We all know the expression, "don't sweat the small stuff."

If you're an MSP, this advice might seem counterintuitive, since monitoring, managing and remediating the million things that can go wrong with an IT network is part of your business value.

On the other hand, if your technical staff spends too much time on the routine activities of systems monitoring and management -- "watching the blinking lights," if you will -- they won't be available for higher-value activities like architecting and implementing advanced solutions. In other words, if you outsource routine tasks to a competent third party, you won't have to sweat the small stuff and you'll make more money.

Reason is, engineers who are bogged down in routine work can prevent you from maximizing their realization -- the amount of revenue they generate from billable activities. It's a business metric that's especially important to today's MSPs.

"As more players have entered the MSP business and customers have begun to shop around, many MSPs are experiencing price pressure on basic services such as desktop, server and network management," says Jason Beal, director of services at Ingram Micro. "To improve profitability, MSPs should tighten the ship of their service-delivery processes and work to improve the realization of their technical resources."

Paul Dippell, CEO of Service Leadership, a consultancy for solution providers, agrees, noting that while MSPs are still the most profitable of all solution providers, most report flat revenues and falling profits. "The MSP business model is by nature the one architected to have the highest profitability," says Dippell. "But even best-in-class MSPs are feeling pressure from the bad economy."

Engineers stuck watching the blinking lights don't help waning MSP profitability, but there are alternatives. An increasingly popular business model, often called a hybrid, which combines managed services with IT projects, is ideal because the two aspects are so complementary.

"The hybrid MSP takes care of customers' operational needs with managed services, and their capital investment needs with projects and products. But if they don't want managed services, the hybrid can still pitch projects, and vice versa," says Dippell. "And managed services customers are likely to be receptive to the project business. The hybrid MSP has two bullets in the gun instead of one."

Such is the case with IT Works, a $10 million MSP and solution provider based in Texas.

"Our sales team goes out and looks for projects, like virtualization, Cisco phone systems and network upgrades," says Greg Starr, COO. "Those projects lead to some of our best MSP prospects, because once everything is up and running and the customer becomes comfortable with us, it's much easier to convert them to our MSP program." Help-desk staff on the managed-services side handle routine tasks, escalating problems only if necessary to engineers who are experts in advanced technologies, such as Cisco CallManager, VMware and Microsoft Exchange.

In terms of business efficiency and realization of engineering resources, the hybrid model makes sense because the synergy between managed services and projects makes it easier to optimize utilization of technical staff and realization of revenue generated. This contrasts with a pure projects business, which finds it hard to keep technical staff engaged in billable work between projects, and the pure MSP whose engineers can be swamped by routine tasks like monitoring and patching that keep them from working on higher-value activities.

"Just because the technology enables engineers to manage more devices than they could when doing break-fix work, that doesn't mean they are utilized most effectively," says Beal. "If your technicians have the potential to achieve advanced certifications, it pays to invest in their training and career development, and outsource the routine work. That's an excellent way to increase their value to the business."

"When you deliver more value to your customers, you can charge more for your engineers' time," says Mitchell Cipriano, vice president of marketing at NetEnrich, provider of the Ingram Micro Seismic Global NOC. "You could tell your customer that you patched three servers and removed viruses from two desktops. Or you could explain how you implemented a CRM system that helped the sales team close 50 new deals this quarter. In the second case, you've helped the customer achieve its business goals, which should lead to higher revenue realized from your technical staff."

Freeing Up the Talent
Nick Mancini, partner at The Tech Consultants, has firsthand experience with this issue. A 10-person hybrid MSP in Southern California, The Tech Consultants last summer outsourced its NOC, help desk and other managed services to Ingram Micro Seismic.

"The Seismic Global NOC provides basic preventive maintenance and problem resolution to our customers for a predictable, fixed rate," says Mancini. "A key benefit is that it has freed up our internal engineers from doing routine and boring tasks, enabling them to do more high-level work. Now we can focus our resources on providing a higher level of customer support, which is more profitable and utilizes our skill set more effectively."

Another benefit is that technicians now can delve deeper into pressing remediation issues that can raise customer satisfaction. "If my technician is busy installing service packs on a server, he might not be available to assist a customer with a Microsoft Exchange database that needs to be repaired," Mancini says. "Outsourcing frees our resources to provide faster service to our customers in areas not covered by the Seismic Global NOC."

Turning routine tasks over to the NOC also helps raise the expertise of in-house engineers. "One of our reasons for outsourcing is to elevate the level of our technical staff," says Mancini. "Instead of hiring more people, we want to train our technical staff so we can offer more sophisticated, specialized solutions and services."

Higher Profits, Happier Staff
At KnowledgeCentrix, a $6 million MSP and solution provider in Southern California, outsourcing to the Ingram Micro Seismic Global NOC has raised the morale of technical staff, who are freed from boring work and no longer need to handle false alerts from monitored systems.

"No one wants to make a career of watching the blinking lights," says Chris Andreozzi, CEO of KnowledgeCentrix. "If that's the whole horizon you have for your technical staff, you're never going to keep your people." By outsourcing, Andreozzi's team gets to concentrate on problem resolution and customer satisfaction -- doing root-cause analysis of why the blinking light went from green to red, and discovering "what can be done to improve the customer's infrastructure to keep it from going to red again, because that's what is really valuable."

"If the light's always red, and we're always fixing things, we're not making money," Andreozzi says.

Outsourcing routine monitoring and management has also freed Knowledge- Centrix's help-desk engineers to move into higher-value activities. As an example, a help-desk engineer in his early 20s now spends one to two days each week working off-site at a large client doing VMware virtual machine conversions, high-value work that affects tens of thousands of users.

Such projects are icing on the cake of an MSP's business, according to Andreozzi. "We're doing projects for our managed services customers, and we do projects for some large customers who don't necessarily need our managed services in their entirety," he says. "But we always try to wrap a managed service around a project, such as managing a virtualized environment for a customer that wanted to keep desktop support and help desk under their control."

If help-desk technicians benefit from upward career mobility that moves them into more sophisticated IT projects, they also appreciate the alert filtering provided by the Ingram Micro Seismic Global NOC. Today, on-call staff might receive two or three alerts per week, all legitimate, whereas in the past they might have received 50 or 60 false alarms a week. "Before Seismic, we had a good staff member quit because he didn't like the disruption of false alerts," says Andreozzi, "but that is a thing of the past."

Scaling Upmarket to Larger Clients
"One challenge you face as an MSP is how to grow your service offering," says COO Greg Starr at IT Works. "As we added new and larger managed service clients, we reached a point where our help desk couldn't keep pace. If you keep pounding your help desk by bringing clients on one after another, you've either got to expand your help desk or bring in a scalable resource." Starr chose to service some larger clients via the Ingram Micro Seismic help desk, "and have them escalate to us if need be," he says. "That simplified our go-to-market strategy and reduced our overall cost structure per client."

In addition, hiring, compensating and training new staff is expensive, and outsourcing relieves the MSP of indirect costs such as computer setup, software licensing and the floor space needed to situate new staffers.

Starr also notes the positive effect outsourcing can have on utilization and realization of technical staff on a per-client basis. If too many engineers are utilized on a fixed-price managed service client, realization of revenue will fall. But outsourcing gives you a fixed cost for each user at the client, "whether they make 100 calls per month or two calls per month," Starr says. "This helps us better understand our costs per client, while the help desk's scalability protects us during busy months when the call level is up."

This combination of scalable resources available at a fixed price on a per-client basis offers key benefits to MSPs wanting to move upscale into larger clients. As Starr says, "Working with Ingram Micro Seismic has allowed us to adapt and grow much faster than we could otherwise." And with the help desk and other managed services running smoothly, IT Works is free to concentrate on what it does best -- capitalizing on the synergy between its managed services and IT-projects business.

Getting There from Here
We have seen the advantages of outsourcing routine managed service functions to improve the utilization and realization of technical staff. But success in this model is contingent on ensuring technical staff are qualified to perform high-value, high-realization activities. A key to achieving this goal, most experts agree, is training on advanced certifications.

"As routine managed services have become more of a commodity, it's important for MSPs to differentiate themselves by building up specialty business practices," says Jeff Borovitz, sales manager at VPN Dynamics, a technical certification company and subsidiary of Ingram Micro. "One of the best ways to do that is through certified technical staff. We know from studies by Gartner and others that solution providers with certified technical staff sell 50 percent to 75 percent more products and services in areas where they have the certifications."

As important as certifications are, they are only one element of a development program that can raise the value of engineers and retain them longer as employees.

"Most MSP organizations are pretty flat, so technicians don't have the opportunity to climb six rungs on the corporate ladder," says David Russell, CEO of ManageToWin, a provider of software for managing employee performance. "They need to understand the value of growing horizontally. This not only improves their skills, but also increases their passion for doing superior work as they grow professionally quarter by quarter and year by year."

One challenge relates to upgrading an engineer's soft skills. For instance, the ability to communicate with clients, to follow up on commitments, give presentations and manage meetings all raise an engineer's value to the company. Engineers need to learn how to deliver a superior customer experience, as defined by top management. Russell also recommends defining high-profit employee activities and compensating on those activities.

Then there's the need for regular monitoring and followup of employee development.

"Too often leaders get excited about these goals, but then don't hold people accountable on a regular basis," Russell says. "These goals need to be defined as a series of tasks grouped in milestones, so at the end of the quarter and year you have measurable accomplishments." If you do, you won't fall into the trap of keeping staff busy by sweating the small stuff. Instead, you'll make significant progress toward higher revenue realization and job satisfaction of your technical team.