{"id":16032,"date":"2020-12-08T22:42:47","date_gmt":"2020-12-08T22:42:47","guid":{"rendered":"https:\/\/fieldnation.com\/resources\/2021-msp-profitability-strategies\/"},"modified":"2025-06-26T13:32:35","modified_gmt":"2025-06-26T18:32:35","slug":"2021-msp-profitability-strategies","status":"publish","type":"post","link":"https:\/\/fieldnation.com\/resources\/2021-msp-profitability-strategies","title":{"rendered":"Field Intelligence: 3 strategies to improve MSP profitability in 2021"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Field Nation\u2019s EVP of Product Management, Wael Mohammed, has examined the data and identified key opportunity areas and growth strategies for 2021.<\/span><\/p>\n<a name=\"field-service-opportunity-is-knocking\" class=\"fldn-table-of-contents-anchor\"><\/a><h2 id=\"field-service-opportunity-is-knocking\"><b>Field service opportunity is knocking<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">After the steep dip during the spring shutdowns, the market started recovering at the end of the second quarter and is leveling out to roughly -10% of 2019 levels. Some sectors have been hit hard while others have been less affected. We\u2019re even seeing some products and services align strongly with the public\u2019s changed safety needs and behaviors.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<h3><b>Digital signage and networking are recovering the fastest<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Trends in the retail and restaurant industries are driving this demand.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Overall, public health concerns have created a strong need for digitally connected, safe consumer experiences. This has given rise to trends from <\/span><b>light-contact shopping like BOPIS (buy online, pickup in-store) and contactless shopping to the use of stores as fulfillment centers and the need for data-powered inventory management<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">While some retail sectors are suffering, grocery, convenience, and discount stores are enjoying strong sales. Meanwhile, online shopping is on track to grow from 17% to 30% of total retail. This has led to more spending on services like<\/span><b> self-checkouts, mobile POS, large signage screens, item labeling, and reconfiguration of store layouts for curbside pickup<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Independent and full-service restaurants are bearing the brunt of deep losses, while quick-serve restaurants are thriving, with drive-thru and carryout leading the way. This has prompted spending on technologies like<\/span><b> contactless order and pay, drive-thru cameras and voice tech, outdoor menu boards and screens, and food delivery pickup lanes<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><a href=\"\/wp-content\/uploads\/2020\/12\/drive-thru-camera.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-14781\" src=\"\/wp-content\/uploads\/2020\/12\/drive-thru-camera-300x200.jpg\" alt=\"Drive-thru camera\" width=\"300\" height=\"200\" \/> <\/a><a href=\"\/wp-content\/uploads\/2020\/12\/drive-thru.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-14782 size-medium\" src=\"\/wp-content\/uploads\/2020\/12\/drive-thru-300x199.jpg\" alt=\"Drive-thru QSR\" width=\"300\" height=\"199\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Opportunity does exist in the current economic landscape. Where some sectors have weakened, others are stronger. Certain business models are less effective, but others seem designed for the moment.<\/span><\/p>\n<a name=\"three-key-strategies-to-grow-your-profitability\" class=\"fldn-table-of-contents-anchor\"><\/a><h2 id=\"three-key-strategies-to-grow-your-profitability\"><b>Three key strategies to grow your profitability<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">After hundreds of conversations with MSPs, we understand the primary challenges to maintaining profitability. We\u2019ve defined three key strategies that address these challenges and make you more nimble, cost-effective and able to scale \u2014 putting you in a better position to take advantage of market opportunities.<\/span><\/p>\n<h3><b>1. Use location-specific market data to make your bids competitive.<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Bidding accurately is a constant challenge. Due to what we call the \u201cmargin one-rate squeeze,\u201d sales teams tend to seesaw between bidding high to maintain the profit margin \u2014 and not getting the work \u2014 and bidding low, but then not realizing any profit from the work. These bids usually don\u2019t factor in the cost of travel either.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Often these teams use their own data captured in-house over time. But rates change constantly (see examples illustrated across 4 cities below), so this internal data rarely reflects the current market. The data is also typically based on national or regional averages. Yet rates can vary from 5% to 15% between locations \u2014 and that can be the difference between profitability and loss.\u00a0<\/span><\/p>\n<p><a href=\"\/wp-content\/uploads\/2020\/12\/Networking-hourly-rates-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-14789 size-large\" src=\"\/wp-content\/uploads\/2020\/12\/Networking-hourly-rates-1-1024x538.png?_t=1607460417\" alt=\"Networking hourly rates\" width=\"640\" height=\"336\" \/><\/a><\/p>\n<p><a href=\"\/wp-content\/uploads\/2020\/12\/Networking-hourly-rates-2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-14790 size-large\" src=\"\/wp-content\/uploads\/2020\/12\/Networking-hourly-rates-2-1024x538.jpg?_t=1607460489\" alt=\"Networking hourly rates\" width=\"640\" height=\"336\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">To win more bids and improve your margins, it\u2019s critical to use up-to-date accurate market intelligence <\/span><b>for specific locations<\/b><span style=\"font-weight: 400;\">. This will help you calibrate to any market, effectively account for travel, and price the work so it\u2019s competitive without dipping into the profit margin.<\/span><\/p>\n<h3><strong>2. Use a flexible labor model so your employees can work to their \u2014 and your \u2014 best advantage.<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Your workforce is your most strategic asset, but a number of factors can prevent you from optimizing this resource:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Lack of good coverage<\/b><span style=\"font-weight: 400;\"> \u2013 Leads to increased travel and reduced profits.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Giving employees lower-value work<\/b><span style=\"font-weight: 400;\"> \u2013 While this is done to address underutilization, it doesn\u2019t help the employee grow or develop new skills \u2014 which can lead them to feel frustrated or unfulfilled.<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Keeping employees on-call for maintenance contracts<\/b><span style=\"font-weight: 400;\"> \u2013 When you work with stringent SLAs, you need a resource on-site fast. Leaving this work to your core W2s has been known to lead to employee burnout.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">By introducing a flexible labor model, you can free up your W-2 employees for strategic opportunities while still providing coverage for project-based or repetitive high-volume break\/fix work. You\u2019ll be able to pursue opportunities more quickly and increase your win rate. And because you have more control over variable rates, your margins will improve.<\/span><\/p>\n<h3><b>3. Flex your service delivery costs up and down in response to market demand.<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Fixed costs reduce agility and profitability. They trap cash and hinder investment in new customer acquisition and product innovation. While fixed labor costs are predictable, they also keep your service delivery costs static and inflexible, preventing you from quickly capturing market opportunity.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A flexible labor model with variable costs translates into equally flexible service delivery costs. You\u2019ll be equipped to respond nimbly to a market that we expect to fluctuate aggressively in the next two to three years. This will put you in a highly competitive and profitable position for 2021 and beyond.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As the recovery unfolds, Field Nation will continue to deliver <\/span><b>Field Intelligence<\/b><span style=\"font-weight: 400;\"> insights to help you navigate the changing market.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">__<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><b>Field Intelligence expert<\/b><\/p>\n<p><a href=\"https:\/\/www.linkedin.com\/in\/waelmohammed1\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Wael Mohammed<\/span><\/a><span style=\"font-weight: 400;\"> has been in the IT services industry for more than 27 years. He has held leadership roles in both startups and large enterprises, including SPS Commerce, IBM, and Target. Wael is currently the Executive Vice President of Product Management at Field Nation, and oversees product management, product design, and data science. He is a master in identifying product and market growth opportunities, taking new products to market, and maximizing product performance.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Field Nation\u2019s EVP of Product Management, Wael Mohammed, explains current trends and provides 3 key strategies to improve MSP profitability in 2021.<\/p>\n","protected":false},"author":42,"featured_media":16714,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"xn-wppe-expiration":[],"xn-wppe-expiration-action":[],"xn-wppe-expiration-prefix":[],"footnotes":""},"content-group":[],"class_list":["post-16032","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","fldn_content_category-trends","fldn_content_type-blog"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Field Intelligence: 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