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How do you measure how much value your current MSP is adding?

It’s a given that no two organisations are the same. Just as no two individuals are the same. Therefore, what is perceived as “added value” to one, might not be perceived in quite the same way by another.


Despite the variances, which are unique to you and your organisation, there are certain key criteria that are useful to bear in mind when measuring how much value your current MSP is adding.


These include what financial value you’re getting from your MSP and whether your Service Level Agreement (SLA) is being met.


However, be sure you look beyond the scope of those criteria.


Yes, cost savings and hitting SLA metrics are objective ways of measuring value, but what about more subjective measures.


Things like:


  • Does your MSP provider work with you as a business and come to you with ideas and initiatives to improve things?
  • Do they provide outstanding customer service for users of the service?
  • Does your MSP supplier solve other talent problems for you?
  • How valued is your MSP supplier within your business?
  • Has your MSP made wider processes within your business more efficient?


For a comprehensive valuation tool to measure the value your organisation gets from your Managed Service Provider (MSP) please download our 35 Questions to measure your MSP's Value.


Financial value


The most straightforward way to determine what financial value you’re getting from your MSP is to agree a set of metrics with your internal finance team which you can then audit.


This allows you to easily assess how things were before your current MSP was put in place and to compare them to how things are now. Are you getting the value you thought you were going to get?


Ask yourself:


  • What savings am I making under this new arrangement compared to what we had in place before?
  • What were our costs under our previous supply arrangements (whether this was another MSP arrangement or a multiagency Preferred Supplier List) and what are they now?
  • What were the average agency fees we were paying before compared to what we’re paying in agency fees now?
  • What were we being charged for statutory costs before and what are we paying now?
  • When we were using a PSL arrangement, what were our invoice costs like compared to what they are now when we only have one invoice?

Rate cards are another area that fall under the “financial value” element of your MSP.


Typically, your MSP will establish a rate card for your most recruited roles, with low, medium, and high payrates for those roles.


To determine how much financial value your MSP is adding, look at what percentage of roles with a rate card have been hired into your organisation, and how many of them have been paid towards the medium to lower end of the payrate compared to the higher end.


Ask yourself:


  • Is our MSP controlling payrates on our behalf?


Direct fulfilment is also a source of information about how much financial value your MSP is adding.


If, for example, your MSP has committed to 90 per cent direct fulfilment, you want to ensure that commitment is being met, because going out to your 2nd tier suppliers can have a significant cost impact.


To accurately assess what percentage is being directly filled by your MSP supplier as opposed to your 2nd tiers, you must first strip out all your payroll workers. This means taking all workers sourced by you, that are payrolled through your MSP, out of the equation. You can then determine how many workers were directly sourced by your MSP, and how many by your 2nd tiers.


Ask yourself:


  • Is our MSP meeting its direct fulfilment requirements?
  • How much are we spending on our 2nd tier suppliers?

The financial metrics in terms of judging value are simple and easy to do.


Your internal finance team may have very clear rules about what can be quantified as a cost saving and what can’t. That’s why having that conversation with your finance team from the get-go is so important and agreeing those metrics upfront.


Only by having those audit rules in place at the start of the contract, do you have the mechanism to judge cost savings as part of the value process throughout your MSP contract. 


Ask yourself:


  • Is our MSP supplier producing reporting information on a consistent basis that allows us to determine what value they are delivering?
  • Is our supplier giving us cost saving data, to the agreed metrics, on a regular basis?


As part of this reporting, you can also ask your supplier to include other information to demonstrate what value they have delivered.



Service Level Agreement (SLA)

If set up correctly, your SLA is a great way to measure how well your MSP is performing in terms of delivery.


A key SLA metric is going to be around getting your roles filled within given timescales, that’s why before building your SLA, talk to your operational team and find out what good looks like to them. There’s no point setting a metric that states all roles must be filled within 5 working days if your hiring managers can’t work at that pace, because your MSP will never achieve it. Instead, find out what will add value to your operations team’s day-to-day working practices.


Remember, you need to think about your SLA from your business’s perspective and to tailor it to your needs. Using standardised SLAs will not necessarily demonstrate value for your organisation.


Ask yourself:


  • Is the SLA we have in place relevant to our organisation?
  • Does our MSP demonstrate value as we have defined it within our SLA?


To ensure you are getting objective and accurate data about your MSP’s SLA performance, use your Vendor Management System (VMS), a cloud-based software platform that finds, engages, and manages your contingent workers and 2nd tier suppliers, to capture that data. This allows for greater transparency, no discrepancies, and ensures that everyone involved is on the same page.


Another thing to remember is that SLAs aren’t set in stone and can be changed.


If your hiring managers and contractors are complaining, and yet everything on your SLA report is green, then there’s something wrong.


On the flipside, you might have a lot of red on your SLA report and assume that your MSP is not performing and yet your operations team cannot speak highly enough of them.


Ask yourself:


  • Do our SLAs reflect our expectations?


The most efficient way to determine if your SLA is meeting your expectations is to have a RAG status metric so that you can judge how your MSP is performing.


A RAG status metric allows you to better interrogate the data and helps you to understand what value your MSP is delivering. It allows you to better see where their performance is lagging and where the issues are.


Do you have metrics within your SLA for your internal teams?


Your MSP might be delivering value and doing an incredible job, but what’s slowing them down and preventing them from hitting those SLA metrics, is the way your internal processes are set up. For example, if your hiring managers take over a week to provide feedback on candidate submissions, how can your MSP fill jobs in 5 days or less. By building in metrics for your operations team, you will more easily see where some of the issues lie.

Ask yourself:


  • Are there elements of our recruitment process internally, stemming from our operational teams, that are impacting our MSP supplier’s ability to meet their SLA?



Subjective metrics of how much value your current MSP is adding


Cost savings and hitting SLA metrics are objective ways of measuring value.


But how has your MSP changed over time? How has it evolved? How does your MSP provider work with you as a business and does it come to you with ideas and initiatives that can improve things?


No MSP is going to get everything right from day one and there will always be a reason for change over the four / five years of your contractual agreement.


Your business will change, the market will change, and therefore you’ve got to make sure your MSP provider’s committed to making those changes with you.


A great way of understanding what value your MSP has delivered, is to look at any change initiatives that your MSP provider has brought to the table, and to quantify the impact that they have had on your business.


Ask yourself:


  • Does our MSP come to us with ideas and initiatives around improving process, reducing costs, improving satisfaction?
  • Does our MSP have a ‘continuous improvement methodology’ in place that allows us to track what initiatives are being put forward?
  • Of those initiatives, which ones have we embedded and how do we track the value of those?
  • Does my MSP provider have a mechanism in place where we regularly and consistently discuss a range of different ideas that they think will add value to our business?
  • Do we have a reporting progress in place about what changes have been made and what the cost savings, process efficiencies, and satisfaction gains are from those?


You know you’re in a good partnership with your MSP when they’re focused on building a long-term relationship with you that delivers value.  An MSP that will demonstrate their commitment to continuous improvement by making changes to their delivery model on an ongoing basis.


What you want is an MSP that constantly looks at the ways of working with you and thinking:


  • How can we do this better?
  • How can we do it more efficiently?
  • How can we do this at a lower cost?
  • How can we do it in a way that will increase the customer satisfaction feedback that we get?


Evolving and developing as an MSP, as a service provision to what the rest of your stakeholders need, is one of the biggest areas that MSP providers tend to fall down on.


Revisit your MSP provider’s tender / proposal document

Another way to benchmark the value you’re getting from MSP provider is to re-read the tender / proposal document they submitted when they bid for your business.


Look at some of the ideas they put forward. They would have talked about innovation, adding value, cost saving measures, and process efficiencies. How many of those things have been delivered?


Think about the things your MSP provider mentioned in their document and ask yourself, would it add value to our business if:


  • Those metrics were being hit?
  • That level of performance was being attained?
  • Some of those processes were put in place?
  • Some of those configurations to the technology were being delivered?



By re-reading that tender / proposal you will get a good idea if what you were promised is genuinely being delivered, and that gives you a good idea of whether you’re getting all the value out of your supplier that you possibly could.


Service level experience


Having a measure of the value your MSP provider is bringing from a service perspective is equally important.


The experience your MSP provider gives to your hiring managers, your internal stakeholders, the temporary workers in your business, and the candidates who are applying to your organisation, is another great way to measure how much value your MSP is adding.

To assess this, you need to use an objective measure of satisfaction like a Net Promoter Score (NPS), a measure used to gauge customer loyalty and satisfaction.

Ask yourself:


  • How much do the people in our business really enjoy working with our MSP provider?


You would expect an MSP provider to have an NPS score of more than 50, which is classed as very good. If they’re great, they should be getting a score of 60+, which is excellent, world class level.

Value isn’t always financial.


If you have unhappy people in operations or if you have unhappy temporary workers, that is going to cause problems for your business.


For example, if operations are unhappy and don’t like using your MSP supplier and your hiring manager community NPS scores are very low, even if your SLA is being met, they will start going outside the process and using other suppliers. This not only introduces contractual risk, but also means your costs will go up.


If you’re getting poor NPS scores from your temporary workers, this is an issue in terms of value because what are those workers saying about you as an organisation when they leave? Does it impact the quality of temporary workers that you can attract going forward? Does it mean that your temporary workers are leaving their assignments early?


This causes problems because it could mean you’ve got this continuous churn, and that you’ve got individuals who are taking knowledge out of the business. Which means as an organisation you’re having to spend more time to onboard and train new people, which means more cost.


So NPS scores aren’t just a value metric in terms of how happy people are. There is a financial and a process efficiency element to what those scores bring with them.

Getting that service feedback will help you understand the value your MSP is adding.


How valued is your MSP supplier within your business?

Who is the “go-to” within your business if you have a talent problem? How often do people in your business reach out to that “go-to”? If the answer is your supplier, then that can give you an idea of how valued they are within your business.


Although your supplier might work within the temporary worker and contingent space within your business – and perhaps they only work in one area of your business (you might have one MSP provider for IT, another MSP for professional staff, and another MSP for admin staff) – ask yourself:


  • Do they add value in other areas outside of their main contractual agreement?
  • Do they get involved in other areas of talent and do they solve other talent problems for us?
  • Have they supported us with permanent hiring when we’ve had a spike in demand?
  • Have they helped us with our early careers hiring?
  • Have they seconded people from their team into our permanent resourcing team when we’ve needed to fill a gap?
  • Have they supported us with screening and onboarding?
  • Have they supported us with running our internship programme?
  • Have they supported our organisation with community engagement projects?


Don’t just look at where your MSP provider may have added value within the scope of their original agreement. Instead, look at where they’ve added value to your business beyond their remit. And if they are supplying additional services, make sure that you understand and measure the performance effectiveness of those, as that is another great indicator of how much value your MSP provider is bringing to the table.


Think about how your MSP has demonstrated ways in which they have made wider processes more efficient.


There are many great metrics of efficiency within the recruitment process that measure how much value your MSP provider is adding.


Things like:


  • How many CVs were submitted?
  • How quick was it to interview?
  • How quickly did they give feedback to the interviewee?
  • What was the overall time-to-hire process?
  • How long did it take to onboard somebody?


However, there are many efficiency gains that can be achieved within your MSP that lie outside the typical things that get measured, and that are still key to your business.


Things you might not have built into your SLA but have big impacts on how your MSP add value.


Efficiencies with your invoicing process.


Ask yourself:


  • Is my accounts payable process now more efficient?
  • Is my invoicing process more efficient?
  • Is everybody using the same source data that means the number of errors and queries has been significantly reduced?


When you think about those areas of efficiency, either build them into your SLA or track them separately, because all those questions add significant value in terms of how efficient the invoicing process is.


What about process efficiencies in terms of approving timesheets?


Ask yourself:


  • How long does it take to approve a timesheet?
  • How many timesheets were approved late?


If timesheets are being approved late, this may have an impact on when workers get paid. If workers aren’t paid on time, they can become frustrated. They may then leave your business early, and you lose talent from your business.


Has your MSP provider come up with ideas how to fix that? Have they installed a timesheet approval process and set deadlines and reminders to chase if timesheets haven’t been approved?


Process efficiencies in terms of generating Management Information (MI).


Ask yourself:


  • Do we get that in a format we want?
  • Does everybody use it?
  • Does everybody value it?
  • If not, how quickly can changes be made to that?


The insight that your MSP supplier provides you with is a key indicator of the value that they’re delivering. And if your stakeholders aren’t reading those MI reports, if they don't contain the right data, if they’re difficult to read, then that’s an area of improvement you can gain.



To conclude


If you’ve agreed your set of audit KPIs from the outset.


If you’ve agreed your SLA up front and are committed to changing and adapting that as your business changes.


Then, when you want to measure how much value your current MSP provider is adding, of course look at the financial value you’re getting and whether they’re meeting your SLA.


These are all great metrics at helping you understand what value your MSP is adding and are all relatively easy to track.


But be sure you look outside the scope of that.


Remember to ask yourself:


  • What initiatives and commitment to continuous improvement has our MSP shown? Have we got tangible examples of this happening so that we can understand what value that brings to our business on an ongoing basis?
  • What sort of service level feedback do we get to measure satisfaction?
  • Has our MSP provider become our go-to supplier for anything to do with talent?
  • What ways has our MSP provider worked with us as a business to highlight areas of process efficiency, and what has it done to put things in place to address that?
  • What other services has our MSP provided, to support our business?



All these things add up to the value that they’re delivering for your business.


For a comprehensive valuation tool to measure the value your organisation gets from your Managed Service Provider (MSP) please download our 35 Questions to measure your MSP's Value.



If you need more help with measuring how much value your current MSP is adding or are interested in exploring ways of how you can better improve your process efficiencies, contact us by filling out the form below.