Resource Utilisation or Utilization? Datto’s #5 KPI to Watch

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Resource Utilization | Utilisation

 

 

We have been living the subject of Resource Utilization (notice the spelling), since Dec 2017. It all started with a Service Manager simply asking, “Can the standard Autotask Resource Utilization report be written as a Live Report so it can be scheduled to run?

What grew out of that simple request was a powerful tool that has been increasing profits by 10% or more for every MSP that uses it, while reducing the time it takes to manage timesheets to 0 hours per week.

Before we jump in to discuss SDB-C’s Resource Utilization Automation System, let’s look at what Datto has to say on one of our favorite topics.

For more information on Resource Utilization, click here to download our Resource Utilization for MSPs eBook.

Fast Recap: Datto’s 4th KPI- RU sub-article takeaways

  • Three main aspects:
    • Performance vs Projections
    • Resource Scheduling
    • Visibility into underlying costs
      • Who is doing the work
      • What issues they are solving
      • What their cost is (assume we are talking burden)
      • What revenue they are generating
      • Where tickets are coming from
      • Identify the most common issues
      • Identify gaps in Knowledge, Skills, and Abilities

Performance vs Projections: Our Take

First, we are not talking about projections, we are talking about expectations. The MSP industry is the only one I know where Techs get paid whether they work or not (or more accurately, whether they track their time or not).

Let’s face it, we cover our costs by invoicing Customers.  That means all Customer-Facing work should be considered billable – either by a Managed Service Agreement (MSA) or on a per hour basis, but all billable! The Tech should get credit for all of it, including Warranty and Business Development (non-billable) work.

So is it reasonable to expect a Tech to work to earn their pay – 100%! Well now let’s be reasonable. There is transition time, lost time, meeting time, and if the Tech is not behaving properly, documentation time where they need time to catch up, but oh well it is what it is.  All of this really adds up and takes away from what is expected.

It is amazing that an MSP can run at 50% utilization (meaning while the tech is being paid full-time, they are actually only working half of the time) and still be profitable, but is this right?  The national average is 70% or about 28 hours per week, while the best in class are 80% or about $32,000 per Tech per Year more profitable (not that money is everything).  The highly efficient MSPs run at 95% or 36 hours per week in Customer-Facing work, and another $16,000 per Tech per Year profitable without spending a dime.

The rest of Datto’s Performance vs Projections comments have very little to do with Resource Utilization. They have a lot to do with how the Company performs, which can be determined by the Mean Time to Resolve KPI (still do not understand why this is not in the top 10, but a hypothesis is becoming clearer).

Here is what I mean: Whether an Employee is focused on the Customer 50% of the time or 80% of the time, it still takes 4 hours to install a PC on the network. It will take both Techs the morning to add a PC to the network.  One of them will pick up another 2.2 hours of work in the afternoon, and the other Tech will blow off the rest of the day.

Resource Utilization has powerful benefits every IT Managed Service Provider must know. Find out how it can boost profits by 10% or more at your MSP.

What Does Resource Scheduling Have to do With Utilization?

First, Datto assumes that Travel is non-billable and not Customer Facing work. The first part is very seldom true as most MSPs charge something for travel and half charge portal to portal as travel is part of the engagement.  However, all travel is Customer-Facing work and the Tech should get Resource Utilization credit for driving to a Customer’s site.

Sorry, I am not seeing where Scheduling has anything to do with Utilization unless of course, you are scheduling them for three days of offsite training, then their utilization will be down for that week, but that is not a typical situation.  It is acceptable that from time to time Utilization will be down for good reason. But if Scheduling is the cause behind low Utilization, then it is management at fault and the Techs should not be penalized.  Either way, adjust the Weekly Billable Hours Goal to the correct expectation or stop scheduling them for non-Customer-Facing work.

Unpacking Underlying Costs:

This sub-section is all over the place, so bear with us as we unpack what is being said…

An MSP may have everything from Customer-Facing Roles to Sr. Management.

Yes, but we only track the Customer-Facing roles. If a Tech is a player-manager, we adjust the Weekly Billable Hours Goal to reflect how many hours they are a player and how many hours they are a manager.

Wait a minute, how can you write a section of an eBook about Resource Utilisation (notice the spelling) without even mentioning that what we are talking about is the Weekly Billable Hours Goal? It seems to me something is missing.

And each of these Resources has a different cost associated with their time and work.

Duh – but what does that have to do with Resource Utilization? Yes, it speaks loudly to overhead or COGS (non-billable Resources) and the profitability of one Billable Resource over another. But Resource Utilization does not impact the underlying cost – just the efficiency and revenue of one Utilized Resource over another.

Visibility into underlying costs:

The list of Visibility has very little to do with Resource Utilization. Resource Utilization is simply what percentage of a Tech’s available hours was utilized for Customer-Facing work.

Yes, the items listed in the sub-section are very important, and something a Service Delivery Team/Manager needs to get their head and arms around – but they have nothing to do with Resource Utilization. They fail to mention that a Service Manager or Self-Managed Tech Needs Visibility.

For example, you want to know how many hours last week:

  • Was I/a Tech available?
  • Did I/a Tech work (or at least reported)?
  • Did I/a Tech work for Regular Time, and what can we do to reduce this number, so I/a Tech has more Customer-Facing time?
  • Did I/a Tech work for the Company either helping Employees or maintaining the network, and what can we do for to reduce this number, so I/a Tech has more Customer-Facing time?
  • How many hours last week did I/a Tech do non-billable work and are we sure the ticket was coded correctly, or do we have a coaching moment on our hands?

From our experience, if this is what a Tech or Service Manager focuses on, then Resource Utilization will grow to be 80-90% – and profit (not Revenue) will increase by $32,200 to $48,300 per Tech per Year.

In summary:

Here is the process of how to effectively use a good Resource Utilization report (one that has been scheduled to run each Monday morning) to evaluate last week’s timesheets:

  • Was the timesheet completed? In other words, was 40 hours reported?
  • How many hours are regular time, and what can we do to reduce that number?
  • How many hours are Company time (Task or Ticket time entries for the Zero account), and what can we do to reduce that number?
  • Review each non-billable time entry to verify it was non-billable work.  If not, coach the Tech on what is and what is not non-billable work.
  • Is the Tech meeting the Weekly Billable Hours Goal? If not, what are they working on that is non-Customer-Facing work?
For more information on Resource Utilization, click here to download our Resource Utilization for MSPs eBook.

 

We want to hear from you! Do you agree? Disagree? Have questions? Let us know.

 

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