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Rethink MSP business processes for greater operational efficiency

Greater operational efficiency can help MSPs maintain margins and keep their customers happy. MSPs utilize automation and KPI tracking to improve back-end processes.

When Vertical Solutions launched as a managed services provider in 2007, one of management's key tasks was to rethink its operations.

The Pittsburgh-based firm had been a break/fix IT support company until then. A merger with R.L. Nelson and Associates Inc., however, would recast Vertical Solutions as a managed service provider (MSP) and cloud hosting provider. Bruce Nelson, owner and president of Vertical Solutions, an R.L. Nelson and Associates company, said the new company needed to take a more proactive approach than it had before. The objective: look at customers' systems and discover issues ahead of time instead of waiting for something to break.

To meet that goal, Vertical Solutions identified its core business processes and looked for opportunities to automate them. The company revamped every application supporting its business, Nelson said. Specifically, Vertical Solutions deployed Autotask Corp.'s professional service automation (PSA) software and Continuum's remote monitoring and management (RMM) software. The tools enable Vertical Solutions to automatically generate a ticket when it receives an email request from a customer. Tickets are routed to specific queues based on the type of problem the customer is experiencing. If a ticket isn't quickly acknowledged, Nelson and his management team receive an alert within a 45-minute (min) window.

"We automate the process to make sure something doesn't slip by," Nelson said. "It's our responsibility to be efficient on the back end."

If you can help set the right expectations early, you can save a lot of extra cycles that can waste so much time in the business.
Jack Knockeprincipal and lead consultant, The VAR Advisor

MSPs strive to boost operational efficiency to keep customers happy and, in a competitive field, maintain margins. It's a job that requires attention to detail and a constant state of vigilance. Seven years into its revised business model, Vertical Solutions continues to tweak its processes and remain on the lookout for any gaps, Nelson noted.

In addition to rooting out inefficiencies, MSPs should track key performance indicators (KPIs) to track their progress, industry executives said. MSP business leadership should also scrutinize make-versus-partner decisions, industry executives noted. It's often more efficient to team with a channel ally to provide a particular service than to build an in-house capability.

Efficiency drains

An MSP may not have to look very far into its processes to uncover inefficiencies. Indeed, poorly managed customer onboarding approaches can introduce operations headaches.

Jack Knocke, principal and lead consultant at The VAR Advisor, a consulting firm that advises IT service providers who want to become MSPs, said managed services firms sometimes fail to set expectations when they sign up new customers.

Customers need to know which services fall within the scope of a contract and which will remain in-house, Knocke noted. They also must also know the contract's start date, since there is typically a lag between the contract signing and the effective date of the contract.

Knocke, who is also a CompTIA faculty member, recently presented on operational efficiency at the Continuum Navigate 2014 User Conference. He said feedback he received from MSPs attending the conference revealed that the first two weeks of a new contract rank among their biggest challenges. An MSP's phones may begin ringing with calls for assistance before it has the customer's IT assets fully under its control.

An MSP's operations manager or a client relationship manager should take the lead when it comes to informing a customer about the contract's scope, start date, support contacts and other particulars, Knocke said.

"One of the first things is to gather ... the team you will work with at the client and make sure the message gets out," Knocke said. "If you can help set the right expectations early, you can save a lot of extra cycles that can waste so much time in the business."

Working with a partner to offer a service can also boost efficiency -- for both the MSP and its customers. Larry Kerrigan, president of CMIT Solutions of Cambridge, an IT services firm, said his company provides a backup and disaster recovery (BDR) service from Continuum. The BDR service, he said, takes snapshots of server data every 10 min, sending only the data that has been changed since the previous backup. The changed data, as opposed to a full backup, travels over the wire to a cloud-based disaster recovery platform.

When a customer's server goes down, a virtualized version of the server is spun up in the cloud, Kerrigan noted. The customer's workstations are repointed from the failed physical server to an IP address in the cloud where the data lives.

"If we do encounter a disaster, we can bring back a whole server in minutes," Kerrigan said.

With a traditional DR approach, in contrast, it could take a week to recover a large file server for a company lacking a hot standby machine, Kerrigan said. The company would have to ask a vendor to send replacement hardware and then load the operating system on the new server and apply all of the programs that previously ran on the failed server, he noted. At that point, the company could restore the data.

From the MSP's point of view, using a partner's DR service offers efficiencies via economies of scale.

"I could try to engineer that platform myself, but I would need to get tens of thousands of users for that to be cost-effective," Kerrigan said.

Efficiency through automation

RMM and PSA systems automate key MSP business processes, such as monitoring servers and managing tickets. In general, automation shrinks the time that MSP employees devote to individual service delivery, support and administrative tasks. That means each employee has the potential to track more customer servers or close more tickets.

Knocke suggested that automation, when layered on a solid business process foundation, can yield significant efficiency gains.

"If you can build an automated process that is built around an efficient manual process, you can save the time of 10 people," Knocke said.

Integrated MSP business systems can produce additional benefits. That's the thinking EVS Corp. follows in its transition to a single business platform based on Salesforce.com. The Memphis, Tenn., company, which specializes in BDR, plans to tap Salesforce for sales automation, ticketing, billing and communications.

Gayle Rose, CEO of EVS, said the rollout will take place over a span of 18 months to minimize employee disruption.

Eventually, every employee "will basically live in Salesforce," she said.

Rose said a typical MSP automation approach would be to deploy disparate systems for email, accounting and ticketing. But over time, a growing business will face the necessity of hiring more people to keep up with the task of maintaining separate systems, she added.

But using Salesforce as a unified business platform provides tremendous built-in efficiencies, according to Rose.

"We can scale without having to add so many people," she said.

Tracking KPIs

MSPs take different measurements to see how they are doing on the efficiency front. At EVS, Rose said she monitors earnings before interest, tax, depreciation and amortization (EBITDA) to help keep score.

"In my mind, EBITDA is a measure of margin and operational efficiency at a very high level," Rose said.

EVS also measures its margins across individual services within the company's portfolio. KPIs, meanwhile, are embedded in the company's planning process. The company develops a three-year plan to establish EVS' long-term vision and also creates a one-year operational plan against the three-year vision. The company includes KPIs in its one-year plan, which is broken down in quarters.

Kerrigan said he tends to focus on customer satisfaction and performance metrics as opposed to indicators that relate to the business health of the company.

"My philosophy is take care of the clients and do a good job, and the business success will follow," Kerrigan said.

Kerrigan said he concentrates on such KPIs as the percentage of times the company resolves customer issues during the first call. At CMIT Solutions of Cambridge, the objective is 80% or higher.

Problems that aren't resolved during the first call go into a ticketing queue. For those issues, the KPI is the time it takes to close the ticket. Kerrigan said the company's objective is to close out tickets within 10 calendar days. He said the company hits that target about 95% of the time. Exceptions stem from situations in which resolution time depends on vendors or shipping schedules. The company may have to wait for a vendor to create a software patch or to ship a replacement part in the case of a hardware repair, he said.

Vertical Solutions' Nelson said his company sends out follow-up surveys to customers whenever a ticket closes. The survey results help him track customer satisfaction. Customer satisfaction ratings provide "an indicator ... of how the process is working," Nelson said.

Vertical Solutions also views the number of tickets-per-customer-endpoint as an important measure. "In that scenario, we are looking for outliers -- clients or areas within clients that generate a heavy volume of tickets," Nelson said. Ticket volume helps the company identify whether a customer is experiencing an underlying problem, such as aging IT systems, he said.

Ticket volume can also shed light on anomalies in the BDR business. If EVS notices that a particular client has the most recovery requests during a one-month period, company representatives will meet with the firm and look for the root cause, CEO Rose noted.

Next Steps

Learn best practices and key performance indicators for IT solution providers

Read about MSPs that struggle for complete business transition

Find out about MSP best practices discussed at the Ingram Micro Cloud Summit

This was last published in October 2014

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What are the most important measures of efficiency for MSPs?
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Customer satisfaction/quickly resolved issues is a key measure of efficiency in my book. The faster an MSP can deal with problems, the faster it can move on to others and continue building business. 
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