PSA Software for MSP Firms: Advice on Choosing the Right Solution

PSA Software for MSP Firms: From Provider to Partner

While organizations across every area of the business landscape have experienced dramatic change over the last several years, especially in the aftermath of COVID-19, few have experienced such dramatic shifts as Managed Service Providers (MSPs).

When MSPs emerged onto the scene in the early 2000s, the approach was reactive: organizations that ran into tough IT problems and did not have the in-house specialists to solve them, reached out to third-party experts.

However, the paradigm is completely different today – largely due to advancements in PSA software for MSP firms. Now, organizations are relying on MSPs to proactively deliver business value that includes – but extends far beyond – solving problems ranging from hardware failures to malware attacks.

As noted by Gartner: “The term MSP traditionally was applied to infrastructure or device-centric types of services but has expanded to include any continuous, regular management, maintenance and support.”

Forbes contributor Laurie Dolan captures this evolving relationship by highlighting four hallmarks of truly invaluable MSPs:

They boost the bottom line.
They inspire co-innovation.
The meet compliance and regulatory standards.
They deliver amazing customer experiences.

In essence, we could say that the “P” in MSP now refers to “partner” instead of “provider” – because this is what organizations that rely on MSPs need in order to compete, adapt, and thrive in the new world of revenue generation.

And this reliance is not auxiliary or insignificant; on the contrary, it is enormous and growing. The global MSP market is protected to reach a whopping USD 274.20 billion by 2026, registering a CAGR of 11.2% during the forecast period (2021-2026).

Indeed, while many sectors will struggle for years to mend from the damage inflicted by the pandemic and some will never fully recover, the MSP marketplace is booming and there is no slowdown in sight.

This growth is exciting and positive. However, it also triggers key challenges for MSPs that have not adopted robust enterprise-grade PSA software, and still rely on manual processes and a mix of ad hoc tools such as spreadsheets.

In fact, research by Service Performance Insight has found that MSPs take the least advantage of commercial PSA software in comparison to all other PS verticals including marcom, value added resellers, accountancies, and other types of professional services firms.

Key Challenges of Managed Service Providers (MSP)

MSPs are facing key challenges as a result of the continued reliance on a manual vs. automated infrastructure. This includes MSPs that are currently enjoying success yet are nevertheless neglecting to exploit their full growth and profit potential. These key challenges can include:

Difficulty tracking, managing, and controlling costs. Typically, MSPs may have some project-based engagements, but most of the work is yearly or monthly contracts that are either based on a set SLA and supporting systems deliverable, or ticket type support from customers with SLAs. Most of these contracts are fixed prices, which makes tracking contract revenues and controlling costs critical.
Inability to manage the pipeline of incoming contracts effectively and efficiently, which leads to missed sales opportunities, a growing services backlog, and missed SLA targets.
Problems forecasting staffing needs, which either leads to idle resources “sitting on the bench,” or a shortage of resources. Either scenario is costly and makes it difficult – and in some cases impossible – to deliver successful outcomes to customers, while ensuring margins and profitability.
Difficulty adhering to time and expense policies. This should be pointed out that it is not just a billing and revenue problem. It can also damage relationships when customers (wrongly yet resolutely) believe that they are being over-charged because their internal numbers do not match the MSP’s.
Lack of visibility into engagement health and status, which forces MSPs to make critical decisions based on “guestimates and gut feels” instead of reliable, actionable data.
Many engagements not concluding finishing successfully. This is often rooted in systemic collaboration and communication problems.
Time consuming and error-prone billing and receiving, which is not just a costly administrative burden, but extends the number of days it takes for MSPs to convert accounts receivables into cash (i.e., Days Sales Outstanding/DSO).
Inability to consistently provide accurate revenue in relation to public accounting standards (ASC 606 and IFRS 15).

How Planview’s PSA Software for MSP Firms Solves these Challenges

PSA Software for MSP firms help to solve these key challenges, and transform them into opportunities to drive customer satisfaction, profitability, and organizational growth.

Here is a snapshot of the advantages, which for clarity are categorized by MSP operational area:

Subscription services

PSA software enables MSPs to streamline workflows and improve governance against subscriptions, which leads to greater accuracy and profitability.

Tickets opened vs. Tickets closed

PSA software enables MSPs to monitor and evaluate compliance regarding response times and solutions as defined by contracted SLA requirements.

Resource capacity and utilization

PSA software enables MSPs to assess demand and capacity in real-time against resource skill sets and competencies, and therefore assign the right people to the right work for optimal utilization. As a result, resources are neither paid to sit idle “on the bench,” nor are they overworked and overwhelmed because engagements are under-staffed.

Customer satisfaction

MSP software enables MSPs to enhance customer experience by capturing and analyzing customer feedback, which ultimately reduces service gaps and improves the overall delivery process.

These dynamic supports what McKinsey refers to as “journey-centric feedback,” which is an innovative value-creating approach that measures customer experience at the journey (i.e., ongoing engagement) level, as opposed to only at transactional touchpoints.

Cost management, revenue tracking & increasing margins

PSA software enables MSPs to increase the overall efficiency of cost management and the accuracy of revenue-tracking – both of which lead to higher margins.

Opportunity management & backlog management

PSA software enables MSPs to establish visibility to sales opportunities and services backlogs, and proactively plan for pipeline engagement.

Time & expense management

PSA software enables MSPs to strengthen and tighten governance of time and expense administration and streamline workflows, which ensures compliance and reduces DSO.

Project management

PSA software enables MSPs to create a single-source-of-truth and glean critical project metrics related to engagement health, schedule, budget, and delivery of services.

Revenue recognition

PSA software enables MSPs to establish scalable and repeatable structure and governance in categorization of revenue recognition methods, and therefore provide revenue forecast and reporting in relation to public accounting standards (e.g., ASC 606 and IFRS 15).

Reporting & analytics

PSA software enables MSPs to leverage data analytics through reports and dashboards, in order to make better and faster decisions.

Planview provides resource managers comprehensive control of the resourcing process.

Essential Functionality in PSA Software for MSP Firms

As noted earlier, the PSA market is massive and growing. For MSPs, this is a good news, bad news scenario. The good news is that there is plenty of choice. Ironically, this is also bad news! Why? Because with so much selection, it can be difficult to identify the right PSA software — and steer clear of the wrong ones.

To help MSPs make an investment in PSA software that will be rewarding instead of regrettable, below we provide is a list of essential “must-have” functionality:

Opportunity management

PSA software for MSP firms must deliver comprehensive opportunity management functionality, which improves and expands visibility into pipeline opportunities that are most likely to convert into engagements.

As a result of this actionable intelligence, MSPs can get ahead of the curve by forecasting requirements and resources that are necessary to meet all SLA targets and delight customers.

Project and task management

Most project and task management work provided by MSPs is based on monthly and annual subscriptions vs. conventional projects with definitive start and end dates.

However, effective resource management is essential for establishing and standardizing a service delivery model with appropriate processes and controls for managing a predictable, profitable, and timely lifecycle that drives engagement success.

Resource management

PSA software for MSP firms must provide full management of the entire resource pool, which helps ensure that the right people are assigned to the right engagements, and at the right time.

This leads to better resource forecasting assignment, management, and utilization – and ultimately means more efficient engagements, higher profit margins, and happier customers.

Time and expense management

PSA software for MSP firms must help ensure that resources accurately and efficiently record their time and expense information – wherever they are and whenever they are working.

This data can then be rapidly and simply validated, approved, and tracked – which reduces revenue leakage, and assures that customers are billed on time and accurately per the SLA.

Financial Management

PSA software for MSP firms must deliver real-time insights and support sophisticated budgeting, multiple currencies, and various tax-related requirements. This enables MSPs to focus on what matters most: meeting SLA targets, ensuring profitability, and satisfying customers.

Integration with a Ticketing System

For those organizations with an established ticketing system, a critical factor that separates PSA software for MSP firms vs. PSA software designed for other verticals (e.g., marcom, accountancy, etc.) is seamless integration with a ticketing system.

This is vital, because tickets are tied to help desks that potentially have certain SLAs — which ultimately impacts billing. Here is an example:

“An MSP firm has a yearly subscription contract with a customer valued at $150,000. Per the SLA, support on this contract must be delivered between 9:00am and 5:00pm. During the contract, the customer calls for support at 6:30pm.

The work itself is tracked as normal. However, the ticketing system identifies that the request was made outside of the SLA framework – and therefore, it should not be billed against the $150,000 annual contract.

Instead, it is automatically re-routed to the contractual off-hours support hourly rate.”

As a result of this automated workflow:

The customer is billed the correct amount
The MSP is paid the correct amount
The MSP can observe and assess the amount/frequency of off-hours support requests, and as necessary make amendments to subsequent contracts (more on this below)

Using the example above, prior to subscription renewal the MSP can proactively reach out to the customer and inform them that while they utilized 114 hours of off-hours support during the life of the agreement, 90% of this took place between 5:00pm and 7:00pm.

As such, a subsequent contract could include support coverage from 9:00am to 7:00pm instead of 9:00am to 5:00pm. Naturally, this will increase the year-over-year cost of the contract (because support coverage is extended by two hours per day).

However, the increase will be lower than what the customer would pay for another 114 hours of off-hours support.

As a result of this shift, the customer is happy because they will ultimately save money. And the MSP has delivered business value and demonstrated that they are a partner and not just a provider.

As we can see, PSA software for MSP that integrates with a ticketing system is the key that unlocks this win-win outcome!

Accessing Business Intelligence

The best PSA software for MSP firms extends beyond core operational functions such as managing help desk tickets and customer accounts and embraces the strategic side of the organization.

Here are some of the advantages of using a PSA solution in conjunction with business intelligence:

Practical task and process automation

MSPs can do “much more with much less,” but without missing SLA targets or undermining the quality of work.

Centralized data storage

MSPs can capture and store a wide range of customer data, such as inventory information and billable time.

What’s more, a “one-stop” repository also enhances security and reduces vulnerabilities compared to a decentralized setup that uses multiple servers and data storage points.

Better software integration capabilities

Syncing with other core systems in the environment enables MSPs to ensure that their in-house technology is flexible and compatible when serving different customers.

Analytics to improve customer service

MSPs can translate raw customer data into actionable business intelligence and use it to improve customer experience and success during an engagement. These same insights can also be used to roll out best practices across the organization.

Additional Features to Look for In Your Next PSA Solution

When evaluating various PSA solutions, MSPs should pay close attention to the following must-have features (in addition to those previously highlighted):

Work distribution
Service level agreement (SLA) goal tracking
Recording of billable hours
Contract management
Billing
Labor utilization
Capacity planning
Ticket Management
Time of day assigned activities

Does PSA Software for MSP Firms Need to be Cloud-Based?

Many MSP firms see the value in a cloud-based vs. on-premise solution, because cloud-based solutions enable the following:

Real-time collection and processing of time/expense data
Supports collaboration across teams and customers
Improves support for remote workers

The value of this latter advantage has skyrocketed in recent years, as COVID-19 has dramatically increased the number of remote and hybrid remote workers.

MSPs with cloud-based PSA software will be able to rapidly pivot to a partial or total remote workforce and continue serving customers.

Key Benefits of PSA Software for MSP Firms

Ultimately, the right PSA software for MSP firms is one that checks all the function and feature boxes described so far – delivers the following key benefits:

Optimizes the services lifecycle profitability by centralizing key processes
Successfully delivers business outcomes for customers
Establishes comprehensive visibility that drives better, faster decision making
Supports predictable, recurring revenue streams through subscription sales and renewals
Creates opportunities for higher margins and greater profitability
Creates opportunities for expanded services and additional offerings

The Bottom Line

A growing number of organizations are wisely turning to MSPs for everything from cybersecurity audits to end user training to hardware and software vendor management – and the list of critical responsibilities goes on.

This dynamic presents MSPs with an incredible opportunity to deliver, impress, achieve and grow. Choosing the right PSA software for MSP firms makes all the difference between thriving and struggling.

Next Steps

Adopting a PSA solution is not a one-time transaction. Invariably, your leaders and teams will need a full range of support: everything from strategic advice to hands-on adjustments.
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