Every MSP has more tools and technology than it did a few years ago. Think about it: The average number of tools in your stack has probably increased dramatically. But tool costs have gone from 10 percent to 20 percent to 30 percent of your seat cost! So, it’s something MSPs should pay attention to.
Now, the rise in tool costs is not necessarily a bad thing. With tools, we offer more value to customers, making them more secure, and, hopefully, making ourselves and our customers more productive. With that, there are a few things to consider.
Understanding costs. You must understand the total cost of a tool. First, be sure to convert the cost from whatever unit of measure you are billed to an average cost per seat. For example, if you have 20 tools with 10 different units of billing from vendors, then it’s like adding fractions with different denominators. For those of you who aren’t good with fractions, it doesn’t work! It would be best if you converted everything to a common denominator. For us, that is a ‘seat’.
Labor costs. Be sure you understand the labor cost of adding a new tool. This includes managing the tool, training people, upgrades, and any tickets from using the tool.
Utilization. How many of the tool’s capabilities are you using? Most tools only have 10 percent to 20 percent of their features utilized.
Instrumentation. Do you have reporting metrics to determine if the tool accomplishes its intended result?
Accountability. Is someone accountable for the result of each tool? Hint: If you say everyone, that means no one is accountable.
This quarter, our peer groups are doing a packaging and pricing gut check, and, as part of that, a deep dive into their tool stacks. I suggest you do the same.