How Resource Utilization can Help You Find Lost Profit 

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Resource Utilization, IT Service Managers

 

 

 

 

 

 

 

 

 

 

 

Let’s jump right into the heart of the value in a Resource Utilization report. Hopefully by now, we have all of the Techs turning their time in on time, we have coached them as to what is acceptable Internal time, and we are proactively managing Company time. Way to go! 

Uncovering Lost Profits at Your IT MSP 

Non-Billable time is where we can expect to find most of the lost profit. Every week when reviewing the Resource Utilization report and the associated timesheets, every non-billable time entry needs to be inspected.  

FYI: Company time is reported as non-billable, so if the task or ticket is for the Company, then there is no need to check the non-billable time entries. We already reviewed it when we reviewed Company time.  

Uh-oh, Miscoded Time Entries   

Almost every week when reviewing the Resource Utilization report, there is $300 to $400, or more, in miscoded time entries. Here are just a few examples common to all of us.   

  1. Travel Time 
  • If you charge portal to portal (which means travel is billable), monitor your new hires closely. More than one new hire coming from another shop has turned in travel time as non-billable. It is a well-ingrained habit and takes close monitoring to retrain them.  

    2. Billable Network Assessments 

  • Most Network Assessments are non-billable as they are considered part of business development. However, it is common practice that if the assessment needed exceeds the reasonable amount of time set aside to do the task, then either the overrun or all of the Network Assessment is chargeable. Thank goodness we look at every non-billable time entry, but we still need to be cognizant of what is a reasonable time frame for a business development network assessment. If this ticket or project has a significant cost overrun, it may be a good idea to verify that it is a freebie.  

    3. Contract work 

  • Sometimes the assumption is, if it is covered by a contract, it is non-billable. This is not quite correct. It will be billed under the Managed Service Agreement, so the Customer will not see the specific line item. But in general, it is still a billable time entry. One manager described it this way, “If we are entitled to be paid, it is billable; if we are not entitled to be paid, Warranty Work, Business Development Assessment, etc., then it is a non-billable Work Type and non-Billable Time Entry.” Adam V 

Why is this important? Turning in contract work as non-billable time skews the profitability picture of the Managed Service Agreements. All agreements are reviewed from time to time for profitability. Profitability is defined as Revenue minus Cost (Billable Hours) divided by Revenue. If the time entry is turned in as non-billable, it is not added to the Cost in the Profitability formula and therefore Profitability is overstated.     

 Resource Utilization, IT Service Managers

Lightening the IT Service Manager’s Load  

Again, good coaching comes in very handy here. Once the Resource Utilization report is being used on a regular basis, non-billable misunderstandings or miscoding, such as travel and Network Assessments, will be driven out of the workforce. This, along with other coaching moments, lightens the load on an IT Service Manager.  

There are less people: 

  • Not getting their time in on time  
  • Hiding time in Internal codes  
  • Scheduling excessive Company project time   
  • Miscoding non-billable time   

Little by little, leveraging the Resource Utilization report each week cuts down on the time it takes to review timesheets.  

 

Have you found lost profit this week?  Please put how much in the Reply Box below. 

Has this been helpful? Please put your comments in the Reply Box below. 

 

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