Of all the assets that managed IT services providers (MSPs) must successfully manage in order to be profitable, the most important is operational efficiency. Efficiency flows into every part of your business; from your team of highly-skilled employees to the IT services you provide. Therefore, you should always be looking for ways to optimally leverage your team’s time and resources without diminishing service quality for your clients.
Throughout my 13 years of building and running my own MSP business, enhancing efficiency was always a high priority—and one I spent significant time on. When an MSP is operationally efficient, it can translate into increased client satisfaction and long-term profitability. However, are you unsure where to start? Let’s dig into how you can create and enhance efficiency within your MSP business with the right tools and practices.
Why Efficiency Matters
As competition in the MSP space continues to grow, it has become increasingly important to maximize efficiency across all the services you offer. Not only can this give a boost to your margins and profits, but it can also allow you to enhance the quality of the services you provide.
Exceptional service delivery is key to ensuring client satisfaction and long-term relationships that enable MSPs to lock in predictable, recurring revenue. Efficiency plays a large role in this, which is why it’s moved to the “things to do to survive as an MSP” list.
Where Most MSPs Start
When looking to enhance efficiency, an MSP’s primary focus is usually on optimizing the front end of their business. Let’s take service delivery for instance. Through automating or outsourcing resource-heavy tasks like troubleshooting and patching, MSPs can cut down on labor costs and even improve service delivery. Not only will this save you the headaches that come with organizing this yourself, it also frees up your highly-qualified and expensive team members to focus on more revenue-generating tasks.
With this checked off, many MSPs will stop here. However, they’re underestimating the gain that is still to be made by also optimizing the efficiency in their back office, which can require a bit more insight into where inefficiencies might be hiding.
Uncovering (and Eliminating) Time-Wasters
There are plenty of hidden time-wasters and revenue leaks that lie deep within any organization. But when you’re in the middle of your daily operations and your team is busy working on important client issues, how can you expose these inefficiencies? One popular strategy can be to audit your internal processes. Ask yourself the following questions:
- How much time do I spend on billing, generating reports or calculating the hours spent on servicing clients?
- Have I actually allocated and invoiced all my billable hours?
- Am I making healthy margins on all my services or client contracts?
- How am I utilizing my team’s time as well as my own?
Assessing and reassessing some of your business operations and processes can help you uncover time-wasters and inefficiencies, but eliminating them requires a bit more visibility.
It All Starts with Insight
To gain insight into where you and your team spend the most time and resources, you will need some help. What if you’re looking to record all the time spent on tasks, both internally and with clients, billable and non-billable? One of the best ways to handle this is to let a Professional Services Automation (PSA) tool automatically register this for you, eliminating human error.
On average, you would want your team to spend at least 80 percent of their time on client-related activities. With that in mind, how do you organize spending no more than 20 percent of your team’s available time on internal tasks? Well, you can standardize and automate internal procedures such as billing, customer and financial reporting, and management information. The right PSA setup will allow you to automatically aggregate all relevant client data, support and operation activities, and financials into one integrated environment. This lets you automate tasks and gives you access to business metrics, which is crucial to managing efficiency. Once you have more insight with this single pane of glass, you can start managing your company on validated metrics.
Data on a Silver Platter
A PSA tool can also show you what clients are taking up most of your resources, as well as the ratio between time spent on a project and the generated revenue. With this data, it becomes extremely easy to get insight into the health of your client base. Let’s say a client consumes a greater percentage of time than the percentage of revenue they contribute. Well, you may have found yourself a client that is not so profitable for your MSP business.
From here, you can dig much deeper. For example, you might want to check these metrics for your total clients, as well as a per client basis:
- On which PCs and servers are we spending most of our time?
- Which end users consume most of our time?
Then, you should do the same for your team:
- What is the average resolution time for tickets and alerts, and is your whole team on par with that average?
- How much time do you spend on tickets that get re-opened, and what would the time spend have been if the ticket was escalated to another team earlier and resolved directly?
- How many times have we not held up to our Service Level Agreement (SLA) for a client?
The ways to increase efficiency are endless, it’s just a matter of how far you are willing to go. However, this all starts with getting the right data presented to you in a uniform way on a silver platter, which is often a challenge.
Most systems collect data but expect you to stir it all together yourself into usable metrics. To avoid this, make sure you find a system that does the math for you. Having out-of-the-box insights will allow you to spend time on actually resolving the inefficiencies you have found.
Key Benefits of Efficiency
With automatically generated data, making your MSP more efficient becomes beneficial to your overall growth and success. Here are some key ways enhancing efficiency can pay off:
- Your clients will be serviced more efficiently
- Service delivery won’t lack due to an overloaded team
- Ticket resolution time will decrease
- Overall client satisfaction will increase
- And more
Looking for more ways to increase your efficiency? Please visit the Computicate PSA booth at Navigate 2017. We would love to meet you and exchange knowledge!