Resource Utilization or Utilization? Datto’s #5 KPI to Watch
We have been living the subject ofResource Utilization(notice the spelling)since Dec 2017.It all started with a Service Manager simplyasking,“Can the standard Autotask Resource Utilization report be written as a Live Report so it can be scheduled to run?”
What grew out ofthatsimple request was a powerful tool that has been increasing profits by 10% or more for every MSP that usesit,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’slook at what Datto has to sayonone of our favoritetopics.
CTA:For more information on ResourceUtilizationclick here to download our Resource Utilizationfor MSPseBook.
FastRecap:Datto's4thKPI-RUsub-article takeaways
Three main aspects:
Performance vs Projections
Resource Scheduling
Visibilityinto underlying costs
Who is doing the work
What issues they are solving
What their cost is (assume we are talking burden)
What revenue theyare generating
Where tickets are coming from
Identifythe most common issues
Identifygaps in Knowledge,SkillsandAbilities
To get the eBook from Datto, download ithere.
Performance vs Projections:Our Take
First,we are not talking aboutprojections,we are talking aboutexpectations.The MSP industry is the only one I know where Techs getpaidwhether they work or not(ormore accurately, whether theytrack their time or not).
Let’sface it, we cover our costs by invoicing Customers.ThatmeansallCustomer-Facing work should be considered billable – either by a Managed Service Agreement (MSA) or on aper hour basis, but all billable!The Tech should get credit for all of it, including Warranty and Business Development (non-billable) work.
So,isitreasonable to expect a Tech to work to earn their pay?100%!Wellnowlet’sbe reasonable.There is transition time, lost time, meeting time, and if the Tech is notbehavingproperly, documentation time where they need tocatch up…butoh well,it is what it is.All of this reallyaddsup and takes away from what is expected.
It is amazing that an MSP can run at 50%utilization(meaning while the tech is being paidfull-time,they areactuallyonlyworking 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 classare80% or about $32,000 per Tech per Year more profitable (not that money is everything). ThehighlyefficientMSPs run at 95% or36 hoursper 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 commentshavevery littleto do with Resource Utilization.They have a lot to do with how the Company performs, which can bedeterminedby the Mean TimetoResolve KPI (still do not understand why this is not in the top 10, but a hypothesis is becomingclearer).
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 takebothTechsthe morningtoaddaPC to the network.One of them willpick up another 2.2 hours of work in the afternoon,andtheother Techwill blow off the rest of the day.
What Does Resource Scheduling Have todoWith Utilization?
Datto assumesthatTravel is non-billable and not Customer Facing work.The first part is very seldom truebecausemost MSPs charge something for travel and half charge portal to portal,as travel ispart of the engagement.However, all travel is Customer-Facingworkand the Tech should get Resource Utilization credit for driving to aCustomer’ssite.
Sorry, I amjustnot seeing where Scheduling has anything to do with Utilization.Unlessof course,you are scheduling them for three days of offsite training,thenyes,theirutilizationwill be down for that week. Butthat is not a typical situation.It is acceptable that fromtime to timeUtilization will be down for good reason.
But if Scheduling is thecause behindlow Utilization,then it is management atfaultand the Techs should not bepenalized. Eitheradjust the Weekly Billable Hours Goalto the correctexpectation orstop scheduling them for non-Customer-Facing work.
UnpackingUnderlying 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 ResourceUtilisation(notice the spelling) without even mentioningthatwhat we are talking about is the Weekly Billable Hours Goal?Itseems 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 orCOGS(non-billable Resources) and the profitability of one Billable Resource over another.But Resource Utilization does notimpactthe underlying cost-just the efficiency andrevenueof one Utilized Resource over another.
Visibility into underlying costs:
The list of Visibility hasvery littleto do with Resource Utilization.Resource Utilization is simplythepercentage of a Tech’s available hourswhichwas utilized for Customer-Facing work.
Yes, the items listed in the sub-section arevery important, and something a Service Delivery Team/Manager needs to get their head and armsaround–buttheyhave nothing to do with Resource Utilization.For Resource Utilization theService Manager or Self-Managed Techneedsvisibilityon
how many hours last week:
WasaTech(or myself)available?
DidaTech(or myself)work (or at least reported)?
Did aTech(or myself)work for Regular Time, and what can we do to reduce this number, sowehavemore Customer-Facing time?
Dida Tech(or myself)work for the Company either helping Employees ormaintainingthe network, and what can we doforto reduce this number, sowehavemore Customer-Facing time?
Dida Tech(or myself)do non-billable work, andare 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 focuseson, then Resource Utilization will grow to be 80-90%,and profit (not Revenue) willincreaseby $32,200 to $48,300 per Tech per Year.
To get the eBook from Datto, download ithere.
Summary:
Here isthe process ofhow toeffectivelyuse agoodResource Utilization Report(one that has been scheduled to run each Monday morning) to evaluate last week’s timesheets:
Was the timesheet completed? Inother words,was40 hoursreported?
How many hours areregulartime, and what can we do to reduce that number?
How many hours areCompanytime (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-billablework.If not, coach the Tech on what is and is not non-billablework.
Is the Tech meeting the Weekly Billable Hours Goal? Ifnot, what are theyworking onthat is non-Customer-Facing work?
CTA:For more information on ResourceUtilizationclick here to download our Resource Utilization eBook.
We want to hear from you! Do you agree? Disagree? Have questions? Let us know.
Steve