Managing business risks is an important aspect of running a Microsoft CSP business. As the business grows in volume and revenue, CSPs are faced with numerous risks that can hamper the long-term business viability. Managing a successful Microsoft CSP business involves proactively identifying and mitigating potential business risks one way to manage risks is to use a CSP billing automation tool. As a Microsoft CSP, you can significantly benefit by taking steps to manage risks for your business. Some of the reasons why you need risk management for your Microsoft CSP business are:
- Improves customer satisfaction– as a Microsoft CSP you are responsible for managing the end-to-end lifecycle of your customers. Your customers depend upon you to manage their license purchases and renewals, their subscriptions, and other related services. Anticipating and mitigating risks that can affect the operations of your customers leads to satisfied and happy customers.
- Leads to profit maximization- risk assessment and mitigation will offer you many opportunities to save costs and time. It helps you make better-informed decisions that can result in improved profitability. It can help you in planning your budget better so that in case of a period of reduced cash flow, you are able to maintain business profitability.
- Ensures compliance- as a Microsoft CSP, you have to remain compliant with many regulations. Failure to abide by any regulations can land you in legal problems. Risk management can help you assess potential regulatory risks and resolve them. By ensuring compliance you will be safe from financial and legal penalties.
- Business continuity- risk management allows you to have fewer disruptions in your business. Risk management enables you to become more proactive and capable of forecasting issues. You can predict issues at an early stage and take measures to ensure business continuity. Having a high rate of business disruptions can negatively impact your reputation and drive away business.
- Reduces inefficiencies– risk management involves looking at each and every aspect and business process carefully. This will allow you to weed out any inefficiencies in your Microsoft CSP business. You can incorporate processes to improve operational efficiency without exposing your business to any new risks.
Though risk management is necessary for every Microsoft CSP business, there are many challenges faced in risk management:
- Identifying and prioritizing risks– Microsoft’s CSP business is complex and different factors can impact the business. There can be risks associated with customers, third-party vendors, data and privacy, etc. Competitors and new products and offerings by Microsoft can also pose risks for CSPs. As there are various sources of risks, it becomes very difficult to anticipate all of them. Apart from risk identification, CSPs also have to prioritize the risks. Different risks have different impacts on the business making it difficult to decide which are critical and which need to be addressed first. Changing market conditions and lack of information about risks also make the task of risk prioritization difficult.
- Allocating a budget for risk management– Microsoft CSPs have to spend money on managing risks. Risk management has upfront costs in terms of risk identification, analysis, implementation, and control. In the short term, these costs can increase expenses and put a strain on your finances. You will have to spend money on hiring and training staff for risk management, investing in technology, etc.
- Formulating a risk management plan– Microsoft CSPs lack the necessary resources to design and implement a risk management plan. A risk management plan not only has to identify the risks but also weigh the costs of implementing the risk management against the costs of not resolving the risk. A limited budget for risk management also makes it difficult to fully implement the risk management plan. There can be unforeseen risks that make it difficult to develop strategies for mitigating the risks.
- Regularly updating the risk management strategies– constantly changing business environment coupled with policy and regulatory changes necessitates Microsoft CSPs to continually update their risk management strategies. Risk assessment and mitigation become difficult when risks are changing too quickly.
Business risks for Microsoft CSPs
There can be various internal and external factors that can pose a threat to Microsoft CSPs. There could be strategic risks, financial and reporting risks, compliance risks, and operational risks.
As a Microsoft CSP, you can face unintentional losses in your revenue. These revenue losses might be small that they might go unnoticed, but they can significantly impact the financial health of your business if left unchecked. As per the State of Monetization report by MGI Research, “42% of companies experience revenue leakage.” There can be many reasons for revenue leakage in a Microsoft CSP business. In the absence of a CSP billing automation tool, there could be billing errors such as not billing the customers for services used or mistakenly billing them at lower rates. Without a CSP billing automation tool, there could be problems in manually tracking customer usage, especially when customers purchase additional services in the middle of their subscriptions. Not keeping a tab on the promotional pricing and discounts offered can also lead to revenue losses. Revenue leakages lower your profits and reduce your ability to invest in the growth and expansion of your business.
Customer churn can lead to a decline in the recurring revenue for Microsoft CSPs. A high churn rate impacts the profitability of your business making it harder to invest in scaling your business. When more and more customers stop doing business with you it damages the reputation of your business. A high churn rate also makes it difficult for you to predict expected customer growth and plan for it. There can be many reasons for customer churn like poor customer service, inability to address the beads of the customer, cheaper pricing offered by competitors, lack of customized solutions, absence of self-service capabilities, payment failures leading to involuntary churn, etc. Losing too many customers also impacts your partner capability score and lowers your chances of becoming a solutions partner. You can read this blog to learn more about the partner capability score.
Every business has to remain compliant with regional as well as industry-specific regulations. Similarly, as a Microsoft CSP, you have to remain compliant with different regulations and standards. These include regulations related to data privacy and security. Non-compliance can lead to financial and legal penalties. Providing privacy and security to customers is among its top priorities for Microsoft. As a CSP, you have to implement the mandatory security requirements and adhere to security best practices without which you will be unable to transact. You can learn more about the mandatory security requirements here.
The market conditions change constantly and can impact on your Microsoft CSP business. A few changes you might experience are customer demands, changes in regulations, economic slowdown, the emergence of new players, technological changes, etc. These market changes can reduce the demand for cloud services, the increased competition makes it harder to attract customers and close sales and complying with regulatory changes can increase business costs as more investment will be needed for strengthening the security infrastructure. Failure to adapt to the changing market conditions can lead to loss of market share, declining revenues, and potential cash flow problems.
Loss of talent
There can be many reasons why employees might choose to quit. Some of them are low compensation, limited career growth, ineffective leadership, inefficient business processes leading to employee fatigue, better opportunities offered by the competition, etc. According to a survey by Gartner, “Poor Talent Strategy is the Top Emerging Risk Worrying Organizations.”. For a Microsoft CSP, losing talent can lead to lower productivity as it takes time to find and hire new employees. In the meanwhile, the existing employees are either overworked or there are delays that impact the work. Recruiting new employees also increases the hiring and training costs of the business. A long-servicing employee has a large amount of institutional knowledge that is lost in case the employee quits. A high attrition rate can also impact the morale of the remaining workforce and customers may view it as an unstable company.
Entry of new entrants in the Microsoft CSP business poses to be a risk for existing CSPs. Globalization, the emergence of disruptive technologies, market saturation, difficulty in adapting to changing customer needs, aggressive pricing and marketing strategies by the competition, inability to differentiate their business, access to limited resources, and frequent changes in Microsoft policies make it difficult for CSPs to compete successfully. Intense competition leads to a decline in market share as CSPs may find it difficult to attract and retain customers. It also lowers profit margins as CSPs may need to significantly lower their prices and offer discounts to close deals.
Deploying various business tools can increase the efficiency of different business processes. For smooth functioning, these tools need to be interconnected and work in coordination. Managing the billing of a large customer base can be quite challenging as there is a need for a lot of coordination between different teams to generate accurate invoices. For optimal business performance, the different tools need to be integrated with the CSP billing automation tool. You can read more about how integrations can enhance Microsoft CSP billing automation here.
As a CSP you need to look out for compatibility issues when integrating your existing systems with new software. You also have to consider the risk of data loss, data security, and data duplication when migrating data.
Changes in Microsoft policies
Changes to the Microsoft CSP program and other policy changes can lead to business risks for CSPs. There could be changes in the terms of the Microsoft CSP program, changes in prices, the introduction of new products, or discontinuation of earlier offerings, changes in certification requirements, new compliance requirements, etc. Failure to keep up with the changes in Microsoft policies can make it difficult to remain competitive and profitable.
How CSP billing automation can help manage risks
Managing a great volume of customer billing manually can lead to business risks. Using a CSP billing automation tool can help achieve a higher level of preparedness and help manage business risks.
Automated invoicing to plug revenue leakages
A CSP billing automation tool can help you plug revenue leakages. The CSP billing automation tool tracks customer usage in real-time making sure that customers are billed for all the services and products that they use. Automating billing also reduces human error so that customers are not billed at incorrect rates. A CSP billing automation tool can also help keep track of the payments as well as send timely reminders to customers regarding pending payments.
Reduction of employee fatigue with CSP billing automation
The manual billing process is mundane and time-consuming. As the volume of customers and billing complexity increase, employees can experience fatigue and burnout. This impacts their efficiency, lowers morale, and can lead to talent loss. A CSP billing automation tool can help reduce employee fatigue as they no longer have to spend their time and energy manually entering data and other repetitive tasks. With automated billing, employees can focus on more value-creation tasks and be more engaged in their work.
Gain a competitive edge with differentiation
You can leverage billing automation to differentiate yourself from the competition. A CSP billing automation tool can increase the accuracy and efficiency of your billing system giving you a competitive edge. You can differentiate your business by offering your customers bundled services that can help solve existing as well as any future problems your customers might face.
Increase customer satisfaction with self-service
A CSP billing automation tool with self-service capabilities empowers your customers to manage most of their subscription-related activities on their own. Customers are able to view their orders, upcoming renewals, usage, and billing reports in one place. They can browse the marketplace and place orders without any dependence on you. This helps your customers save time and the increased transparency helps build trust.
Lower involuntary churn with payment integrations
Limited payment options and repeated transaction failures including automatic payment failures can lead to involuntary churn. A CSP billing automation tool integrated with an external payment gateway will make payment collection easier, faster, and more secure. An external payment gateway will allow you to offer your customers multiple payment options such as credit and debit cards, ACH, bank transfers, etc. The external payment gateway integrated with the CSP billing automation tool can also handle automatic payment failure by sending an alert to the customer regarding payment failure and automatically retrying the payment.
Keep up to date with Microsoft policy and price changes
It is important to keep up with changes in the Microsoft CSP program. If you are unaware of the policy changes by Microsoft, you might unintentionally violate them and become non-compliant. Not keeping track of the latest Microsoft pricing can hurt your profit margins as you might be selling products at a lower price. A CSP billing automation tool with bi-directional sync ensures that the pricing is always up to date. Any price or policy changes that affect the CSP billing are reflected in the CSP billing automation tool.
Manage business risks with C3
Managing business risks is challenging but essential for the survival of Microsoft’s CSP business. You can manage business risks by leveraging pureplay Microsoft CSP billing automation. Partnering with C3 not only helps you optimize your operations and improve customer experience but also helps you reduce and manage risks in your CSP business. The following features offered by C3 can help you in risk management-
- Self-service– enhance customer experience with self-service. Allow your customers to have complete control over their accounts by giving them the option of self-checkout, the ability to view complete account details in one place and raise and track queries without any dependence on your customer service team.
- Integrations- run your Microsoft CSP business seamlessly with the host of integrations offered by C3. Automatic data flow from business software and accounting software reduces the risk of data loss and data duplication. C3 offers integrations with Professional Services Automation (PSA) software such as ConnectWise Manage as well as Datta Autotask and bookkeeping software such as QuickBooks and Xero.
- Secure payments– plug revenue leakages as well as keep the transactions and financial information of your customers secure with C3. C3 offers integrations to external payment gateways such as Stripe, Authorize.Net, Bill&Pay, MCB, and EziDebit. These payment gateways are secure and keep your system safe from safe from hackers and data breaches.
- Accurate invoicing– CSP billing automation tool reduces the risk of human errors in generating invoices. With C3 you can generate accurate and timely invoices. Billing the customer on their actual usage will help you reduce revenue leakages, improve cash flow, and build customer trust.
Apart from these, C3 offers many more features that can help you manage risks and help you achieve business goals. Book a demo to learn how C3 can help you.