Service Leadership, Inc. Finds Continuum’s Unique Business Model Helps its Partners Achieve Higher Margins, Withstand Downward Market Pressures and Operate More Efficiently Compared to Other MSPs
BOSTON – July 19, 2017 – Continuum®, the exclusive provider of the only vertically integrated IT service delivery platform that enables MSPs to scale rapidly and profitably, today released an analysis from Service Leadership, Inc., the leading financial and operational benchmark organization for MSPs and IT solution providers worldwide, that indicates that Continuum’s partners are able to achieve greater profitability than other MSPs as a result of the company’s transformative business model.
Continuum’s unique model provides MSPs with an integrated, on-demand IT workforce, allowing them to grow their client base without needing to add costly technicians to their payroll, so they can focus resources on business growth. By comparing financial data from a random sample of 140 of Continuum’s partners in the Service Leadership Index® (S-L Index) to those in the S-L Index who do not use Continuum, the analysis illustrated the real, long-term effects of this business model to not only achieve greater overall profitability than their peers, but withstand downward market pressures.
“Normally, we don’t compare any vendor’s partners to those of their competing vendors, because we know that the partner’s Operational Maturity Level© has a much greater impact on their financial performance than does their choice of vendor,” said Paul Dippell, CEO, Service Leadership, Inc. “However, Continuum’s business model allows the MSP to shift material operational responsibility, financial risk, and management effort, to Continuum for a flat fee. We wanted to see if this provided their partners with a measurable financial advantage. Because of the size of the overlap between their partner community and our benchmark community, we were able to examine this for the first time in a useful way. For the 140 partners who were in that overlapping group, the analysis showed a material advantage for these partners using Continuum across key profit and growth measures.”
Achieving higher margins and withstanding market pressures
The analysis showed that, of the MSPs in the top quartile of the S-L Index, Continuum partners achieved gross margins on managed services that were on average 8 percentage points higher than their non-Continuum peers. And, among all MSPs in the S-L Index, Continuum partners recorded Adjusted EBITDA figures that were on average 7 percentage points higher than their peers using other platforms.
Furthermore, while the MSPs who did not use Continuum saw a decline in managed services margins of 4 percent from 2012 through 2016, Continuum’s partners saw their margins on managed services hold steady on average during that same period. In addition, they grew their Adjusted EBITDA dollars at a much faster rate. Continuum partners with less than $5MM in revenue grew profit dollars 7 percent on average while MSPs who did not use Continuum realized just over 3 percent growth. Likewise, partners with more than $5MM in revenue grew profit dollars by 17 percent while their peers realized just under 13 percent growth.
These findings clearly illustrate the advantage of Continuum’s business model as MSPs strive to grow their business and increase profitability.
Carrying less overhead for a stronger, more agile organization
The success of Continuum’s business model was further validated by findings that Continuum partners were able to leverage the company’s on-demand, integrated IT workforce and spend less than their peers on overhead expenses. In fact, non-Continuum MSPs were found to spend 6 percent more on average on General & Administrative expenses between 2012 and 2016 than MSPs working with Continuum. That has given Continuum partners the ability to drive greater profitability in an increasingly competitive managed services market.
Driving the difference: a focus on growth and a commitment to the model
First Service Carolina, Inc., is an example of a Continuum partner that has leveraged this transformational business model to drive growth and profitability. The company manages more than 1,500 endpoints and, by leveraging Continuum’s platform, First Solutions’ technicians have transitioned from routine, break-fix-focused system administrators to high-value technical experts for their clients.
“Continuum’s model has allowed us to free our staff from the day-to-day management of our monitoring tools, thereby giving us the resources to focus entirely on our clients,” said Mike Abbott, Founder, First Service Carolina. “Our headcount is the same as it was when we started with Continuum, but we’re now managing twice as many endpoints and working on far more valuable, higher-level projects for our customers, driving greater client growth and profitability for our business.”
“We are pleased to have empirical data from a scientific study conducted by Service Leadership, a credible third party, that validates our underlying value proposition established as the basis of our entire business - that our competitive differences drive profitability and growth for MSPs by allowing them to leverage Continuum’s integrated, on-demand IT workforce,” said Michael George, CEO, Continuum. “That means MSPs can grow their client base without needing to hire new technicians and increase payroll, and can therefore invest in other areas of the business. They can dedicate resources to higher-value projects that build the business, rather than focusing on mundane day-to-day, resource-heavy tasks. In fact, we saw that the highest-performing Continuum partners were all-in as far as leveraging our RMM, Help Desk and Backup solutions. This suggests that the correlation between use of our platform and profitability is exponential.”
To learn more about the Service Leadership analysis and Continuum’s transformative business model, click here.