10% Profit increase in 17 weeks or less: Part 4 - The Voyage Home
10% is the Tip of the Iceberg: The full ROI is 10X. Now where else in the world can you get that much ROI with a Money Back Guarantee? Read on!!
Welcome back, Autotask Warriors. Much like the adventures of the USS Discovery and Season 1 of Fallout, this series has come to the end.
We started this series discussing my frustrations with MSPs who won’t put the time or money into building a better MSP. We’ve talked about MSPs who think they are “good enough,” are too busy working tickets to focus on sales, or to work on the business, and others flat out won’t spend the money to invest in their MSP.
I’ve spent 3 weeks showing you how you can improve Service Delivery and I can help break the unproductive cycle at your MSP.
This week, we voyage home to the biggest reason MSPs can’t or won’t sign up for Advanced Global programs or any other programs to fix their businesses: money. I’m going to be blunt today – you tell me how you want your picture on MSP magazines, want to be that guy invited up to the stage at shows, and certainly want to be posting those Facebook photos of your Cayman Island vacation. You tell me all that and in the same breath say you won’t spend (or don’t have) the money – you’d rather work 100-hour weeks, have workplace drama, and constantly pray Clients don’t leave; then STOP IT and make the changes to bring in the money.
If you’re too timid to risk ruffling some feathers and getting those engineers to use Autotask properly, then I am sorry for you. If you’re afraid and you need a friend – I am here for you. And if you want to implement change and have a wonderful, profitable MSP to work at, and just need to make sure you can get the ROI you need, the rest of this post is for you.
The real Return on the Investment (ROI) is the cost savings that are going on in the day-to-day operation even as we speak. Whether you use Kuwaiti Dinars, the Australian Dollars, British Pounds, Swiss Francs, US Dollars, or Euros, the majority of the costs fall into three significant categories:
Wasted Billable Hours
T&M hours Written Off as Managed Service Support
Client Churn
Wasted Billable hours
If Fred V from Kaseya is right – and he is based on the data Advanced Global sees – wasted billable hours amount to 96K USD per Tech per Year. So, for a 6 Tech shop, we are talking about 576K USD per Year. Even in a 2 or 3 Tech shop, this is enough money to pay my bill and hit Cancun.
T&M hours written off as Managed Services Support
T&M hours written off as Managed Services Support is 15% of MRR. So, for 1MM USD in MRR, that’s 150K USD per Year. Even half of that is still 75k, enough to invest in MSP Operational Improvements AND get a Tesla.
Client Churn
Client Churn is going to cost you 3K USD for every Managed Client that leaves. This number conservatively estimates Offboarding and Onboarding at 20 hours. With an industry churn rate of 8% and 100 Managed Service Clients, that is 24K USD per Year (20 hours at $150/hr x 8). Even with 50 Clients and if Off/On is a more realistic 40 hours, it still costs you $24k a year. Ouch! Oh, by the way, still way more than the cost of Operational Improvements.
Total Costs
So, let’s total it up and see what we have: a 6 Tech shop doing the magical $1MM USD in MRR with 100 Managed Service Clients is burning 750K USD per Year. To 10X your investment the first year after exiting Advanced Global’s Core Service Delivery Improvement Program, the program should cost you 75K USD – BUT WAIT! THERE’S MORE! Advanced Global’s Core Service Delivery Program does not cost anywhere near 75K.
Cost Savings Breakdown
Before we jump in and talk about the cost of the Core Service Delivery Improvement Program, lets take a deeper look at the Cost Savings we have mentioned:
Wasted Billable Hours
10% of Techs’ inefficiencies are due to confusion over what to work on next, confusion over Client expectations, and confusion over the request itself. This is easy to fix just by Categorizing all Client Requests into 11 different/optimized Workflows (not to be confused with “rules”), Prioritizing all Client Requests in a Multi-Dimensional Matrix, and Organizing the Techs’ view so, in a single glance, they can see what to work on next and are totally aware of all of their responsibilities.
Knocking out another 10% involves doubling down on the Intake and Open Ticket Management processes, as well as making it easy to shift non-billable work (not to be confused with MSA Covered Work) from the Techs to a non-billable, highly skilled clerical worker – called The Service Coordinator.
An additional 10% of potential Tech productivity can be achieved by empowering the Service Manager to see thru the Fog of Data, and illuminating for them, out of the Sea of Tickets, which ones need Intervention, Root Cause Analysis, or Process Improvements. This takes Advanced Live Reports that do not come by default in the Autotask PSAutomation software.
Fred V is right, the Techs are less than 50% productive, while the best-in-class MSPs are 80-85% productive, leaving the unproductive MSP with 576K USD less revenue/profit year in and year out. In other words, the best-in-class MSPs have fewer people and the unproductive MSP in my example could increase revenue by 576K USD per year, without hiring a Tech.
As long as the cost of the improvement program is less than 57.6K USD (which it is), this would be a wise 10X investment (which it is).
T&M hours written off as Managed Service Support
Almost every MSP we talk with recognizes they are giving away the farm. They also recognize the A&P process is burdensome, and manually tracking down the accuracy of every Time Entry (to ensure T&M hours are not being written off as Managed Service support) would be even more burdensome. Who among us has the time for more burden?
What most MSPs do not realize is that the problem is caused by a great divide between what the Techs know and what is in the MSAgreements (something that nobody knows – just ask the salesperson/owner). This gap is both in our culture and in the PSAutomation software. Techs know what type of work they did but do not know what is in the MSAgreeements. Accounting knows (or hopes they kinda know) what is in the agreement but do not understand the difference between a Business Premium License and a Basic License or the nuances of that “one-off” deal we made with that one Client. There is the Great Divide, and the software is no better. The SQL Tables in Autotask have very few look-up links connecting the financial side of the house to the service delivery side of the house.
So, what is the solution? AUTOMATION! “What?” you say. “I read this far only to be told I need to AUTOMATE!!!!???? You got to be kidding me!” Autotask not being Automated is all of the problem! “ I would suggest that that is not quite true. The Autotask PSAutomation software is very robust and can do a lot of automation, without some sort of bolt on AI (which cost even more) software. The problem is, as Aaron Kenndy of Cognition 360 fame says, “No PSA comes pre-configured for use.” But who has the time to figure out how to configure the six levels of PSAutomation within the Autotask software? ADVANCED GLOBAL MSP COACHING – that is who!
The automation we are talking about is the Cascading Contract Automation where the contract module can be configured to transcode the Tech Speak (What Type of Work was done) into MSAgreement language (What Type of Work is Covered or Not-Covered). Once properly transcoded on a Client-by-Client basis, the Time Entries appearing in A&P are 90+% accurate, reducing the A&P time by as much as 75%, let alone less chasing, disrupting, and frustrating.
Client Churn
As we have mentioned before, 8% Churn (the Industry average) does not sound like much. As a matter of fact, most MSPs tell us their Client Churn is very low. UNTIL we deliver the data, reminding them of the Clients they would prefer to forget (you know your best Clients according to Bill Gates) – the ones that push you to improve.
So, let’s think about it for a moment. If you have 100 Clients, and want to grow the business by 2 new Clients per Month (which you cannot do since the Techs are only more productive when working a Zen environment) and have very little Client Churn (8%), that is 8 Clients per year or four months of growth. Get the picture? The first 4 months of 2024 is not really growing the business, you are just making up for Churn. I know, I know - the replacement Clients are a better fit, and most likely a growth in average seat size. That just means you cannot afford to lose them even more. And don’t forget, they just left an underperforming MSP, so there is a good chance they will leave you, unless you fix your Client experience.
And that is what it takes – fixing the Client experience. Excuse me while I go on a rant here. On May 2nd, we posted this article: MSPs do not give a HOOT about Client Experience! What drove me to rant was sales. We are able to sell Service Delivery Foundational and Performance, Streamlining Labor Invoicing, and Project Management Methodology Improvement Programs all day long. But it is pulling teeth to sell Building a Better Client Experience (BaBCX)– MSPs do not care about improving the Client Experience – I (Steve) STAND BEHIND THIS STATEMENT.
We sell more BaBCX by packaging it with the Real-Time Time Entry Culture Change program, than because the MSP cares about the Client Experience. Yet every other industry in the world, and every best-in-class MSP starts their improvement programs with caring about the Clients. For Example:
Apple
Harley Davidson
Zappos
Nordstrum
Trader Joes
In this day and age, businesses do not provide products and services, they provide Client Experience. This includes Advanced Global. Our focus is providing a Transformational Operational Improvement Experience. One with a specific roadmap to get you from where you are (inefficient and losing profits) to where you want to be (maximized efficiency and growing without hiring), a success criteria using LEAN Process Profitability KPIs, and a guide on the side providing:
100’s of Process Improvement Discussions via Videos you have access to after leaving the program
Weekly Side-by-Side, “Done with You” coaching sessions
100’s of Advanced Live Reports to guide you on continuous improvement long after the program has been completed, reports that empower you to hold the Team accountable in a positive, collaborative, coaching/mentoring environment
Where else in the world are you going to find a better MSP Operational Improvement Experience – and we are committed to continue improving for you, the industry, and starving children (ours). To top it off, we provide all this with a Money Back Guarantee.
WHY? Quite frankly, if we are not delivering on our promises, guiding you to deliver best-in-class KPI performance, we are not entitled to be paid.
I do not want to cost you any money. Our focus is to provide 10X return on your investment in a partnership with Advanced Global. Again, where else are you going to find a better MSP Operational Improvement Experience?
I am Steve and I approve this Blog Article.
Steve and Company.
Tired? Frustrated? Overwhelmed? Thriving and want to do better because you know you can? Don’t let this be your last season. info@agmspcoaching.com