Provade Perspectives

MSP or Self-Managed Program: 5 Factors To Evaluate (Part 1)

  

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by Peter Parks, Director of Product Strategy

In a recent meeting with a prospect I was asked whether we see more self-managed programs or programs run by an MSP.  The answer was quick and definite – we see more programs run by MSPs.  The follow-up question could not be answered as quickly – which is better?

Conventional wisdom is that it is best to have a program run by an MSP.  If one had to hazard a guess, knowing nothing about the client, this would be the answer with the best odds to be correct.  There have been studies conducted that have found greater compliance, better performance and lower pricing in programs run by MSPs.  But it is not always true.  What determines which way to go?  Here are two primary factors you should examine if you are not sure whether to go MSP or self-managed.

Spend
A simple place to begin is the amount of spend your program does, or should, have running through it.  There is not a magic number, but the smaller the total spend, the less likely there are multiple complicating factors.  A program with minimal spend (let’s just say less than $10 million annual throughput) is not very likely to be global or have a wide variety of labor categories.  If your program is relatively small, all in one country and only includes a few categories of labor, then you need to ask yourself what true value an MSP would offer.  Preferential pricing can be achieved by reducing the number of vendors, but keeping more than one can keep just enough competition to drive performance.

Geographical Dispersal
Is your organization highly centralized or spread-out?  When all of your services procurement occurs in a single, or very limited number of locations your ability to effectively self-manage increases.  If you have many production facilities and sales offices spread across the country or multiple countries, you could benefit from a large national or multi-national MSP who can monitor fulfillment and supplier performance and through their own network of offices might act as a supplier as well.

Stay tuned for three additional factors you should examine if you are not sure whether to go MSP or self-managed.