Profitability Plateau: Breaking reactive IT service habits

Posted by Gary Pica on Dec 2, 2015 10:00:00 AM

Stop struggling under the weight of endless IT tickets; break those reactive habits.Are your monthly recurring revenue numbers plateauing at $75,000 to $100,000 a month? Is your profitability stagnant while you struggle to increase sales?

Often, this is where MSPs get stuck. You’ve nailed down your processes and made a few sales, but there’s still something missing. You’re spinning your wheels. You’re working hard, but you can’t break through that barrier to increase monthly recurring revenue. You want to move past this $100,000 threshold.

So, what’s the answer? Hire more people? Rework your service offerings? Focus more on sales?

Unfortunately, the answer isn’t as simple as “sell more.”

How Did You Get Stuck in the First Place?

There are many factors that contribute to this impact zone. The most important? You’re working reactively. And that means you’re losing money.

To break through the profitability barrier, IT service providers often start adding new clients. But, with every new client, the number of IT tickets for user requests and monitoring alerts starts to climb. Employees are focusing solely on getting those tickets closed each day, but they still continue to pile up.

E-book: 5 Big Tips for Running a More Productive IT Services Business

We call this the “reactive spiral of death.” In it, you have no time to spend on improving your business or addressing proactive efforts, like IT system alignment and optimization of your clients’ operations.

Rest assured: There is light at the end of the tunnel.

MSPs that are able to escape this reactive spiral of death are finally in a position to reduce their IT tickets per endpoint and spend less average time on each one. So, let’s move on to how to make that happen.

The Numbers Behind Your Struggle

To start your journey toward wiping out your reactive habits, let’s look at two numbers:

  • Tickets per endpoint per month
  • Average ticket resolution time

The average MSP stuck below the $100,000 barrier creates .75 to one ticket per month per endpoint. This includes all reactive tickets from end users, system and monitoring alerts, system failures, and any unexpected issues that arise. Top-performing MSPs, in comparison, only generate between 0.2 and 0.5 tickets per month per endpoint.

That’s a significant difference.

Now, evaluate your average resolution time. How much time do employees typically spend on resolving and closing IT tickets? MSPs that are stuck below the barrier usually spend a full hour closing one ticket. Top MSPs, however, spend under 30 minutes per ticket.

What if you generated half the tickets and spent half as much time as you normally would resolving them? Imagine the extra time you would gain. Your team could focus more on optimization and increase the value of your service offering

Watch now: Productivity's Impact on Your Bottom Line

Breaking Bad, Reactive IT Service Habits

Ready to break through your profitability barrier and elevate the value of your service offering? Employ the following two tactics to increase your productivity and monthly recurring revenue.

1. Standardization and Alignment

Imagine the increase in efficiency you could achieve if there was a higher level of standardization across your client base. Think beyond documentation processes and IT system uniformity. Think ongoing standardization.

Most providers only implement standards two times: when they install something new and when something needs to be fixed. Every firewall, cloud service, and IT system is secure and working properly the day it’s installed — but what happens when employees actually start using it? That’s where your IT tickets come from. Alignment with technology standards should be an ongoing, continuous process.

 2. Implementation of Network Administrator

Without resources dedicated to making standardization happen, you won’t see any improvement. That’s where the network administrator comes in. It’s this person’s job to align each client’s IT system with your company standards.

With the network administrator’s focus on standardization, you’re able to eliminate many IT tickets generated from systems that are out of alignment. This frees up other employees who are drowning in IT tickets — and it frees you up to focus on improving your business model.

E-book: Tips for Running a More Productive IT Services Business

Gary PicaGary Pica is a pioneer in the managed services field. He built a top MSP with over 7,000 endpoints under management. His results in sales and profitability redefined what is possible for MSP’s. Gary has shared the process that revolutionized his business through the FormulaWon program and myITprocess software application. His passion is helping MSP’s reach their full potential. For more information about Gary and TruMethods visit www.trumethods.com.

Photo Credit: Rhys A. via Flickr.com. Used under CC 2.0 License.

Topics: Saving Time

The MSP's Complete Guide to Cyber Security
Fixed Price Data Protection
MSP Marketing Assessment
Intronis demo lunch