Stephen D Buyze

“Empowering Managed Service Providers to Increase Profit”

Contract Automation Boosts Profits!!!

One of the first Resource Utilization Automated System reports rolled out to our Customersshowed 2% T&M and 98% Recurring Services work for the week.  

I asked the owner, Are you an All In Managed Service Provider?” to which he quickly responded, “Yes, all our Customers have Managed Service Provider Agreements (MSAs) and all work is covered.”  

As we talked more, it was true, all the Customers they worked for had agreements. But the MSAs were in a wide range: 

  • Silver (Monitoring Services only)  
  • Gold (Monitoring Services and Network Devices)  
  • Platinum (All In – some even included Project Work) 

We followed the 5 steps outlined in our last articlewhich started with getting a clear understanding of what was being sold and what was in the signed agreements. Go figure, there was a disconnect with Customers that negotiated something a little different than the standard Silver, Gold, and Platinum MSAs 

To handle this, we created a one-sheet Excel document outlining what was in the agreements.  We also educated the Support Team that if it was out of the agreement, they should remove the contract from the ticket. 

A month later, T&M billing was 20% of the work being done. Now I ask you, would you love to increase your Managed Service Profit by 18% – just by communicating?   

Before you get too excited, please note (and we have been trying to say this loudly), this is not an easy thing to do.  From our experience, it takes 3-5 months to complete. This means it will take many conversations to get it done, not just one. 

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As noted in this experience, we relied on the Techs to remove the contractThis was a small 3-person shop without a Service Coordinator to helpToday, we recommend for any size shop (including onemanbands) that you use Contract Exclusions to automate the process.  

Side Note: 

We also recommend that if you have 3 Techs or more, it’d be a good idea to hire a Service Coordinatoras one of our raving fans strongly agrees. Having a Service Coordinator makes the Techs 10% more efficient, and that efficiency covers the cost of employing a full-time Service Coordinator – for more information on this subject, book a FREE 30-minute coaching call with Steve. 

Contract Exclusions: How do they work?  

So, what is the process for figuring out Contract Exclusions? Of course, it starts with knowing what is and isn’t included in each Customers Managed Service Agreement (MSA)For every “Out of MSA,” you need either a Work Type or Role. How do you know which one you need? Well, this is where it gets very confusing, so stay with me here, and we will do our best to make it simple. 

Work Types are used when the work being done is not based on the skill  level needed, but outside of the normal 8-5 remote incident remediation workday. For example:  

  • Project work 
  • Recurring Tickets (think: proactive, regularly scheduled maintenance engagements) 
  • Afterhours, Weekend, Holiday work, etc. 

This is where it all gets very confusing. When the work is Out of MSA, Roles or Work Types are used to exclude the work from the Contract. If the Exclusion is to the standard rates, great – it’s simple, and your coaching team is very appreciative.  However, if you are extending to your most important Managed Service Customer a reduced rate for Out of MSA work, the Exclusion needs to roll over to a T&M Exclusion Contract.  

Now stay with me here: Autotask is designed to only adjust the billing rate by Role in T&M Contracts, not by Work Types.  

Therefore, we need to throw everything out that I just said, and make a Role for every Work Type that needs a rate adjustment in the T&M Exclusion Contract – but only the Work Types that need the billing ratadjustment. 

Roles are used when the skill set is needed to complete all or part of the engagement. For example: 

  • Standard rate is Technician 
  • Sr. Technician rate is used for higherskilled work such as VMware, Azure, Citrix, etc.  
  • Network Engineering level II or III rate for Projects 
  • Architect rate for consulting or network design work 

The Role could also be a reduced rate such as: 

  • Bench Tech  
  • End User/Help Desk 

**SDB-C rant: While we agree that it definitely takes a different skillset to do Benchwork or be on the Help Deskwe strongly disagree that they are less valuableThese Techs are also highly skilled in their own right and worth their weight in gold! 

A word of cautionDo not create a Work Type and then a Role to be used in the T&M Exclusion Contracts with the same name or for the same thingThis will only confuse the heck out of the Support Team, and they will never get the Work type right in the time entry. 

Easy Steps to take after Roles & Work Types are in Place 

Now we are in the home stretch, and things get very easy with the following 3 steps:  

Once the Work Types and Roles are in place: 

1) Create the T&M Exclusion Contract first, as it is at the end of the line 

2) If you have Block Hour or Retainer Contracts for any specific type of work, such as Network Administrator (proactive maintenance) or Consulting time, create them next: 

a) Set the T&M Exclusion Contract as the Exclusion Contractin the Block Hour or Retainer Contract

3) Create the Managed Service Agreement last, making sure to populate these fields: 

a) Set this Contract as the default.

b)Set the Service Level Agreement.

c) Make sure the Contract Category is populated.

d) Make sure theContract Exclusionis populated with the next Contract in the Contract workflow. 

Summary: The Main Takeaways… 

1) Create the Work Types you need to adjust the Billing Rate, including Taxables…but not the Work Types you need to adjust the Out of MSA Billing Rates for Managed Service Customers.   

2) Create the Roles, including the Out of MSA Work Types with Billing Rate adjustments for Managed Service Customers. 

3) Create the end of the line T&M Exclusion Contract. 

4) Create the middle of the road Block Hour and/or Retainer Contract(s). 

5) Create the pot of gold Managed Service Agreement Contract. 

This is how you configure Contract Automation. Using the automation effectively takes building Support Team habits that check the Role and Work Type as the request journeys from New to Complete. Speed Codes help immensely in this areaWe use Live Reports for QC by either the Service Coordinator, Service Manager, or both. 

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