3 Key Drivers for Profitability When Working from Home

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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™

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