METRICS THAT MATTER

THAT MATTERANNUAL ITSP BENCHMARKING STUDY

®

METRICS THAT MATTER

About the Survey

Executive Summary: Setting Sights on Growth

Workforce Expansion in the Works

No End to Endpoint Increases

Shifting Priorities, New Opportunities

Automation: The Key to Smart Growth

Manual Tasks Are Costly

Recurring Revenue Is Essential

Success Metrics Are Shifting

Outreach Improves Customer Satisfaction

Conclusion

TABLE OF CONTENTS

3

6

9

12

14

4

8

11

13

16

17

METRICS THAT MATTER

Decision Tree Labs conducted the Metrics That Matter survey in July 2017 on behalf of

Autotask Corporation. More than 1,030 ITSPs from around the world responded.

ABOUT THE SURVEY: A NEW ERA OF ITSP

3

Executive Management

Sales & Marketing

Service/ Help Desk

Project Management

Operations

Other

Professional Services

42%

7% 6% 9%

17% 12% 7%

LOCATION RESPONDENTS BY ROLE

North AmericaEurope, the Middle East and AfricaAsia-Pacific Region

61% 29%

10%

METRICS THAT MATTER

In a world where cloud platforms and

applications, mobile devices and big

data are commonplace, and businesses

are increasingly integrating advanced

technology, such as wearable devices,

artificial intelligence and machine

learning, the information technology

service providers (ITSPs) who keep those

systems running are more important

than ever.

As the ITSP market has matured, this

year’s numbers indicate that established

firms are winning more business, with

both project and ticket volume increases

scaling positively according to ITSP size.

Those logging more than 26 projects or

between 10,000 and 100,000 tickets per

year saw the greatest volume increases

in those respective categories.

4

PROJECT VOLUME

TICKET VOLUME

EXECUTIVE SUMMARY: SETTING SIGHTS ON GROWTH

Less than 5,000 tickets each year dropped by nearly 13%

5,000 to 10,000 tickets increased by 5%

10,000 to 100,000 increased by nearly 8%

26 to 50 projects a year increased by 7%

26+ projects a year increased by 10%

1 to 25 projects a year decreased by 9%

METRICS THAT MATTER

ITSPs are also reaching new revenue

heights, with more companies jumping

over the $2 million annual revenue mark.

This year, the more money you grossed,

the faster you were likely to grow.

As they grow, so does the need for better

people, processes and technologies

to maximize and manage that growth.

ITSPs are using more remote monitoring

and management (RMM) systems

to help them identify issues with

clients’ networks and platforms, and

address or escalate them immediately.

Such automated monitoring and

deployment is good for both the ITSP

and their clients, because it streamlines

processes, and improves efficiency

and effectiveness.

55

<$2 MILLION ANNUAL REVENUE

$2 TO $5 MILLION ANNUAL REVENUE

$5 MILLION+ ANNUAL REVENUE

Reduced by 8% since 2016

Grown 3% since 2016

Grown 2% since 2016

Reduced by 27% since 2013

Grown 2% since 2013

Grown 5% since 2013

REVENUE GROWTH CONTINUES FOR ITSPs

METRICS THAT MATTER

With continued expansion expected as dependency on technology continues to grow,

ITSPs must invest in onboarding and training the best employees possible to compete and

gain market share in an increasingly demanding sector.

Three-quarters of respondents said they’re adding up to 10 people over the next year to

accommodate growing ticket and project volumes. While service desk staff dominate

when it comes to headcount increases, other functions are also seeing their share

of expansion.

WORKFORCE EXPANSION IN THE WORKS

6

Growth Point: Many respondents are also hiring engineers and development personnel, pointing to the need for successful ITSPs to develop talent and create a deep bench of skillsets and expertise.

Service Desk Staff

Salespeople OperationsProject Staff Marketing

64% 40% 35%36% 20%

WHERE ITSPs ARE STAFFING UP IN 2017-2018

6

METRICS THAT MATTER

“It’s not enough to have a great product or solve a particularly complicated business challenge, clients want to know that investing their money is going to deliver a strong return, and that the company they choose to partner with is going to help them maximize their investment. This starts right at the initial point of sale and means the employees that represent your brand need to be highly qualified to ensure your clients’ success.”

Mark Banfield Senior Vice President & General Manager International at Autotask

7METRICS THAT MATTER

METRICS THAT MATTER

With laptops, tablets and smartphones integrated into most workplaces, ITSPs are

managing more endpoints—and their focus on expanding service teams reflects that

need. While the percentage of ITSPs managing more than 1,000 endpoints stayed flat year-

over-year (39%), it is still up nearly 5% from 2015, the first year the question was included

in the survey.

But that doesn’t mean respondents aren’t seeing growth in this area. Half saw a steady

increase in the number of client endpoints year-over-year—and that momentum is

continuing. In fact, 63% of this year’s survey respondents said the total number of

endpoints they’re managing increased by up to 50%.

NO END TO ENDPOINT INCREASES

8

Key Insight: As the Internet of Things (IoT) brings more connected devices into the workplace, the number of endpoints will continue to grow. The 2016 State of the Endpoint report by the Ponemon Institute found that 60% of respondents had greater difficulty in managing endpoint risk in the 24 months preceding the survey.1

Between 76% and 100%

More than 100%

Lost endpoints

Between 51% and 75%

Between 26% and 50%

Between 16% and 25%

Between 5% and 15%

Flat, or less than 5% 14%

35%

20%

8%

2%

2%

3%

1%

ENDPOINT INCREASES YEAR-OVER-YEAR (2016 TO 2017)

8

METRICS THAT MATTER 9

Since the first Metrics That Matter survey was released in 2013, client priorities and critical

investments have matured and evolved. One area that clearly illustrates these changes is

data security, which has grown from a top revenue driver for a small minority of ITSPs to a

major business driver for ITSPs.

SHIFTING PRIORITIES, NEW OPPORTUNITIES

6%

2013 2015 2017

63% 44%

HOW SECURITY SERVICE REVENUE HAS GROWN

“IT strategy, process operations or security

consulting” is a top revenue driver

Security accounts for 30% or less of revenue

Data security is the #1 priority for clients and new business driver

9

METRICS THAT MATTER

The survey also revealed shifting priorities among ITSP clients, which dictates how the

ITSPs themselves expand their services. In just the past two years, ITSPs have seen

changes in their clients’ most pressing concerns.

Even as priorities shift, key revenue drivers have remained consistent over

the past two years.

10

Key Insight: Even as areas such as endpoint management and business continuity remain a key priority for many businesses, clearly, they are making investments in various areas of security, which are critical to mitigate risk and keep their businesses operating.

10

Disaster recovery and business

continuity

Data security

Endpoint security

Information security

Backup and restore

Internet security

Always-on environments

Business continuity

Mobile connectivity

Endpoint management

Email security

51%

44%

70% vs. 71% 57% vs. 52% 29% vs. 26%

51%

36%

32%

30%

36%

31%

2016 PRIORITIES

2017 PRIORITIES

TOP SECURITY-RELATED SERVICES DRIVING REVENUE – 2016 VS. 2017

METRICS THAT MATTER

Growing business volume, revenue and headcount is good news for ITSPs and bodes

well for the industry overall. To maintain that growth and continue to scale effectively,

ITSPs need to find new ways to automate and streamline processes. Here, respondents

give themselves high marks in service and support, but need to improve in selling

and invoicing.

AUTOMATION: THE KEY TO SMART GROWTH

How would you rank your organization’s automated

delivery processes in the following areas?

11

Key Insight: Nearly two-thirds of small to midsize businesses (SMBs) get paid late, and invoicing delays add to the time it takes to get their money,2 according to a 2016 survey by Fundbox. Such lag times have a significant impact on how your company can invest in new hires, marketing—and even payroll.

11

AUTOMATION OF KEY PROCESSES

60%

40%

20%

0%Selling Service Invoicing Support

Good Need to ImproveExcellent

METRICS THAT MATTER

The survey also revealed that many ITSPs are wasting up to 10 billable hours each week

on manual processes that can be easily automated, such as entering data into multiple

systems, scheduling and dispatching technicians, and capturing billable time. Such

activities eat into profitability through lost revenue, delays and increased potential

for errors.

While hiring more people can help organizations keep pace with increasing demand to an

extent, automating service delivery and business management lets ITSP leaders focus

on areas that will help them grow and become more profitable instead of getting bogged

down in rote, day-to-day tasks.

MANUAL TASKS ARE COSTLYKey Insight: The demands of meeting client needs and managing a growing business make it difficult to prioritize automation internally. This is where vendors can be invaluable partners, integrating and streamlining communication between cloud-based apps, and making it simple to integrate disparate tools and automate processes to help the ITSP grow and scale service delivery.

12

Data entry into multiple systems

Maintenance of on-premises software

Inability to optimally schedule and dispatch technicians

Inability to accurately capture billable time

Maintenance of on-premises hardware

Maintenance of disparate operational systems

69% vs. 73%

67% vs. 68%

68% vs. 70%

66% vs. 67%

67% vs. 68%

64% vs. 65%

WHERE ITSPs LOST UP TO 10 BILLABLE HOURS PER WEEK – 2016 VS. 2017

METRICS THAT MATTER

Demand for managed services and cloud-based

services

Improved service desk processes,

performance and automation

efficiency

Improved service technician

performance

48% 41% 37%

TOP CAUSES OF RISING RENEWAL RATES

Sustainable growth requires both acquiring new clients and retaining current ones.

Most respondents have high renewal rates. When asked to attribute the reason for

their rising renewal rates, this year’s respondents pointed to improvements in service

desk processes, performance and automation efficiency, as well as improved service

technician performance.

61% of respondents reported annual renewal rates of 90% or more.

RECURRING REVENUE IS ESSENTIAL

13

METRICS THAT MATTER

ITSPs use a few key metrics to gauge success. A year-over-year comparison of those

metrics points to a growing focus on customer satisfaction—it has become so important

it now tops the list of metrics that matter.

SUCCESS METRICS ARE SHIFTINGKey Insight: As your own organization grows, it’s a good idea to track customer demands and the shifting metrics by which you measure success. Doing so will help you adapt your service offerings and increase customer satisfaction.

14

Customer satisfaction rating

Response time

Billable resource utilization

Gross profits

45% vs. 52%

51% vs. 52%

55% vs. 51% 53% vs. 47%

METRICS THAT MATTER – 2016 VS. 2017

Profitability by customer

48% vs. 44%

METRICS THAT MATTER

“ITSPs are uniquely positioned to help drive innovation and growth. When they have a 360-degree view of all the technologies implemented across the organization, they gain insight into the results being delivered and can clearly see the impact of those results on their operations.

That insight can greatly impact major business decisions.

Ultimately, ITSPs that use a professional services automation solution can provide access to the core metrics and trends associated with the technologies that SMBs deploy.”

Mark Cattini President and CEO at Autotask

15METRICS THAT MATTER

METRICS THAT MATTER

ITSPs are expanding the breadth of channels they use to reach and engage with clients to

improve satisfaction. In last year’s survey, customer surveys, Knowledgebase and

self-help portals topped the list of channels. This year, there has been a significant shift

in how ITSPs engage with clients.

Although having an assortment of client service channels, including webinars and events,

is important, automation is essential in the customer satisfaction realm, too. Finding

ways to automate and streamline customer service response and modes of collecting

feedback helps ensure consistency and will also help improve internal efficiencies.

OUTREACH IMPROVES CUSTOMER SATISFACTION

16

Key Insight: Even growth-minded ITSPs are under-investing in automated service channels, such as live chat (22% vs.15% in 2016) and self-help portals (29% vs. 32% in 2016), that could deliver critical competitive advantages.

16

Social media Customer surveys

Knowledgebase

Knowledgebase

Customer surveys

Outbound communication

52% 49%

34%

Outbound communication

Social media

26%

41%

46%

49%

TOP CHANNELS USED TO IMPROVE CUSTOMER SATISFACTION (2017)

TOP CHANNELS USED TO IMPROVE CUSTOMER SATISFACTION (2016)

Self-help portals

32%34%

METRICS THAT MATTER

The 2017 Metrics that Matter survey clearly shows that ITSPs are in growth mode. But with

growth comes growing pains. Shifting customer demands, recruiting and training new

employees, proliferation of endpoint concerns and outdated manual processes are key

challenges that ITSP leaders must face.

As the sector and the businesses in it mature, forward-thinking ITSP leaders must

embrace the tools that will help them scale their operations. Automation will be a key

competitive advantage for many. Those who employ tools such as RMM will eliminate

inefficiency that hurts profitability, while optimizing technician time and capturing billable

hours. Increasing automation in areas like selling, customer service and invoicing, where

ITSPs give themselves low marks in adoption of automated processes, can further

improve new business development, customer retention and cash flow.

Business technology continues to evolve. IoT promises to be a game-changer in terms

of connected devices in the workplace, making ITSPs even more in demand. Prepare to

make the most of these opportunities by investing in the talent and systems you need to

meet increased demand and scale your business.

For more information on how client needs are changing and how ITSPs can respond, visit

the Autotask resource center at www.autotask.com/resources.

CONCLUSION

17

METRICS THAT MATTER

SOURCES1 Ponemon Institute, 2016 State of the Endpoint Report, April 2016.

2 Fundbox, “Fundbox Study Reveals Crippling Effects of Late or Unpaid Invoices,” March 16, 2017.