Building the business case for a service desk. By Eric Anthony, with additional input from Richard Tubb

Building the business case for a service desk By Eric Anthony, with additional input from Richard Tubb

1 When I started my IT Managed Service Provider (MSP) business almost eight years ago, MSP wasn t even a buzzword, and the idea of fixed-price IT services was in its infancy. Even so, I knew that I needed to run my business on processes, not just my own abilities. My own abilities are limited and if I wanted to grow and scale the business then I would have to have systems in place to make that happen. For the MSP, the tool to manage those systems is the PSA or Professional Services Automation tool. Small MSPs gain advantage by doing more with less and by having the right service desk application in place; and larger MSPs simply cannot maintain proper control of their business processes without this tool. The hard part is finding a tool that has the features and flexibility to manage your business while still being simple enough for all of your employees to use without complaint or error. Simplicity is a key ingredient because if your MSP is one of those larger ones I mentioned, then getting your employees to use the system is the primary key to your service desk success. The old adage Garbage In, Garbage Out is exactly what you ll get if your service desk application isn t simple to use. More information? Do you need more information about MAX ServiceDesk or do you want to start a 30-day trial today? Contact our sales team: info@maxfocus.com In this white paper we ll cover a number of key components or processes that your service desk must perform efficiently in order to ensure that the processes you, the business owner or manager, have put in place achieve your definition of success with your MSP business. It doesn t matter if you operate under a break/fix or a managed services model, your service desk

application is the center point of your business. It will help you manage time, people and money by optimizing the following processes: chat, and voice-to-text. If necessary, incidents can be entered into your service desk system manually for those situations not covered by automation. 2 3 Customer input tickets, service requests, requests for quotes, and feedback. Service delivery ticket workflow, SLA warnings and breaches, ticket scheduling and recurrence. Billing accurate time capture, export details to accounting package, contracts, and recurring invoices. Analysis reporting, anstatistical dashboards. Customer input As I m sure you ve heard, responding quickly and professionally to your customers is of vital importance regardless of whether you are a Managed Services Provider or still doing mostly break/fix work. Failure to do so leads to customer frustration and can result in you losing business. Of course, responding quickly to every issue is an easy thing to say, and it was easy to implement 15 years ago when the primary avenues of communication were still telephone and fax. Communication has evolved rapidly since then. Now there are more ways to communicate and they re exponentially faster. This creates additional complexity for the MSP, who now has to monitor more lines of communication and respond faster than ever. With all that complexity and the need for greater speed, it s crucial to have a system in place to keep track of incidents. Introducing the service desk This is where your service desk comes in. Your service desk takes those inputs such as telephone calls, emails, or in-person requests either automatically or manually entered, and tracks them from cradle to grave. The first step is getting as many of your inputs entered automatically. Emails, a customer web portal and monitoring alerts are common sources of automated input. Some service desk offerings have options for linking to social media, In addition to workflow, customer communication is key. Making sure that your service desk notifies clients when a ticket is created by them or on their behalf is critical. Then the application should allow you and your staff to communicate quickly and easily with clients and record those communications. Most importantly you must complete all open tickets and close the loop on all your work. If tickets aren t closed, you won t have confirmation that work was completed. As an MSP, this type of workflow control allows you to scale your business, ensure your technicians are conforming to your working standards, and manage customer requests so that nothing falls between the cracks. Once the inputs, now tickets, enter the system they re prioritized, assigned to staff and divided up into work queues. Some of these actions can be done automatically by the service desk through workflow rules, such as automatically placing tickets into queues, setting priorities, and assigning to staff based on the source, type, or keywords related to the tickets. Now that they re properly categorized and prioritized they can be worked in the proper order. A proper service desk should also track due dates and Service Level Agreement (SLA) events to make sure that tickets are being worked efficiently.

4 Service Delivery If you think you can succeed without providing excellent customer service, think about this quote from a 2011 American Express Survey: Three out of five Americans (59%) would try a new brand or company for a better service experience. Your service delivery is of primary importance to retaining customers. You might have awesome sales people, but if you can t deliver what you are selling in an organized and efficient manner then you will lose customers. Customer service will always be a contributing element to any successful business. Even using the exact same tools and processes, one MSP can excel over another by providing better service. So if technical ability and value-added features are equal, what are customers looking for in terms of customer service when choosing an MSP? They want to feel heard. The first thing a service provider can do is respond to the customer quickly. More importantly, the technician should reiterate back to the customer what the issue is to make sure the customer knows that they re understood. IN short, ensure you follow these three simple rules: So the question now becomes how to deliver a better experience in terms of the points listed above? The answer is PROCESSES. Processes allow you to measure the things that matter and position yourself to scale the business. The key to good processes is to automate them as much as possible. A service desk application can automate many of the tasks necessary to maintain excellent customer service regardless of the amount of work thrown your way. Nothing makes people feel warm and fuzzy more than knowing that they ve been heard and that someone understands their problem. The service desk tool accomplishes this in two ways. Firstly, upon receipt, it automatically confirms a new ticket or incident from a user. Even though customers know and understand the acknowledgement they ve received is an automated email, it s still reassuring knowing that the ticket was received. Secondly, it provides an avenue for technicians to be notified of a new ticket and to quickly respond via email or the service desk interface reiterating the original request and asking for clarification or additional information when needed. It also maintains a complete history of both sides of the email conversation ensuring that it can be reviewed at any point by any technician with access to that queue. Make the customer part of the process Give the customer access to view the status of their tickets, who s working on them and what the resolution is when the problem is resolved. Do everything quickly Respond to, assign people to, and resolve problems efficiently. Don t sacrifice speed for quality but don t make them wait unnecessarily either. Do it right the first time The only thing worse than doing it too slow is doing it wrong. Increasing speed without sacrificing quality is called efficiency. Your technicians can be more efficient when they have information at their fingertips. Knowledge base articles, asset/configuration information, and ticket histories eliminate redundant work and save time all by residing within one application. Through the effective use of ticket queues, technicians can collaborate on jobs to create even more efficiencies. To make sure that you and your organization are up to speed, use the SLA functions within your service desk to maintain proper timing

5 and to generate alerts when tickets are about to breach acceptable limits. your business won t evolve and grow. As a business owner who has made the mistake of wanting to Billing Can a piece of software increase your cashflow and profits? To be blunt, it isn t the software that increases your cashflow and profits; it s the automation of processes that the software facilitates. Regardless of your business you must have processes in place and make them workable in order to succeed and scale. Unfortunately, humans are prone to distraction and must sometimes be given a framework for getting mundane tasks done. It s those mundane tasks, however, that often ensure that ideas, time, and talent are translated into revenue. For the MSP or break/fix business these tasks usually revolve around their service desk software. When I finally got my processes to the point where we could invoice customers once a week, I saw a dramatic decrease in the turn-around time for receivables. Without this change in velocity of cash flow I would not have sustained weekly payroll at times. I found some interesting things when I sent more invoices more often. My invoices received less scrutiny because of the lower dollar amount. Smaller invoices were paid faster because they could be approved at lower levels. Another part of invoicing that my service desk helped with dramatically was invoicing questions. By capturing detailed information and putting that information on my invoices, there were significantly less questions that caused less friction in getting paid. Also, on a psychological level, invoices with more detail get paid faster because they re typically approved faster. Businesses are like any organism in that they need food to grow. Positive cash flow is that food to your business. Without consistent, positive cashflow 6 serve the customer above all else (a noble concept), I realizated that just like the oxygen mask on an airplane, you can t help anyone else until you make sure you re going to be around to do so. Analysis Any business that delivers a product or service must keep track of its inventory in order to be profitable. For the managed service provider this can be difficult because their primary inventory resource is technician time. One of the problems is that MSPs frequently have two types of customers. They have managed services customers who are billed a flat monthly rate using technician resources in such a way that the less tech time used, the more profitable the MSP becomes. They also have break/fix customers who are charged on a per hour basis. As you can imagine already, this makes it harder to manage inventory than just a company that sells widgets. The break/fix model is closest to the widget company because it s a one-for-one relationship. With break/ fix, your widgets are time. For each widget (time) sold, the company makes $X in revenue, which translates to $Y in profit. In this scenario it s the same with technician time. The most common problem here is that widgets are sometimes lost or stolen. The same thing can be said for technician time. Therefore it s critical to have a system for tracking technician time against their jobs or tickets to make sure that billable time is not lost or, worse, stolen. Examples of data to be tracked includes: Average time spent per ticket (more is better) Average time per ticket for each technician (identify more profitable technicians) Technician availability (how much inventory is available/wasted) Profit by client (Revenue minus COGS) The managed services model is different because profitability is based on using the least amount of

resources to deliver a fixed price service. In this case the MSP must be able to track how much time or resources are used to deliver each service or they won t know what their profitability is. As an MSP you must be able to identify the following key performance indicators (KPI) in terms of time inventory: 8 Making fact-based decisions Why is it important to understand your gross margins for both types of service delivery, break/fix and managed services? This is so that you can make fact-based decisions. The old phrase What can be measured, can be managed is hugely important Average time spent per ticket (less is better) Average time per ticket for each technician (identify less profitable technicians) Time spent per month on each client and device (identify less profitable customers/devices) Profit by client or device (Revenue minus COGS) Technician availability (how much inventory is available/wasted) here. For instance, while you may know that your MSP business is profitable a quick glance at your profit/loss or bank statement shows that you generate more income than you spend in costs each month how would you react if the figures showed you that one managed service contract was wildly profitable, but those profits were being eaten away by six unprofitable break/fix contracts. As you can see, the data collected is almost the same, but they have an inverse relationship to profitability based on which model the client falls into. By understanding the gross margin for each contract, you can shift your focus from measuring profit overall in your business, to measuring profit on each individual contract (or technician) and So how can you effectively measure the difference between the services you deliver under the break/fix model and those you deliver under the managed service model? The key is to measure the gross margin. make adjustments accordingly. That s the profit you re making as a business now. Think how much more profit you would make if those six unprofitable break/fix contracts became profitable in addition to that one very profitable managed service contract. 7 Understanding your gross margin Gross margin is the difference between revenue and direct cost in the products or services you supply, before accounting for fixed costs. Typically this means calculating the selli ng price of an item either your technician s time, when sold in the break/fix model, or 9 Resolution cost per issue We ve explored the benefits of understanding gross margin and accordingly your profits at a client level. It s worth understanding that measuring metrics in this way allows you to go even deeper with your analysis and pinpoint individual costs per issue. the contract cost, when sold in the managed service model less the direct cost of delivering that service, such as the hourly pay of your technician. For instance, let s say that you have a managed service customer who has an aging backup system. By tracking the time spent managing that customer As a business, you should be looking to increase your gross margin across the board reducing the costs of providing a service, and increasing the against the contract profits, you notice that the gross margin for that customer is dropping rapidly. This is the first red flag. profits you receive from that service. So in our two examples of break/fix and managed service above, gross margin can be calculated by understanding the cost of a technician s time spent vs the cost of a technician s time charged. On closer inspection, you can see that typically, issues for this customer are resolved in a timely fashion. The gross margin for support tickets, however, plummets when your technicians are dealing with backup issues at that customer.

10 How do you improve the gross margin across the board for this customer? The metrics tell you that your clients are spending too much time dealing with the aging backup system, and it s reducing your gross margin and costing you profits. The solution? Speak to the client about replacing their backup system with something that needs less maintenance. If the client replaces the backup system then your gross margin will jump up again as your technicians are spending less time managing the backups. It s worth noting that even if the client doesn t replace their system, you can make a fact-based decision to raise the price of the customers managed service contract to compensate for this problem. Remember that gross margin can be increased by reducing the cost of support (replacing the aging backup system with something that needs less maintenance), or by increasing the price of the service provided (your managed service contract). Increasing profits through training Two further examples of increasing gross margin might be through highlighting where your support could be delivered more efficiently. 11 The second example would be where you identify that a particular member of staff at one of your customers is taking up an inordinate amount of time from your managed service contract. Upon further investigation you see that this particular customer employee seems to be requesting frequent assistance from your technicians in resolving Microsoft Excel issues. How can you manage this issue so that the problem is reduced or even eliminated, thus reducing the amount of time you spend dealing with the issue and increasing your gross margin? The answer might be to offer Excel training to the customer employee. This training could be charged for (offering a new profit stream) or, if you make a fact-based decision based on your gross margin before and the predicted gross margin after the training. Training might be given free with a view to lowering your cost of support over the long-term. Lowering cost of support In each of these scenarios, we have been able to highlight issues where gross margin is affected not only at a company level, but also at a customer level, and even more granularly, at a customer employee and an MSP technician level. The first example could be where you identify that a particular technician seems slow to resolve issues around a particular technology. Comparison of the technician s time spent resolving this issue is considerably higher than the time other technicians within your business spend resolving similar issues. In this scenario, you ve highlighted the issue that is affecting your gross margin and can make a factbased decision on how to address this issue. The solution may be to provide the technician with training on the specific technology to increase his knowledge and skills and to reduce his time to resolution for this type of issue. Once the technician is trained up, your gross margin on that particular type of issue should also improve. 12 This level of granularity affords you a great deal of power when focusing on how to grow your MSP business. You can make fact-based decisions rather than work on gut feeling alone. Conclusion Best in Class service builds customer loyalty, spreads by word of mouth and makes your managed services business more efficient. Utilizing a service desk application brings together the functions of communication, knowledge, and efficiency. It also allows you to make fact-based decisions based on key metrics to help you provide a high level of service, grow your business and maintain success throughout the life of your business.

About the authors Eric Anthony Eric s IT experience began in 1985 at the age of 15 when he was making money setting up home computers for friends and neighbours. He went on to receive a degree in computer engineering from the University of Central Florida. Within a year of graduating he started his first break/fix IT company supporting the SMB marketplace in Orlando, Florida. In 2004 he became COO for one of his largest clients, a fashion jewelry manufacturer and in 2006 became CIO of a group of specialty furniture manufacturing companies. After five years of management experience, he decided to start his second IT company focusing on a managed services model. Providing different levels of service to a variety of micro-smb customers allowed his company to provide standardized services across a variety of market verticals without having to be specialized in any single vertical. Richard Tubb Richard Tubb is probably the most well-known face within the British IT Managed Service Provider (MSP) community. His track record speaks for itself, as he launched and sold his own MSP business before creating a leading MSP blog and consultancy practice. As the former owner of an IT Managed Service Provider (MSP) business, Richard understand the challenges IT business owners face every day and can help you to overcome them while retaining what s left of your precious sanity. The author of the book The IT Business Owners Survival Guide and writer of the award winning blog www.tubblog.co.uk aimed at putting IT Consultants back in control, you can find Richard on Twitter @ tubblog. In 2013 Eric sold his IT company to long-time business associate and went to work for LogicNow as a sales engineer. Combining his years of experience with the MAXfocus Remote Management product and business ownership he now works to help other MSP s achieve their goals through using the LogicNow family of products.

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