legal compliance and resolution of disputes

Terms and conditions for termination.

An SLA protects the MSP by defining the level of service to be delivered and stating explicitly how this will be done and under what terms and conditions. SLAs also define the business value the customer expects in terms of issues like availability of key business systems. The MSP can then use these key metrics as the basis to demonstrate the value delivered. Scorecard views then report against the defined performance.

Flexible Reports for Diverse Audiences

To communicate your value, nothing is more effective than well-designed reports that target the audiences most concerned with gauging a company’s return on IT investments. While every company won’t have all audiences, reports should be directed at four primary groups: executive (such as business owners or C-level executives); operational (including line of business vice-presidents and directors); technician (or hands-on IT personnel); and external (like auditors for security).

Depending on the target audience, reports should answer common customer questions, including:

Is our infrastructure supporting our business goals as defined in the SLA (both operationally and strategically)?

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When it doesn’t work, are we getting the service that we are paying for?

What do we have to do to keep it working?

How can we minimize cost impacts?

Reports must also take into account the context of the data, such as a baseline to understand what the numbers mean. A baseline is an external standard by which you can compare and trend your data. This allows an MSP to compare a customer’s one-month call activity against their 12-month running average, for example. Trended usage levels like these help support purchase requests and budget forecasting. Baselines also allow MSPs to compare key business service availability against the average for all customers to show a customer how they compare to the average.

Figure 1 N-compass Firewall Incident Trend Report

As the table below illustrates, different reports can address different levels of concern. At the highest level, reports should provide a broader scope of activities and results, with a longer-term view of trends and cost savings. As the audience grows more technical, reports should feature more granular information that arms technicians with actionable information capable of prompting more immediate response.

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Strategic Tactical

Executive Cost of downtime

Strategic planning

Relationship building

N/A

Operations Reporting against SLA

Validate current spending

Budget planning

Capacity and growth planning

Summarized activity reports

Incident reports

Security activity reports

Recognize short-term threats to business activity

Technical N/A Detailed reports

Specific incidents

Designed to guide immediate activity

Executive-level reports

These can speak to issues that hit an organization’s bottom line and address a company’s ability to serve its own customers while dovetailing with overall strategic goals. From an MSP’s perspective, these reports should help drive future spending on MSP offerings. Over time, they can be used to build a business case for additional customer investment in your services. Executive-level reports might include:

Analysis of costs by business service. How can we improve our business through the use of technology?

―What if‖ scenarios. How would investment in this area impact downtime costs?

Comparison to baseline. How do our failure areas or cost categories compare to that of our competitors, or to our historical averages?

Operation-level reports

These should include information that illustrates how operations personnel can validate current spending and avoid short-term risk. These personnel are consistently evaluating whether or not they are receiving the level of service for which they are paying. They are keenly interested in such metrics as success or failure of certain objectives (as defined by the SLA), summarized activity levels or trended usage levels that might support purchase requests or budget forecasts. Operations-level reports might include:

Service level reports. Are we succeeding or failing on certain objectives as defined by our SLA?

Summarized usage reports. How do our activity levels or usage trends impact purchase requests or budget forecasts?

Short-term recommendations. How do current-vs.-historical costs influence our plans for future capacity upgrades?

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Technician-level reports

These reports should provide data that help inform immediate IT needs. Technicians care most about information that allows them to clearly prioritize tasks. As a result, technician-level reports tend to include granular, specific information:

Notifications

Detailed reports on specific incidents / devices / services

Short-term trend reports

As we have seen, different audiences seek out and require different information to assess the value of an MSP’s offerings. But to communicate value in the most effective way, reporting tools must be flexible. For instance, in the SMB market, executive and operational concerns may be addressed by a single audience. To provide the right mix of information, MSP solutions should offer integrated reporting so reports can be customized, differentiated, informative and interesting.

While most MSP management tools lack these features and level of integration, N-able Technologies has developed a solution capable of helping elevate MSPs to the coveted role of a trusted advisor.

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N-compass: Demonstrating the Business Value of Managed Services

Track Metrics that Matter Most

There is one solution that provides the offline business reporting MSPs need to demonstrate to customers the business value of managed services: N-able Technologies’ N-compass Performance Management solution. N-compass enables you to report on key service performance metrics such as uptime, capacity, and security, allowing you to demonstrate the true value of the services you provide.

N-compass provides extensive reporting capabilities that allow you to leverage predefined IT services, managed VoIP and security reports, incorporate data from multiple sources and create unique customer reports. The ability for your customers to easily view and understand IT performance data helps them make better, more informed decisions for the successful operation of their business. Also, by showing customers that their IT infrastructure is performing at an optimal level under your management, customer satisfaction increases and you take on the role of trusted advisor to your customers.

N-compass is highly integrated with N-central®, the leading RMM platform deployed globally by MSPs servicing the SMB market. Built on Microsoft® SQL Server and the Microsoft Reporting Services engine, N-compass includes an offline data warehouse and reporting infrastructure that provides extensive and customizable reporting capabilities without impacting the data processing activities of N-central. Multi-server support allows you to collect data from multiple N-central servers and provide aggregated reporting on the business value of your managed services offering.

N-compass tracks comparative baselines, a running average gathered against customer information based on a given metric. N-compass can track performance against any metric for the purpose of business impact and predictive analysis to help your customers make informed business decisions.

A Simple, Efficient Reporting Architecture

The design of N-compass is based on an offline data warehouse. This warehouse is a uniquely designed database optimized for reporting performance and ease of report development.

Leveraging industry-leading technologies for data collection, transformation, and storage and retrieval, the data warehouse can gather data from N-central, aggregate it and make it available for reporting in a simple and efficient manner. N-compass scorecard views quickly demonstrate to busy customer executives the business value of their managed services and whether you are meeting or exceeding your SLAs.

By tapping the power of Microsoft’s SQL Server Reporting Services, N-compass provides a simple-to-use reporting user interface that is seamlessly accessed from within N-central. This allows any N-central user to access N-compass reporting without requiring additional credentials.

All reports are branded with your information and can be run on demand or scheduled for automatic delivery. Delivery formats include Microsoft Excel, Word, Portable Document Format (PDF) and CSV.

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Figure 2 N-compass Architecture

Four Comprehensive Analysis Features

N-compass includes four important features that can be leveraged to provide comprehensive analysis for use in existing or custom reports. The analysis based on these features plays an integral role in helping you demonstrate the value of your managed services offering. These four features provide the critical missing links to historical information, relevance and contract comparison that help you demonstrate the business value of your services while helping your customers’ executives make important strategic decisions.

Comparative baselines for insight into current results. Comparative baselines provide the ability to calculate data for other time periods or devices and use them to provide insight into the current results for a given device or service. This helps to provide insight into the historical levels of service and helps to justify future costs such as further investment into a project. Baselines include historical and program-level information, which provide comparisons against other customers and put results into context.

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Figure 3 N-compass Downtime Cost Impact Report

Cost of downtime – a critical investment metric. Cost of downtime is a critical measurement(?) to determine when further investment is required in key systems. N-central allows you to enter a cost value into every service group, a grouping of lower level IT elements that forms a mission-critical business service like email. N-compass uses this value to show how downtime, when aggregated over time, can cost a business.

Service level agreements – a summary of customer expectations. You and your customers outline expectations in SLAs. These documents outline what services will be rendered, what service levels will be provided, what recourse your customer will have if they are not met, and what the cost of the services provided will be. N-compass reports can demonstrate if you are delivering on your contracts and meeting or exceeding your SLAs.

Program levels – comparison of available MSP programs. Quite often you will have several standardized programs that you market to your customers. N-central and N-compass support the subdivision of your customers into groups so that you can assign baselines, SLAs and other key information to them. This gives you the ability to measure service levels on a program-level basis, allows comparisons across program levels, and allows you to assign standardized SLAs at each level making reporting more relevant and easy to use.

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Better Information = Greater Value

By regularly supplying the three key customer audiences with accurate, insightful reports, N-compass allows you to realize a broad range of benefits.

Maintain and increase service levels – Quickly create reports that evaluate mission-critical business services such as email, network and security to ensure you are performing according to your service level agreements.

Better plan customer IT investment – N-compass’ comprehensive trend performance, business impact and predictive analytical capabilities allow you to help your customers make better business decisions and plan future IT investments.

Increase technician utilization rates – Highly integrated with N-central, easy set up and configuration, auto-upgrade capabilities and predefined reports lower your overall cost of service delivery and increase technician utilization rates.

Build the role of trusted advisor – Take on the role of trusted advisor and reduce the probability of being displaced by effectively managing your customers’ IT infrastructure and measuring the results against service level agreements.

Better differentiate your managed services offering – Strengthen and differentiate your managed services offering by providing your customers with more reporting capabilities that demonstrate the business value of managed services.

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Conclusion

For MSPs aiming to serve small- and medium-sized businesses, the ability to capture and retain lasting customer relationships is proving to be a determining factor for long-term profitability. Only by clearly and consistently communicating your value to your customer can you hope to attain the role of trusted advisor–a position that will help protect you from losing business to lower-priced competitors. An integrated, offline reporting solution such as N-compass from N-able Technologies can ensure that your customers always perceive your value in the ways that matter most to all managers within the customer organization. With N-compass, everyone understands your value, so you can focus on delivering even more to your customers in the future.

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Disclaimer

This executive brief may include planned release dates for service packs and version upgrades. These dates are based on our current development plans and on our best estimates of the research and development time required to build, test, and implement each of the documented features. This document does not represent any firm commitments by N-able Technologies Inc. to features and/or dates. N-able will at its best effort, try to meet the specified schedule and will update this document should there be any significant changes. N-able reserves the right to change the release schedule and the content of any of the planned updates or enhancements without notice. Publication or dissemination of this document alone is not intended to create and does not constitute a business relationship between N-able and the recipient.

N-able Technologies is a market driven organization that places importance on customer, partner and alliance feedback. All feedback is welcome at the following email address: feedback@n-able.com.

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About N-able Technologies®

Founded in March 2000, N-able Technologies is the market leader in transforming service organizations into managed service providers (MSPs). N-able’s combination of products, people and processes help service providers, develop, sell and deliver highly profitable managed services to the small- and medium-sized business (SMB) and mid-enterprise markets. N-able’s product line provides complete solutions to monitor, manage and optimize information technology and security from a business perspective to evolve IT services from reactive to proactive to managed. www.n-able.com

Copyright

Copyright © 2006 N-able Technologies.

All rights reserved. This document contains information intended for the exclusive use of N-able Technologies’ personnel, partners and potential partners. The information herein is restricted in use and is strictly confidential and subject to change without notice. No part of this document may be altered, reproduced, or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of N-able Technologies.

Copyright protection includes, but is not limited to, program code, program documentation, and material generated from the software product displayed on the screen, such as graphics, icons, screen displays, screen layouts, and buttons.

N-able Technologies, N-compass, N-central and Monitor Manage Optimize are trademarks or registered trademarks of N-able Technologies International Inc., licensed for use by N-able Technologies, Inc. All other names and trademarks are the property of their respective holders.

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