Given the overwhelming popularity of our roundtable series earlier this year focused on how MSPs can navigate difficult client relationships, The ASCII Group and Commercial Integrator here present a fresh roundtable discussion to kick off another multi-part series. This time, we turn our attention to how to optimize your MSP business and, thus, achieve stronger growth, assure long-term financial sustainability and bolster your industry reputation.
We kick off the series with three leading ASCII Group members: Sean Jennings, sales manager, CIM Solutions; Angel R. Rojas, Jr., president and CEO, DataCorps Technology Solutions; and Christopher Barber, chief nerd, Cheaper Than a Geek. We hope you enjoy the insights and analysis we present here.
Commercial Integrator: At a time when labor costs are going up and businesses are looking to save money, how does your business determine proper staffing levels?
Sean Jennings: I watch ticket response times and scheduled booking loads. I will also get feedback from my techs and my service manager to understand how consistent they feel the loads are. I will then look at the techs’ ticket times to see if they are working on a fully loaded schedule or not (i.e., how many hours per day they are billing).
Angel R. Rojas, Jr.: We are regularly studying helpdesk volume, sales pipeline, team burnout and growth opportunities to make decisions on staffing. Typically, I prefer to be slightly overstaffed to give us the ability to be agile.
Christopher Barber: As we always have: by revenue per employee.
Commercial Integrator: What calculus do you do when setting your pricing levels? Have you had to change your pricing substantially in response to inflation?
Jennings: I will watch customer profitability. I will also poll other MSPs in my circle to understand what they are billing or are able to bill their clients.
Rojas, Jr.: Pricing is set based on an individual client’s requirements, but we utilize technology baselines on healthy IT spend, which are currently trending in the $4,000 to $5,000 range per employee, per year. We find that the budget number informs clients and prospects so they can plan accordingly. The number sets a good expectation for robust good health and, when reality falls under that number, everyone’s happy!
Inflation has been particularly challenging to deal with, as it has resulted in us having to pass costs along to clients. We delayed as much as possible, but we made the tough decision to increase rates in order to offset the rising costs.
Barber: Yes. Here in Maryland, the laws were adjusted, and some items that weren’t subject to sales tax suddenly were. And our primary software company increased their pricing by 5% at basically the same time. So, overnight, our costs for some services jumped 11%. We politely explained this to our clients, along with [doing] an 11% increase. Since, we have been hit with more price increases — as we all have — and will be implementing adjustments again. For now, this appears to be “the new normal.”
Commercial Integrator: How critical is it for MSPs to continually broaden their core competencies and areas of expertise? Which areas are you looking to strengthen?
Jennings: This is very important. If you are not growing and adding updated services, then you will lose your competitive edge as an MSP to other MSPs, [as well as] to in-house IT. Companies will outsource to an MSP to be able to access best-of-breed skill sets. If all they wanted was someone to support Windows XP and Server 2018, then they could just hire anyone off the street. Most companies want to be using the best technology to help them grow their business and improve efficiencies and profitability.
Rojas, Jr.: MSPs must always focus on the assumption that today’s problems are solved tomorrow. Anticipating what tomorrow’s challenges will be informs our strategy and allows us to prepare and quickly adapt. We are currently focused on process and systems. By focusing on process improvement and integration of technology with business processes, we believe we’ll be uniquely positioned to bring emerging technologies to our clients and implement them seamlessly into their business processes.
Barber: Extremely. If you don’t stay current and relevant, an MSP that does will take your clients. While we are strong in cybersecurity, we are always looking to strengthen our offerings. With security technology changing so rapidly, we are constantly reevaluating how we offer this crucial service and keep our clients safe.
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