Stephen D Buyze

“Empowering Managed Service Providers to Increase Profit”

#1 Goal of Every IT Service Manager is to Improve Net Profit! Really?

it service manager

Net Profit? How does an IT Service Manager impact Net profit? Owners and Executives focus on Net Profit in relationship with Return on Investment (ROI). Owners also focus on Cash Flow, because more businesses go out of business due to Cash Flow rather than Net Profit.

But what can IT Service Managers focus on to improve profit?

A) Reduce the Time to Completion

B) Reduce the number of Open Tickets

C) Increase Resource Utilization

These are the keys to IT Service Delivery operations that impact Net Profit.

This article is an introduction to a three-part series of articles on Aligning Service Manager’s focus with the Company’s #1 goal: making more money for the Company (profit).

Please Note: My expertise is as a Resource Planning Analyst, so I write from the perspective of mining and transforming data into golden information for Service Managers. In this series the “Gold” is making more money for the Company (profit).

IT Service Managers, 3 Key Metrics are Worth Your Attention

Let’s face it, for a business to survive, pay payroll, deliver excellent Customer service, etc.; everyone needs to align on the objective of making more money (profit) for the company. In today’s ever-changing world with disruptive technologies being the norm, successful companies being bought up and gutted, or the market not embracing what a business is providing, continuous improvement of profit is the key.

We talk about aligning organizations. We talk about IT Service Delivery operations aligning with Corporate Goals. We talk about Managers aligning with Executives. But at the end of the day, what does it mean? Out of the mountains of available data and volumes of metric rhetoric, does it really come down to three simple metrics/reports that an IT Service Manager should focus on to make more money for the Company?

Over the next few weeks, three articles will form a series that take a deeper look at these three metrics: Time to Completion, Number of Open Tickets, and Resource Utilization. Each article will look at what they represent, how to benchmark, track and improve, and finally, how they make more money for the company.

As an introduction to the series, here are the first few paragraphs of each article:

Part 1: Time to Completion, a Win-Win

Time to completion is a double-edged, “win-win” sword. First, to improve the Customer’s experience by completing all commitments in less time! Second, the longer a service request is open, the more overhead and administrative time is needed to manage the service request. It also adds more disruptions/inefficiencies to the workforce.

However, we are not just talking about the internal time. It includes the Customer’s time reading all the status updates and reasons why the service request lingers on. At some point, the Customer’s time is wasted venting frustration for unreasonable delays. This level of frustration plants seeds of dissatisfaction and thus triggers service provider comparison shopping. (more to come on this topic in following weeks)

Part 2: Number of Open Tickets Impact on Profit

Driving down open tickets is a worthwhile exercise, but the impact to profit is not in focusing on closing them. The significant impact is not to have open tickets in the first place. If some remediation effort is refocused on preventing them in the first place, then this is a win-win-win scenario.

First, the Customer is not impacted by lost productivity. Second, profitability of Managed Service Agreements increases because less cost-side support is needed to maintain Customer Satisfaction. Third, billable resources are repurposed to higher billable time such as Technology Success visits or Project work. (more to come on this topic in following weeks)

Part 3: Improving Resource Utilization

Autotask default Resource Utilization (RU) reports help benchmark existing levels of Resource Utilization. However, after using them for years, they do not seem to identify the coaching moments Service Managers need to improve the Resource Utilization metric. After the November MSP-Ignite Service Manager Peer Group https://www.msp-ignite.com/peer/service-managers/

Conference call, one of the members asked to have the Autotask default Resource Utilization report re-written in Live Reports so it could be scheduled to run. As the revised Resource Utilization Live Report was shown to other Service Managers, they liked what they saw and requested changes to highlight coaching moments. Customer Facing Non-Billable, Internal Project or Ticket, and Miscellaneous Allocation Codes were flagged if they exceeded10% of the Resources available time.

With these three big changes and a few minor ones, the managers were able to improve Resource Utilization by 4-8%, thus increasing company profit by $12K to $24K per Technician per Year. For a copy of the mock-up report, email me at SBuyze@SBuyze.com (more to come on this topic in following weeks)

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