What are operational maturity levels (OMLs) for MSPs?

Service Leadership, a leading company that works to measure IT and managed service provider (MSP) performance, defines the five levels of operational maturity for solution providers. Often referred to simply as operational maturity levels (OMLs), OMLs help managed service providers (MSPs) measure how consistently, intentionally, and effectively they run their businesses. As I’ve previously explained in the Frankly IT blog:

“OML is a self-assessment framework that helps you see how consistently and intentionally your MSP operates. It is not just ‘what you do’ but ‘how repeatable and scalable it is.’”

Industry practitioners note that OMLs generate the most value not when a business reaches a specific level, but when OMLs are used to identify where a business’s operations are reactive when they should really be strategic. Moreover, OMLs are especially valuable if the results can be replicated regardless of who might be responsible for executing them.

What is an MSP? Where they differ and why it matters

OML 1 – Beginning

MSPs at OML 1 are primarily operating through trial and error, meaning largely inconsistent service quality and low to negative financial performance. At this level, MSPs have little awareness of what translates to results versus what harms them. Since there are no meaningful controls in place, day-to-day operations are reactive by default.

OML 2 – Emerging

OML 2 MSPs are defined by an initial awareness of the basic profit levers of their business, but are still inconsistent in their execution. Financial performance remains low to negative, controls are still minimal, and forward-thinking planning is limited. If incentive compensation exists, it is too small to make a significant difference, nor is it properly aligned with desired outcomes. Although this level displays more advancements than the last, progress is still limited as it is built on a fragile foundation.

OML 3 – Scaling

This level represents median financial performance results and service quality. Basic controls exist, accompanied by some forward budget planning, but attainment tracking is still limited. Incentive compensation is meaningful in scope but not tied to budget attainment. According to the Service Leadership Index, MSPs at this level are most often delivering around 9.6% adjusted EBITDA, which is a significant improvement over Levels 1 and 2, but still well below what top performers achieve.

OML 4 – Optimizing

OML 4 is where performance starts to spike more significantly. MSPs at this level have robust controls and consistently deliver high financial and service quality performance. Incentive compensation is meaningful in scope and tied to budget attainment, which directly translates to alignment with leadership goals and team execution. Financially, OML 4 MSPs consistently deliver adjusted EBITDA at or above 18.7%, which is about three times the median. At this level, operational discipline begins to compound into sustainable, high-performance outcomes.

OML 5 – Innovating

The operational characteristics of OML 5 are similar to OML 4, with MSP extending its capabilities beyond core IT services and into lines of business adjacent to IT. Companies operating at this level represent the highest tier of financial performance and are actively shaping where their business goes next, rather than simply responding to past performance. 

How are OML traits assessed, and what do they measure?

The OML framework is built around 30 to 39 distinct traits depending on an MSP’s predominant business model. Collectively, these traits work together to reveal how consistently management teams are executing across each critical component of their business. Drawn from real-world examples of both high- and low-performing solution providers, the OML framework goes beyond theory to truly define what distinguishes the industry’s top performers. The assessment examines how MSPs handle decisions and processes that every solution provider must manage, including:

• Time tracking: Is time being captured accurately and consistently? And is that data then being used to inform pricing and profitability decisions?
• Pricing: Is pricing simply driven by gut feel and a reaction to competition, or is it determined by a repeatable methodology?
• Service and solution delivery: Does the quality of your services and solutions vary depending on who is facilitating the work, or are products, services, and solutions delivered through defined, scalable processes?
• People management: Are hiring, onboarding, and offboarding decisions consistent and intentional, or are they improvised as needed?
• Offering development: Is there a structured process for developing, approving, rolling out, and driving new services or solutions to success? Or is the process inconsistent?
• Vendor management: Are vendor relationships truly actively managed and optimized? Or are they actually just transactional and reactive?
• Financial management: Does the business have a detailed budget with attainment tracking, or is financial oversight limited to reviewing results after a period is complete?

It is vital to remember that operational maturity is not designed to determine whether results are being achieved, but rather to determine whether your results are infrastructure-dependent or people-dependent.

How does operational maturity correlate to MSP financial performance?

There’s a strong positive correlation between MPSs with higher operational maturity and successful financial performance.

The Service Leadership Index reports that solution providers at a higher OML consistently deliver EBITDA percentage (earnings before interest, taxes, depreciation, and amortization) about three times higher than those with a median OML. Meanwhile, the firms with the lowest levels of maturity regularly operate at zero profit or below—at least until they either improve towards the median, cease to exist, or sell.

While OML can be linked with financial performance, operational maturity benchmarking is most effective when used diagnostically, rather than as a ranking system to optimize for. From my experience as an MSP professional, I’ve noted the following in the Frankly IT blog: 

“Where it goes sideways is when MSPs chase a higher OML just to wear it like a badge. They adopt tools and processes only because they think it will ‘bump them up a level,’ even if those things do not fit their size, culture, or clients. That is when maturity becomes performative.”

Instead, OMLs should be used as a mirror to surface where consistency is genuinely lacking, not just another box to check in hopes of improving performance. 

Does company size determine operational maturity?

A common assumption about operational maturity is that larger solution providers must be higher in OML. After all, growing and managing an enterprise-scale organization requires advanced management skills, right? The truth is, a company’s OML has nothing to do with its size.

We know this because it’s entirely possible, and sadly not uncommon, to find large solution providers—up to billions in revenue—who fail to generate profit and struggle to consistently deliver quality services. Conversely, it’s possible to find a $1 million solution provider who operates at OML 4 or 5 and gets impressive results. As I’ve previously noted:

“Just because another MSP runs at Level 4 does not mean you should. Their size, pricing, and margins might support that. Yours might not, yet. If you force enterprise-level frameworks into a lean MSP to ‘look mature,’ you are not improving. You are complicating.”

How can MSPs use the OML framework?

Where the OML framework falls short: 

To understand how the OML framework should be used, it is beneficial to first beneficial to discuss how the model can fall short. Here are a few ways OMLs can be used to cause more harm than good:

1. OMLs can encourage performative maturity instead of genuine improvement. If an MSP is focused on progressing to a higher OML as a status symbol rather than as a diagnostic tool, the result is processes and documentation that look good on paper but do not fit their business needs.
2. OMLs are not one-size-fits-all. While it may be tempting to want to adopt an enterprise-level framework for your small to mid-sized business, your business’s size, pricing, and margins are likely drastically different. Over time, this strategy can harm your business rather than scale it.
3. OMLs are not a pass/fail system. Using your OML as a scoring system rather than a diagnostic framework can lead to dishonest scoring that never addresses the underlying health of your business. 
4. OMLs require honesty. Similar to the former, an OML is only as useful as the information that was input while completing the assessment. If MSPs answer the assessment based on how they would ideally like to operate, or to achieve a certain score, the framework and your intended results will break down.

How MSPs can maximize the value of the OML framework:

Doucette perfectly summarizes the goal of the OML framework, stating that the best MSPs she knows use OMLs not as a strict standard that they must abide by, but as a guide to clarify what they are seeing:

“Think of OML as GPS. It shows you where you are and what routes exist. You still choose the destination.” 

From there, MSPs can ask honest questions to help determine which OML they fall in, as well as what they can do to improve. Here are a few questions Doucette recommends asking:

• Where are we consistent?
• Where are we winging it?
• What needs to be documented, delegated, or dropped?
• What services or skills do we actually want to add?

The most effective MSPs use OML to spark honest internal conversations. They don’t relegate their conversations to where they rank, but about where they are consistent, where they are improvising, and what investments will actually move the needle. Operational maturity, done right, is about intentional progress, not perfection.

What does it take for an MSP to move to the next OML?

Regardless of the level you start from, your path forward will likely follow a similar pattern. As an MSP, you will need to identify the specific traits that are causing your performance to stagnate. From there, you will need to pinpoint what changes need to be made and then execute those changes systematically in order to effectively monitor your progress. Progressing to the next OML does not mean overhauling all of your operating strategies. It is about making targeted, incremental improvements to the appropriate areas at the right time. 

For unbiased best practices on boosting your growth as an MSP, consider reading this foundations article from The MSP KB. The MSP KB is a user-driven resource that serves as a living encyclopedia that documents the experiences of MSPs across the globe. Built for anyone looking to improve their MSP knowledge, The MSP KB is a valuable resource at any stage of your operational maturity journey.

Need additional OML support? Consider Auvik as your MSP partner

Operational maturity does not happen overnight. Instead, it is built with a combination of consistent effort, clear processes, and the right tools. As an MSP interested in progressing your OML, you are likely familiar with operational drag. Reactive troubleshooting, inconsistent documentation, and manual network discovery all add up to form structural barriers preventing MSPs from moving up operational maturity levels, regardless of the effort invested. 

This is where an effective MSP partner becomes especially valuable. While there are a variety of options on the market, Auvik’s cloud-based software is the ideal partner for MSP network management. With automated network discovery, real-time monitoring, and continuously updated network documentation, Auvik breaks down the barriers that block your ability to scale. Not only will this speed up your processes, but it will also help you build an operational foundation that directly translates to high OML performance. For a full breakdown of the pros and cons of using Auvik for your MSP needs, check out this blog on the best MSP software.

Start your free trial of Auvik today and see how automating your network management processes can remove the operational friction preventing your organization from reaching its full capabilities.