In a crowded MSP / IT services market, the firms that thrive aren’t just those with the best tech — they are the ones with the sharpest insight into their financials, margins and operational maturity. For MSPs using ConnectWise (or comparable PSA / professional services software), the Service Leadership Index (SLI) is increasingly seen as the gold-standard benchmarking platform to help you get that edge.
At Brisan Accountancy, we specialise in guiding IT and tech firms to harness SLI (and related tools) fully — from data preparation to interpreting metrics, optimising KPIs, and translating insights into profit growth and higher business value.
What Is the Service Leadership Index (SLI)?
The Service Leadership Index (also marketed as the S-L Index) is the industry’s most robust benchmarking system for IT solution providers (TSPs), encompassing MSPs, VARs and hybrid models.
Key features and characteristics:
- It collects quarterly financial and operational data from participating firms globally and benchmarks across more than 80 metrics.
- It includes diagnostic reports such as the Fundamentals Diagnostic Report (FDR), which analyses about 17 core metrics (and up to 68 more in deep-dive mode) — e.g. gross margins, SG&A, compensation, cost structure.
- The SLIQ tool (Operational Maturity Level) overlays an operational maturity assessment and prescribes action plans to raise maturity and profitability.
- It offers a Budget / Proforma module, enabling firms to build budgets, allocate quarterly expectations, and compare actual performance vs plan.
- SLI is now part of the ConnectWise ecosystem (post acquisition), reinforcing its alignment with MSP technology and operations.
In sum: SLI gives your business a mirror — showing you where you are, how you stack up to top-quartile peers, and where to focus improvement.
Why IT / MSP Firms Should Care: Profit, Valuation & Discipline
Using SLI isn’t just a “nice to have” or vanity metric. It drives real business outcomes, especially in IT service organisations:
1. Benchmarking for Clarity: “What Good Looks Like”
Without benchmarking, your financials can only tell you so much in isolation. SLI provides a peer-anchored frame of reference:
- You see not only your gross service margins, but how they compare to best-in-class peers in your business model (MSP, hybrid, product + service).
- You can analyze cost line splits — for sales / marketing, general & admin, compensation, and how those differ vs benchmarks.
- With SLI’s “Best-in-Class-O-Meter” (in deeper reports), you can run “what-if” analyses: “If I reduce my cost base by X, or raise margins by Y, where do I land?”
This insight helps you spot weak spots, validate assumptions, and prioritise investments where the ROI is highest.
2. Driving Enhanced Margins & Operational Maturity
Benchmarking is just the starting point. The real value lies in closing the gap toward top performance. SLI’s SLIQ module helps you:
- Assess your Operational Maturity Level (OML) across domains—financial discipline, service delivery, compensation, sales, strategy, compliance.
- Receive a customized, prioritized action plan tailored to your firm, with recommended practices and tools.
- Track progress over time, with iterative improvements to process, automation, staffing, profitability levers.
Firms that do this well can see dramatic improvements in gross margins, lower inefficiencies and tighter cost control.
3. Boosting Valuation & Shareholder Value
Strong margins, growth trajectories, clean KPIs and operating discipline all feed into how investors or acquirers value your business:
- The top quartile of TSPs typically earns 2.5× the EBITDA percentage of median peers, regardless of size or model.
- In recent SLI reporting, best-in-class firms have delivered 19 %+ adjusted EBITDA — even as revenue growth slowed.
- Because of that consistent performance, valuation multiples for high-performance firms have risen — in one year, valuations rose ~22% in some models.
- Institutional or private equity buyers look for scalable, repeatable, disciplined operations. Having SLI benchmarks and upward momentum can give your firm credibility and justification for premium multiples.
Thus, SLI is not just a benchmarking tool — it’s a framework for driving value creation.
Key Metrics MSPs Must Monitor (with SLI + Accounting Insight)
If you’re an MSP or IT services firm, here’s a non-exhaustive but core list of metrics where SLI benchmarking + expert accounting support can uncover hidden upside:
- Gross Service Margin (or Service Gross Margin %): how much margin you keep on your recurring / managed services after direct labour costs
- Service Multiple of Wages: billed service revenue ÷ wages of service staff. SLI / ConnectWise commentators suggest that to reach best-in-class, this should be at least ~2.5×.
- Adjusted EBITDA %: profitability metric that adjusts for owner compensation and normalising items — a key output in SLI benchmarking
- SG&A as % of Revenue: how much of your overhead is consuming top line
- Compensation Ratios: how much payroll (salaries, benefits, incentives) eats into revenue or margin
- Utilisation / Billable Hours (for those with time billing or hybrid models)
- Growth vs Expense Leverage: how well your revenue growth scale absorbs fixed cost base
- Budget vs Actual Variance: ability to hit forecasts and adjust in flight
- Operational Maturity Level (OML) — an index score showing how mature your processes are compared to peers
Having a specialist accountancy partner like Brisan means we can map your ConnectWise / PSA data properly into these metrics, ensure your chart of accounts aligns with SLI-style benchmarking, and help interpret weak spots or opportunities.
How Brisan Can Support You (as an MSP / IT Firm)
At Brisan Accountancy, we’re not just number-crunchers — we specialise in tech + MSP verticals, so we speak your language. Here’s how we can partner with your firm around SLI and financial excellence:
1. Data Preparation & Chart of Accounts Structuring
SLI benchmarking only works if your underlying data is clean and comparable:
- We help align your chart of accounts, ledger categories and revenue recognition practices so your data maps reliably into SLI’s required fields
- We assist with data extraction, transformation and formatting (from ConnectWise PSA, accounting systems, payroll, etc.)
2. Benchmarking Onboarding & Quarterly Reporting
- We guide you through onboarding your firm into SLI — setting up secure inputs, submitting quarterly data
- Each quarter, we interpret your benchmarking outputs: highlight variances, trends, strengths, risks
- We prepare tailored dashboards and reporting that integrate SLI metrics into your management reporting
3. KPI Interpretation & Improvement Planning
- We help you make sense of the “delta” — where your business is underperforming vs peers — and propose interventions
- Working with you, we prioritise action items from your SLIQ plan (or custom plan) in areas such as pricing, staffing, process, compensation, automation
- We assist in financial modelling (“what-if” scenarios) to assess impact of changes (e.g. raising utilisation, reducing non-billable load)
4. Budgeting, Forecasting & Valuation Support
- Using SLI’s Budget / Proforma module (plus our finance modelling), we help you build realistic, stretch budgets and drive accountability
- We support scenario analysis — what if margins improve by x, or growth slows — and help you plan accordingly
- As you mature, we work with you on exit readiness, valuation support, due diligence preparation (leveraging your SLI performance as credibility)
5. Ongoing Advisory & Audit Readiness
- We support you in regular reviews of performance, and help embed continuous improvement
- Because SLI benchmarking is semi-public and data intensive, we help with internal controls and “audit readiness” so your data (financials + operations) is defensible
- If you engage in peer groups or coaching (e.g. via IT Nation / Service Leadership peer groups), we act as your financial sidecoach, helping you extract maximum value
In short: we make SLI actionable, not just aspirational.
Integrating with ConnectWise / PSA Ecosystem: What Makes It Synergistic
Your choice of PSA / professional services tool matters. The better your tool integrates with your financial system and supports clean data flows, the more value SLI can deliver. Here’s why MSPs using ConnectWise (or similar mature PSA solutions) are in a good position:
- SLI is now part of the ConnectWise offering and is deeply compatible with the PSA / financial ecosystem.
- Many PSA systems maintain time, project, ticket, service and cost allocation data that feed directly into gross margin calculation logic
- With clean integration, you reduce manual effort in reconciling service labour costs, expenses, allocations
- Using SLI’s benchmarking plus PSA data lets you drill down: which client segments, service lines or geographies deliver stronger margins
- Because SLI updates quarterly, you can track performance improvements in near real time and adjust course
By pairing your PSA/ConnectWise system with SLI and strong accounting support, you get a feedback loop: insight → execution → measurement → iteration.
Case Snapshot & Recent Trends
Here are a few observed insights from recent SLI / industry data:
- In 2024, best-in-class TSPs achieved 19%+ adjusted EBITDA, even as many firms saw revenue growth decelerate.
- Valuation multiples rose significantly: one year saw ~22% uplift in valuation for high-performance firms.
- In Q4 2024, although managed service revenue growth slowed globally, MSP profitability remained near historic highs.
- The average managed service gross margin reached ~ 46.2% in Q2 2024 (a strong result), while product gross margins also rose.
- The “service multiple of wages” remains a critical lever — to break even, TSPs generally need 1.9× to 2.0×; to hit profitability, 2.5× is a benchmark for top performers.
These trends underscore both opportunity and discipline. You can’t just grow revenue — growth must be profitable, scalable and defensible.
How to Get Started: A Roadmap for IT / MSP Firms
If your firm is considering adopting SLI and leveraging it with accounting support, here’s a suggested roadmap:
- Engage a Specialist Accountancy Partner
Choose a firm (e.g. Brisan) that understands MSP / IT services, PSA systems, and benchmarking best practices. - Clean Up Your Financial & Operational Data
Align your chart of accounts, revenue / cost allocations, and ensure your PSA / accounting integration is solid. - Onboard into SLI / Benchmarking Platform
Submit baseline data, receive your initial diagnostic reports (FDR, SLIQ) and benchmarking context. - Interpret and Prioritise
With your accountant and management team, review benchmarking outputs, identify your weak margins or high cost sectors, and set focused improvement plans. - Deploy Improvements & Track Progress
Work through your action plan (via SLIQ or custom improvements), monitor quarterly results and adjust course. - Leverage Results for Growth & Value
Use your enhanced metrics for investor pitches, M&A, internal performance incentives, or expansion planning. - Iterate & Mature
Continuously feed back improvements, rebenchmark, and use your accountant as a strategic partner for growth.
Conclusion: Turning Benchmarking into Business Value
For MSPs and IT services firms, the Service Leadership Index offers more than comparative metrics — it gives you a proven playbook for closing the gap toward top-quartile performance. Paired with domain-aware accounting support, it becomes actionable intelligence rather than just data.
If you’re using ConnectWise (or a similar mature PSA / services platform), your infrastructure is already primed to feed into SLI insights. The missing piece is often translating those insights into strategy, execution and financial discipline — exactly where Brisan adds value.
