There are two main ways to improve your bottom line: increase your revenue or decrease your costs. For many managed services providers (MSPs) today, you’re busy dealing with tickets going up and head counts remaining flat, which makes it hard to find the time to develop new lines of business or aggressively expand your client base. Focusing on cost reduction is a great way to increase profits and address the issue of higher ticket counts, but where can you start? First, you need to adopt a lean philosophy.
Lean philosophy was developed in manufacturing, but has been adapted to the service industry, and the principles that drive waste reduction in other lines of business can easily be applied to the MSP. Here are six tips that will help you create more value for clients with fewer resources and become a more lean organization.
1. Commit to Waste Reduction
If you want to reduce waste, you’ll find some easy wins early on, and that’s great. But lean as a philosophy works best when the entire organization buys in. Get everybody on board, and all of a sudden everybody will be identifying opportunities to reduce waste. There’s no faster way to see benefits than to commit to waste reduction company-wide.
2. Understand the Types of Waste
Lean philosophy is based around the idea of eight types of waste. Each of these can be applied in some way to an MSP business. It’s important to understand the different kinds of waste that can hide in your organization, because only then will you know what to look out for.
Time waste, errors and tasks that take longer than they should are obvious examples, but there are definitely more. Inefficient processes, bloated stacks and misalignment of employee skills and roles are all forms of waste where opportunity for improvement can be identified.
3. Find Champions
It’s easy to get bogged down in your day-to-day, especially when you have so much on your plate. However, this may force you to set aside bigger strategic issues for when you feel you have more time. To combat this, you need to find and identify your “lean champions.” These are key people, particularly in different departments, who you can task with driving the team to reduce waste and spread that mentality throughout the entire organization. You can even set waste reduction targets if necessary. Make sure your champions are people in your organization who have a mandate to drive waste reduction, so that they can spur their teams on.
It shouldn’t take long to put together a list of opportunities for improvement within your organization. But remember, focus is the key here. Find the ones that will make the biggest difference to the bottom line, and do those first. Sprinkle in some quick wins to keep everybody happy with the lean approach, and doing so will build positive momentum for waste reduction.
As always, you need to test and measure if you want to make any progress. Make sure that your efforts to reduce waste are working and did not have unforeseen consequences. And, if you can quantify the results of your efforts, that can be a powerful motivation tool for your team.
6. Revise as You Go
Just because you fixed a process once, it doesn’t mean it’s been optimized for future growth. Do not be afraid to revisit wastes to see if your improvement can be further improved upon. Being a lean MSP is an on-going process, and there are often still gains to be made. In fact, quantum leap sort of gains usually come after a few iterations of incremental gains, as you search for a way to rethink a critical process.
For most companies, lean philosophy is a transformation—a shift in how you conceptualize your business. There are a lot of sources of waste, so the process of going lean is never really finished. It’s a way of life that you need to gradually build into the organizational culture. But once you start seeing the results, you’ll be able to build momentum. The result will be an efficient, highly-effective organization that enjoys a better bottom line.
Are you looking for more information on how your MSP business can reduce waste and optimize efficiency? Visit IT Glue’s booth at Navigate 2017, and we'll be happy to chat with you!
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