5 ways managed service providers help with cost containment

Think of it as the ultimate job interview.

However, you are not hiring an individual. You are recruiting an entire organization—one that can, if you choose wisely, improve your business, enhance your efficiency and perhaps even enrich your company’s culture.

A managed service provider (MSP) can tackle crucial business functions that are outside your organization’s primary focus, or it can provide your company with additional resources and a vast knowledge base that goes beyond your immediate employees. But whether you’re looking to outsource your financial accounting, or have someone handle your IT needs, you will want to ask the following questions when selecting a managed service provider:

1. What is your industry expertise and experience?

Let’s start with this most basic of questions. After all, if your MSP doesn’t have strong qualifications within your industry, there is probably little reason to continue talking. You will want to hear about your MSP’s past engagements, years of experience and success stories. What is their level of fluency? Do they understand the segments of your industry, as well as the nuances and subtleties of your business? For example, does the MSP understand how FDA validation works or what it takes to build and support a bioinformatics platform? Listen for their analysis of trends, key business applications and compliance needs within your industry and how they have met the expectations of their previous clients.

2. How well does the contract “flex”?

Back in 2019, how many of us predicted that a pandemic would devastate the country? Exactly.

Unforeseen circumstances arise with disturbing regularity, so it’s vital to know the level of flexibility that your contract affords. And it’s not just negative developments like COVID-19 that you may need to address. What if your business booms, and you double your workforce or add locations? In such situations, will your contract be a safe zone or a prison? You’re looking for a degree of flexibility that will not lock you into a contract drawn up when the world was very different. For example, a current trend is the user-based pricing model, in which your usage of the product influences the fees you pay—so if you use more, you’re charged more, and if you use less, you’re charged less. Options such as this may help to keep your contract relevant to your needs.

3. How will you scale with our business?

Similar to the previous question, how will the MSP adjust when/if the environment changes? Are they not just willing, but fully capable of, altering their approach? Because change is constant in any industry, your MSP should not just roll with fresh developments, but anticipate them. In cases of rapid evolution, perhaps your MSP needs to reassess your current services, or offer an industry-specific solution, or create an entirely different suite of services. Regardless of the circumstances, you don’t want to outgrow your MSP, so make sure that your potential partner can scale with your needs.

4. Describe the engagement team structure and their experience. Can I meet them?

Clearly, you will want to get to know the people with whom you are entrusting your business. How many clients do they have? Can they give your business the attention that it requires? Beyond the bios and résumés, however, keep in mind that cultural fit is important. Do you get a good feeling interacting with the engagement team, or is there a vague sensation that something isn’t right? Remember that the whole team has to be impressive, not just its leaders.

5. How well does your geographic coverage overlap with my business?

This is especially crucial if you have multiple offices or international operations. But it’s relevant even if you have just one location. Will their team members be available to come into your office, if needed, or will they have to hop on a plane? Will you be expected to adjust to multiple time zones and a far-flung team, or will there be a point person in your city? In essence, to what degree can you count on your MSP to work around your schedule, not the other way around?

6. What additional services do you offer?

You’re well aware of the reasons why you’re hiring the MSP, of course, but part of running a successful business is keeping an eye on the future. So if new needs come up, or delayed projects come to the forefront, will the MSP be able to tackle them? For example, you may be engaging the MSP for managed IT services, but perhaps they can help with your cybersecurity or an ERP selection effort down the line. Can they handle both? You will want to have a clear idea of your MSP’s additional capabilities and how you can access them, rather than getting stuck in a situation where you scramble for a new provider later.

7. What training resources and communication strategies do you use?

Nobody likes jargon. We all want concise statements and clear communication. It seems, however, that we rarely receive this.

You want to be sure that your MSP not only grasps the issues, but can explain new technologies or changes in procedures to your people. How does the MSP train users and ensure the adoption of new technologies and business processes? How do they communicate innovative ideas? Most importantly, will they be proactive about change management, or will they leave it to you to figure everything out? Good MSPs come to the table with well-established learning platforms and customized user journeys.

This is where your MSP’s soft skills come into play. Your provider should make you feel confident in their ability to implement solutions, of course, but an effective MSP will also put you at ease when it comes to communicating the new approach.

8. What is the procedure for handling cyber-related incidents?

Basically, what if something goes horribly wrong? You do not want to hear, “That will never happen” or “We’ll address that if it comes up” or “Just trust us.”

Your MSP should have a coherent approach for dealing with a crisis. What is the incident-response plan? What is your responsibility? What is the MSP’s responsibility? When does the issue become a bigger problem? Of course, you hope that it will never happen, but you need to know in advance how your MSP will react in an emergency.

9. What best practices, frameworks and certifications will you bring to the engagement?

Your MSP should be eager to discuss things like ITIL and SOC 2 compliance. This evidence of their competence is not a nice-to-have. It is a basic requirement and a crucial part of ensuring that you are hiring the right provider for your business.

What level of competency does your MSP display from a technology perspective? Ideally, your MSP goes beyond the basics and stays on the cutting edge of innovation.

10. What service-level agreements (SLAs) do you offer?

Defining the measurable metrics that are within your MSP’s control is an integral part of choosing the right provider. Has your MSP set reasonable standards for uptime, response time and other benchmarks? Who will address certain problems, and which issues are out of scope? What are the proposed remedies for common issues, and what are the penalties for failing to take corrective action? Agreeing on the details of the SLA increases the odds that there will be no unpleasant surprises or disagreements once the engagement gets going.

11. How do you go about strategic planning, roadmapping and staying current on trends?

You don’t want to drag your MSP uphill to meet your needs. Nor do you want to restart the engagement because your MSP planned poorly or overlooked key changes in your industry. So find out how your MSP onboards new clients, and how you can help ensure that the engagement begins with a solid foundation. Ask about quarterly business reviews, reporting on SLAs, next steps, regular updates and other fundamental aspects of the communication process. Be sure to verify that your provider stays on top of developments and won’t need you to nudge them into action. Your MSP should be proactive in offering ideas and providing insights, rather than waiting for you to lead them to a solution.

12. How do you assess if an engagement has been successful?

What will be the return on your investment? You’re looking for hard data, of course—items laid out in your SLA as well as other objective measurements of improvement. But in addition to the standard metrics used to gauge success, how does your MSP evaluate concepts like client satisfaction? Are they interested in having a positive impact on your organization’s culture, or are they just focused on executing their tasks? Ultimately, how will your MSP determine if the engagement met or exceeded your expectations, and do you agree with those standards?

A good MSP can solve problems that have long been hindering your organization. They may also resolve issues that you didn’t even know you had. But even more than that, a solid MSP can help develop your staff. They can coach and mentor your people. They can bring in expertise and experience that go beyond fulfilling the stages of the contract, and help take your business to the next level.

Every organization has unique factors that contribute to determining an optimal cost containment strategy. Managed service providers can help organizations make the best possible decisions related to cost optimization, as well as provide function-specific services on an outsourced or co-sourced basis to help your company better manage costs. When you work with a partner that has experience with your type of business and industry, it can provide guidance and services that strengthen your cost containment tactics in both the near and long term.

Are you curious about how your organization could better support cost containment and improve cost management? Here are five ways outsourcing can help with cost optimization.

1. Providing insight on the impact of cost-related decisions

Organizations that are seeking to manage costs often consider making big moves. This might include an organizational restructuring, supplier rationalization to streamline spending or sunsetting products or services.

Such major changes can have substantial effects on an organization, but they may not always play out as intended. However, time and resources often prohibit a company from examining all the potential ramifications of the changes being evaluated.

A managed service provider with proven experience evaluating cost-optimization or value-creating actions and strategies can provide a stress test to validate your big plans before your organization puts them in motion. Drawing on its wide expertise with similar clients and situations, the provider can also offer other suggestions for cost containment that you may not have considered.

2. Lowering high-cost turnover expenses for in-demand skills

Companies often outsource particular positions because individuals with the skillsets they need can be difficult to find or prohibitively expensive to hire in-house, or can quickly outgrow their roles and want career growth opportunities. For many organizations, finding and keeping skilled talent can be costly; however, they’re essential for mission-critical capabilities such as ensuring the reliability of core applications and protecting an organization’s users and data against the risks of cybercrime.

IT outsourcing can be the answer, especially in the area of cybersecurity, where there’s been a critical labor shortage both in the U.S. and internationally for more than a decade. An effective cost containment strategy could include managed IT services, managed application services, managed security and virtual CISO services. Because these are some of the most in-demand roles, the cost savings of outsourcing these services can be significant.

3. Improving process efficiency wherever needed

Identifying and acting on both granular and big-picture opportunities to trim time and costs in business processes can be challenging for organizations. Managed service providers with experience designing efficient systems that optimize how people, processes and technology work together can help companies recognize and take advantage of these opportunities. 

Choosing a managed service provider with industry- or function-specific expertise allows services to be targeted to your organization’s particular needs. For instance, processes that are largely manually driven, are frequently executed, or take a moderate degree of effort and touch more than one key system to complete are prime candidates for robotic process automation (RPA). Daily tasks like accounts payable and accounts receivable, for example, where there are numerous, time-consuming and repetitive manual activities that are easy to automate, would benefit from RPA. By automating these processes, RPA can deliver real value as well as significant time and cost savings. It can also free up staff to do higher level work like strategic initiatives, which might have more impact on company growth.

Often, organizational and financial inefficiencies result from a lack of business process integration. When a managed service provider helps with integration, it can streamline governance and workflows, delivering both cost and time savings for an organization.

4. Keeping business systems aligned and efficient during growth

Growth brings both opportunities and challenges for organizations. Whether a company is experiencing organic growth, going through an M&A or rapidly adding new employees, effective business process integration is essential to achieving cost containment and profitability goals. Business process integration also helps facilitate faster stand-up of new systems and applications, helping to deliver technology cost optimization.

Experienced managed service providers understand how to manage growth effectively, and they can apply best practices to help your organization scale quickly. For example, a provider with a wide portfolio of managed service offerings can help with managing through an M&A transaction management for an M&A, developing a business process integration plan, quickly standing up the newly integrated systems for that plan and then providing IT managed services and consulting over the life of your systems.

5. Enabling cost-effective agility for never-ending change

To be cost efficient in today’s globally and digitally linked economy, organizations need to adapt to change quickly and effectively. Such change could be driven by a wide range of factors, including customer behavior; economic, social or environmental events; or new standards and regulations. Whatever the cause and whenever change occurs, companies must be ready to respond.

Providers with industry-specific business experience and a large portfolio of services can support your agility by providing new or expanded services as needed. For example, the recent pandemic spurred a host of new requirements for workplace safety. In response, many companies turned to service providers to help them quickly build applications to communicate and execute the new safety rules. With the help of an always-on provider, organizations can spin up such digital solutions rapidly and cost effectively, enhancing their competitiveness.

The unexpected absence of a critical role, such as an IT leader, is another situation that requires organizational agility. Here, the problem could be solved by implementing managed IT services and/or hiring a virtual IT leader for a specific period of time. Such an approach can be much more cost effective than searching for a temporary replacement using internal resources.

Solutions for effective cost control

In today’s global business environment, controlling costs is essential to an organization’s success. Yet many organizations lack the in-house expertise and resources necessary to identify and execute effective cost-containment strategies. Outsourcing to an experienced managed service provider can help.

A strong managed service provider can optimize your process efficiency, keep business systems aligned during growth, share expert insights to guide cost-related decisions and enable organizational agility in the face of change. Choosing a provider that offers a subscription model with a predictable monthly fee further supports cost containment. The guidance, services and assistance that an experienced managed service provider offers can help companies of all sizes make smarter decisions to better manage costs. 

Seeking new ways to cut costs in your organization? Listen to our podcast to learn how outsourcing can optimize your back office.