Categories
Business Operations

3 Key Drivers for Profitability When Working from Home

With the current situation we are all facing with COVID-19, we have all been forced to work from home and think outside the square. As a whole, the IT space has been hit the least, but it doesn’t mean that we shouldn’t evaluate what we are doing and how. 

Many business owners don’t look at their internal business, and how things happen. Are we running things as effectively as possible? Is everyone in the business working towards the same goals? Chances are no – and it’s understandable – if you never look in, you’ll never overcome your current challenges or make it past your current state. Something many of us only look at when we are bleeding is how we are spending our money, and are we getting value from it. 

When speaking to MSPs, we frequently ask questions around tickets and data. It helps us understand the position the MSP is in, and how they view what is important to them. We’re surprised time and time again, that most don’t know their business metrics, even from a high level, and we’re not talking about Staff Member X worked on ticket Y for Z minutes. We’re talking at a simple level – how many tickets were logged in the last 7 days.

This is a simple metric that should not take more than 30 seconds to consume, but having this metric weekly gives you a very quick powerful snapshot as to how things are trending. 

3 Key Metrics

Here are 3 key drivers an MSP can look at to ensure they are profitable and heading in the right direction.

Ticket per endpoint goes down

Most MSPs have seen their end customers affected directly with the current climate. Either from having customers needing to terminate employees, or reducing the number of employees that are working for them. In either case, this is directly linked to a reduction of devices requiring support, so it should also directly relate to the ticket count going down. We see on average between 1.7 and 2.7 tickets/endpoint being logged (pre-COVID-19).

 Time to support goes up

Most MSPs have seen only a minimal impact on how busy their techs are. Why is this the case, considering most have seen a reduction in support requests? Supporting your customer when they are working from home is harder and takes longer. If the user has taken their device home – we are not trying to support a device that is not in an environment we have designed or setup. Most homes have consumer-grade internet connections and Wi-Fi. Together with slower internet speeds faced by everyone leads to simple things that and simple support taking longer.

Cost of tickets go up

Supporting a device has a cost. How much it costs per ticket is something most MSPs have never analyzed, measured or tracked. From our analysis pre-COVID-19 we see an average ticket costing $16. This has taken into account the utilization of a tech and the loaded burden cost. With the time to support devices going up, it is no surprise that directly transfers to the cost/ticket going up by as much as 25%. At a cost of $20 to the MSP per ticket, you can see for MSPs that are too efficient and having 2 or more tickets/device being logged per month. 

So to recap, is working from home bad news? Can we still be profitable in this environment? Yes it is possible – but you cannot achieve it with your head in the sand. Keep an eye on the amount of tickets being logged on a daily and weekly basis. Together with these 3 metrics, you need to be aware of how this is affecting you and adjusting your team size and expectations accordingly.  

 With the data listed above – an MSP is achieving a monthly gross margin/tech of between $3,450 and $8,700. You can see from this – there is a massive difference of over 100% between the 2 figures.  

If you’re looking for ways to improve your MSPs profitability, whether while working at home or from the office, reach out to our team today to schedule a demo of our PSA plugin or check out our new podcast MSP Power Up™

Categories
Business Operations

The Glass Ceiling for MSPs

The infamous glass ceiling. I am pretty sure most MSPs have heard of it – or worse felt it. The 2 ceilings we hear about are the $2m ceiling and the $4m ceiling. I only came across this glass ceiling in the last few years when speaking to MSPs, yet I have had my MSP since 2000. When I had first heard of it, I was quite confused as to why MSPs talked about it, getting past it was like winning a prize. It was only after speaking to many MSPs about the way they did what they did and a few years of digging to really understand what made this glass ceiling – and why so many were affected by it.

 The great news is that these ceilings are glass – so we can definitely smash through them, but what makes these ceilings and more importantly how can we get past them?

What Causes the Glass Ceiling? 

The ceiling is a result, not a cause, just as the profitability of a business is a result. As a business, if you want different results than what you are seeing you’re going to have to take different actions. What I found interesting was that the word ‘culture’ gets thrown around in these discussions, and it was this that started my thinking. What is the relation between the way that different MSPs define their culture and their size? Does it have anything to do with the ceiling? 

What we found is that the smaller MSPs struggle to get past the $2m ceiling not because its $2m. The reason is that as a business they need to do things differently, they need to be more structured and put in the processes to make this happen. The unfortunate thing is that many MSPs have been started by a tech themselves, and a lot of the time they don’t have the business knowledge to take their MSP to the next level. This has a compound effect. They are not profitable enough to be able to afford to bring a business manager into the business to help them make the change, and if that’s not hard enough, the last compounding point is that they, the business owner, are not ready for the change. They cannot expect this change to happen without them, and they need to do what is required to make the change.

I have spoken to many business owners that are under that $2m ceiling – that will never go past it, due to themselves. They cannot expect their team to do something one way if they don’t do it themselves. This is the single most common reason the $2m ceiling will continue to keep them trapped. They need to embrace structure and process to be able to not only get past the $2m ceiling but also to enjoy higher profit margins. 

How to Break the Glass Ceiling

So what do MSPs that are trying to break the $2m ceiling and $4m ceiling look like – and how do they compare with those that didn’t see the ceiling to start with? Here is a table we put together, and for those that have read any of my blogs or heard me at an event or in a podcast – you will see a reference to restaurants. But this time it’s not fast food. After reviewing the table, can you see where you are and how others do things differently? Have you experienced being a consumer in a restaurant and experiencing what is described below? Put yourself into your customer’s shoes and think about things from the way they see it. 

If you want to chat about ways to break the glass ceiling, feel free to book some time on my calendar! 

 $2m Ceiling$4m CeilingCeiling Smashed
Tech Team SizeUnder 1010 – 20Over 20
Culture

 

I don’t want my people to be restricted.

 

I want people to have fun, and colleagues to work with their peers through issues.I want my team to grow with my business. I want a performance team that succeeds together.
How the do it
  • They let techs do what they want, when they want.
  • Tickets are just picked by the techs. It’s up to them to keep an eye on the queue.
  • They allow customers to dictate how the log tickets.
  • Data from emails don’t always go into the ticket (PSA).

 

  • Tickets are allocated by a dispatcher
  • The dispatcher is a tech that spends some of their time looking at the ticket queue.
  •  They depend a lot on email, communicate back and forth via email.

 

  • Dispatcher allocates all work once it’s logged.
  • Dedicated Customer Service Representative (CSR) logging tickets.
  • Tier 1 team works on basic tickets.
  • Tier 2’s and Tier 3s are in smaller ratios compared to Tier 1.

 

 

Delivery of ServiceInconsistent.

 

Transitioning between inconsistent -> consistent.

 

Consistent

 

Their people
  • Everyone they hire is a T1-T3.
  • Their people should be able to do any ticket.

 

  • Different levels of techs are hired as required.
  • Growth of each team member is unstructured and driven by the team member.
  • Any success of this growth by the MSP is accidental.

 

  • People are hired for specifics skillset.
  • Junior hires are put through a structured development plan.
  • Team members are shown how they can grow into future roles.

 

Net ProfitLow  – < 10%

 

Medium 10% – 15%

 

Higher 15%+

 

Data Analysis
  • Looked at quarterly if at all.
  • Utilization & Labour cost are not measured.

 

  • Looked at once per month – or less frequent.
  • Utilization is measured, but data accuracy is assumed.

 

  • Service Manager oversees day to day ticket flow and customer satisfaction.
  • Data is reported daily / weekly, and people held accountable.

 

Tech to Endpoint Ratio1 : <120 

 

1 : 120 – 1 : 150

 

1 : >150

 

Team utilization (real)

 

< 55%

 

55% – 65%

 

> 65%

 

SLA

 

Not in place, as tools and process are not in place to measure.

 

  • Are set out with the customer, but processes are not in place to ensure they are met.
  • Not well communicated to the team.

 

  • Clear and documented for the customer.
  • Documented and communicated to the team.

 

Real world analogy
  • It is like going into a restaurant, sometimes they greet you and take you to your table, other times – it’s up to you to find somewhere.
  • The pages on the menu are just clipped together with a paper clip.
  • Sometimes you have to put your hand up for service, other times they come to you.
  •  Sometimes you need to have a booking, other times you don’t.
  • Sometimes your meals come out fast, and hot – other times you look around and other guests seem to be getting the royal treatment and the waitress is on their beck & call, while your constantly putting your hand up for attention

 

  • It is like going to a restaurant where you are always greeted at the door.
  • Sometimes you can choose where you sit, other times they will direct you to a specific table.
  • When you sit down sometimes they offer you water and the menu.
  •  Some days the person who greeted you then becomes your server and has to rush back to the front door when a new customer walks in, on other occasions you feel really looked after.
  • The meals are always good value but the portion size and attention to detail vary depending on if it’s a weekend or a weekday.
  • It is like going to a restaurant – your greeted every time at the door, and taken to a seat.
  • They ask for your preference of location to sit.
  • The person that took you to your table hands you over to a server who then looks after you until you leave.
  • On sitting down your asked if you would like water, and given the menus.
  •  The menu is simple that anyone can work through it.
  •  The meal sizes are similar, and you always feel the same value of your outing.