Improve Process Efficiencies to Raise Your Managed Services Margins

Both the speakers and audience at this morning’s MSP Partners Community meeting during CompTIA’s Annual Member Meeting kept coming back to a common pain point that many IT solution providers experience. Despite the high level of automation and remote processes followed by many industry experts, others continue to struggle to improve their organizations’ business and process efficiencies. As the company grows, what was once a small issue can snowball into a much greater problem that gets harder to address.

Carolyn April, director of industry analysis for CompTIA, shared a number of results from the association’s latest IT services research, including the incidence of providers leaving vendor program money on the table. According to those surveyed, 17 percent indicated they frequently do and 40 percent say they occasionally have, while for 70 percent of them it’s taking on greater importance in their business. That’s just one process where a little oversight could add money back in the company’s coffers.

But if the organization’s business -improvement needs are numerous, which area of concern should they address first to make the largest impact? “Cash flow,” is most important, according to John Tippett, COO of EDTS. “MSPs have to master cash management practices first to ensure they have the resources to address the other issues in their business.” When the accounting side of the house is running well, owners can focus more attention on the operations and customer services processes.

James Foxall, president of Tigerpaw Software emphasized a couple basic steps needed to improve cash flow. “MSPs have to make sure their time is captured immediately, and then get billing out right away. You need to invoice each day, enforce late fees, and remain diligent to get paid on time and for everything you do.”

That is likely the reason that PSA (professional services automation) systems are becoming so popular with IT services organizations, since they can automate their perfected services and billing processes and track service tickets. Using these systems, MSPs can better manage their services teams and improve cash flow with immediate invoicing (and tracking).

Many MSPs are adopting the industry best practices to address process improvement needs. That’s a foundational element of the MSP Partners Trustmark program, a business credential designed to qualify and differentiate organizations providing on-premise IT services via a managed services business model. This collaborative community helped to create the standards, best practices and courses to complete the program and continues to be a part of its promotion and refinements.

To learn more about the MSP Partners Community and how to benefit from their business improvement programs, go to www.comptia.org/membership/communities/msppartners.