In this day and age, achieving “operational efficiency” sure sounds like something every managed services provider (MSP) should want to do. It implies a smoothly run operation that is functioning at peak levels of performance and thus optimizing all the resources on hand. We oftentimes talk about MSPs needing to achieve operational efficiency, but what exactly do we mean by that and how can you actually accomplish this as an MSP?
The textbook definition of operational efficiency reads something like this, according to an entry on Webopedia.
Operational efficiency is the capability of an enterprise to deliver products or services to its customers in the most cost-effective manner possible while still ensuring the high quality of its products, service and support.
Operational efficiency is often achieved by streamlining a company's core processes in order to more effectively respond to continually changing market forces in a cost-effective manner.
In plain English, a company that operates at a high level of operational efficiency is streamlined, measured and always optimizing their day-to-day operations. At an even more simple level, companies that are operating at high levels of operational efficiency are lean, mean fighting machines—which can help them reduce costs and increase their profitability.
Why Operational Efficiency is So Difficult
Most businesses would love to claim this title, but few do. Why? It’s just not easy to do. In fact, some companies have entire teams solely responsible for managing and improving internal operations.
Efficient operations can be especially difficult to achieve for many MSP business owners because they have many other areas of their business to worry about. There is no cookie cutter approach to the MSP business and, like many other industries, each business has its own unique challenges and opportunities. Therefore, there’s no one-size-fits-all approach for creating efficiencies. However, there are some strategies you can leverage as an MSP that can allow you to become more efficient, and thus, more profitable.
Strategies for Improving Your Operations
Let’s take a look at a couple of options to consider which may help you take your operational efficiency to the next level. Keep in mind, these solutions are not simply magic pills. These are processes, not events. Sticking to these strategies can lead to many benefits for your business.
1. Use Products That Scale
One problem many MSPs encounter is that they implement custom solutions for each client. It’s definitely important to tailor your solutions based on the client’s needs, but you should leverage products that don’t force you to re-invent the wheel each time.
To prevent sacrificing growth and efficiency, MSPs can leverage products and solutions that are built to provide scalability and profitability. This is, in fact, what Continuum’s fully-integrated IT management platform is designed to do. And, thanks to a recent analysis from Service Leadership, Inc. (S-L), we can understand how Continuum partners are achieving higher growth and profitability by leveraging our products. By comparing financial data from a random sample of 140 of Continuum’s partners in the Service Leadership Index® (S-L Index) to those in the S-L Index who do not use Continuum, the analysis shows that Continuum partners achieved gross margins on managed services that were on average 8 percentage points higher than their non-Continuum peers. Because Continuum’s products and services are scalable and can be repeated across large numbers of clients, it allows MSPs to configure devices efficiently and achieve higher profitability.
2. Increase Devices Per Technician
In other words, automate where you can. Repeatable and consistent processes often require less people. The upside is that automated processes are predictable and can be relied upon. The downside is that when the human element of a high-touch business is removed, trust can erode and that leads to strained client relations. Make sure you don’t become too remote from your clients.
One of the best ways to become more efficient is increasing the amount of devices your technicians can handle. Employees are necessary, but they are expensive (even just finding talent for your business can be one of the largest hidden costs most MSPs don’t notice). If you can onboard more clients without needing to hire new technicians, that helps to eliminate a large cost for your business.
This is where utilizing a Network Operations Center (NOC) can be most beneficial. Continuum’s on-demand NOC workforce can act as an extension of your team, allowing your organization to carry less overhead and become more agile. In fact, according to the S-L analysis, non-Continuum MSPs were found to spend 6 percent more on average on General & Administrative expenses between 2012 and 2016 than MSPs working with Continuum. This further proves how MSPs can leverage a strategic partner such as Continuum to become more efficient without expanding staff.
3. Leverage Outsourcing
All MSPs should consider outsourcing portions of their business. For example, outsourcing your service desk allows you to provide 24x7x365 support to your clients without taking the huge costs of hiring and maintaining an in-house service desk. Because the nature of service requests is so volatile, it’s very difficult for MSPs to maintain the correct level of technicians that ensure minimal wait times, yet doesn’t waste money of technicians being under-utilized. This is why outsourcing your service desk is such a popular option for MSPs.
The outsourcing model has been proven to help MSPs take on less risk and achieve higher profitability. Among all MSPs in the S-L Index, Continuum partners recorded Adjusted EBITDA figures that were on average 7 percentage points higher than their peers using other platforms. With Continuum’s model, RMM and NOC are fully-integrated to provide heightened service delivery, increased efficiency and long-term growth.
4. Eliminate Redundancies
This may be a painful process but it may be one of the most important you will ever do. Nothing is less efficient that having two people doing the same job while other tasks are left undone. Clearly define where each employee should and should not work.
Again, this is where a NOC will benefit you. Instead of having multiple technicians receiving the same tickets and working on the same issues, you can utilize a Network Operations Center, which will monitor, resolve and prioritize tickets for your techs—and eliminate the redundancy of multiple techs working on the same issues.