OAS - EVALUATING THE ROI OF MSPs - MEDIUM SIZE COMPANIES (PART TWO)

08 Jul

Part two OAS focuses on Key Evaluation Criteria and KPIs and offers the following recommendations.

As medium-sized organizations typically operate on restricted budgets and seek value from a Managed Service Provider (MSP), it's essential for the company to create an MSP ROI “scorecard” focused on specific objectives.

The most common criteria to consider include:

IT Incident Metrics

Monitor the changes in support tickets, outage events, and severity levels before and after engaging with an MSP. A significant decrease in these metrics signifies a return on investment (ROI). For example, CIOs can measure the percentage reduction in downtime and helpdesk volume.

Cost Comparisons

Evaluate the total cost of ownership by comparing MSP fees with previous expenses, which include staff salaries, capital costs, and break/fix expenditures. Many companies calculate annual cost avoidance, such as headcount reduction and deferred hardware spending. Additionally, predictable billing is a key factor; organizations appreciate having a fixed budget line item.

Service Level Performance

Verify that the MSP meets the agreed-upon Service Level Agreements (SLAs). Track metrics such as mean time to acknowledge and time to resolve issues. Achieving these SLAs serves as evidence of ROI through dependable operations.

Business Impact

Whenever feasible, connect IT metrics to business KPIs. For instance, CIOs might measure the transaction volume managed during peak events or the uptime percentage during trading hours. Additionally, monitoring customer satisfaction, such as the Net Promoter Score (NPS) for client-facing applications, is also important.

Compliance, Risk & EX

Depending on the industry the company operates, ensuring audit readiness and minimizing risk are essential. Companies commonly evaluate ROI based on the time and cost savings associated with compliance audits or the reduction in security incidents. One whitepaper from an MSP suggests monitoring the frequency and impact of security events; MSPs should demonstrate a decrease in breaches, such as achieving 50% fewer security incidents with their security services
Employee Experience Surveys and feedback scores, such as IT service desk satisfaction, are often utilized. Many MSP engagements feature regular customer satisfaction (CSAT) surveys; a notable increase in CSAT scores after transitioning to an MSP is regarded as a measure of ROI.

MSP Pricing vs Productivity: Comparison Table

Metric / Outcome	In-House/Break-Fix	MSP/Managed Service
IT Spending (Cost)	Large upfront CapEx (hardware, software) plus variable ops costs. Budgets often spike with emergency fixes or renewals.	Predictable OpEx (per-user/device or tiered fees); 46% of MSP clients cut IT costs by 25% Subscription model includes upgrades
Downtime (hours/year)	Often higher – reactive model leads to frequent outages.	Proactive monitoring greatly reduces outages. IDC found MSPs cut downtime by 85% and 63% measured outages drop sharply.
Response & Resolution Time	Slower: calls for external vendors or overworked in-house IT cause delays.	Faster: MSP guarantees (SLA-backed) 24/7 helpdesk. Issues are often fixed remotely. One analysis notes MSP fixes are “faster and more cost-effective” than ad-hoc calls.
Internal IT Productivity	Low: IT staff spend ~80% time on routine fixes Innovation is hindered; 70% say routine ops block strategic work.	High: MSP takes over maintenance. Firms report ~57% of formerly routine time freed for core projects. IT can drive new initiatives (cloud moves, analytics) rather than just “keeping lights on.”
Employee Satisfaction	Lower: frequent tech problems frustrate users (e.g. 20 weekly tech frustrations → 1.5h lost productivity).	Higher: stable, user-friendly IT leads to happier staff. 89% of employees say better tech/support would raise satisfaction MSP helpdesks and modern tools improve user experience.

Part three - Benchmarks, Case Studies and Best Practices

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