Profit First? It’s Easier Said Than Done

Sunny Kaila, CEO, IT By Design
Author: Sunny Kaila, CEO, IT By Design

Business is tough. As an MSP owner for more than 20 years, I get it. There are times when profitability is low — and I mean really low! We’ll just invest back in the business. Or so we tell ourselves. It’s taken me years and many tough learnings to understand that, unless you’re a lifestyle entrepreneur, you must think PROFIT FIRST. 

So I wanted to share some of my learnings and three key ways that I believe are tangible and highly effective methods to increase your annual profits. They’re also quite practical, relatively easy to implement, and you should make them a permanent part of your infrastructure.

1. Be smarter with in-house resources

Building an internal 24/7 network operations center (NOC) service simply isn’t efficient and usually costs at least four times more than outsourcing. MSPs commonly experience very high turnover with employees who do not want to work nights and weekends. The cost of training a replacement is usually three to six months before they are self-sufficient. You’ll likely also have to hire some very expensive infrastructure resources for the “just in case” situations, taking a hit on your cost efficiency and profitability. Unless you’re in the people business, there are certain services that your in-house staff needs to deliver. 

An obvious benefit of building your own NOC team is that it’s dedicated to your MSP business, while a shared NOC resource isn’t. Shared resources manage multiple client environments, so you may be concerned about their focus. I understand your hesitation about shared NOC services. But consider this: A shared NOC has probably seen many of the issues and challenges you’re facing, 20 times over. They are focused on efficiency, resolving issues permanently, and driven on SLA’s and Customer Satisfaction. So while having an internal team may make you feel warm and fuzzy, it’s definitely not giving your bank account a warm feeling.  

I know, you’re probably thinking, “Well my clients have critical and sensitive data, making security a top priority, while other areas like business continuity and network management are close behind. I can’t trust anyone else, there’s just too much riding on our shoulders – above all, our company’s integrity.” I completely understand. But think about this: Are you everywhere in your business? Having people watch your systems internally doesn’t make it better, it just makes you work harder. 

That’s why selecting the appropriate shared NOC service provider is of utmost importance. As with any relationship, finding the right resource is the biggest challenge. But once you do, it can have an incredibly positive fiscal and emotional impact on your business in the following ways:

  • You now have extensive integration with client monitoring, ticketing systems, and other tools that allow you to serve a wider population of clients with varied technological needs
  • You’ll have greater scalability without having to quickly hire and less up front expenses, which will benefit you when you sign a huge new account
  • The ability to monitor 24/7 without additional on-call staff
  • The ability to support a customer using a specific technology platform since most third-party NOCs already have solutions architects on staff certified on it – eliminating you from bearing the entire burden as you’ll be sharing a portion of it

2. A Love/Hate Relationship with Your RMM

You know how your RMM saves you time, money, and streamlines your entire IT service with an all-in-one solution? You love it, right? What you don’t love is the time and resources it takes to manage the tool, create the scripts, deal with bugs … the list is endless.  You probably have a Senior Engineer, highly paid and extremely technical, managing your tool. So – let's get this straight – not only do you pay a small fortune for the tool, but you also pay a very talented in-house team member to manage it (salary plus burden). 

That’s one expensive love list. Perhaps instead of using your own team members to manage it, consider using a third-party virtual administrator. A good company will manage the tool end to end, not only applying best practices and improving functionality, but they’ll also streamline reporting, patch management, and create customized strategic initiatives while freeing up your engineer to address more profitable ― and BILLABLE ― projects. 

So for a fraction of the cost of a dedicated, in-house engineer, a virtual administrator will optimize and maintain your RMM investment. The best part is that there are many companies that offer virtual RMM from which to choose, giving you the opportunity to be a smart shopper and select the right one for your MSP.

3. Use Virtual Techs to Manage Your Backups

With cyber threats haunting all MSPs and their customers, you need to make certain that your backup strategy is sound and well managed because the “bad guys” are and will always be 10 steps ahead of us. A good backup who’s highly available will save you a significant ransom and potentially a customer. 

Now, trusting one person to manage all of your backups is tough. What if they call out sick, or they’re not really fully attentive because the dancing cat on YouTube caught their eye, etc.  You can’t afford multiple team members just checking backups – it impacts profitability because it’s a “value added service.” So think about it: Do your backups really need to be managed in-house? 

Rather than have that internal person checking backups every day, consider using third-party services.  Many NOC providers will include this in their service. If you still want a dedicated resource ― back to that warm and fuzzy feeling ― then hire a remote resource at a fraction of the cost.  IT By Design’s NOC service offers this backup at no additional charge.

Be smart about where you spend and hire in your company. Salaries are one of your biggest expenses and not only is there base pay, but let’s remember the 30%+ burden many of us also pay. Using these three simple opportunities – that will have little client facing impact – you’ll be able to create efficiencies in your team, reduce overhead, and increase profits. 

At the end of the day, while leading our people and teams, we can only truly serve them if we stay in business. And to do that we must think PROFIT FIRST. 

This guest blog is courtesy of IT By Design and authored by Sunny Kaila, founder and global CEO. Read more IT By Design guest blogs here. Regularly contributed guest blogs are part of ChannelE2E’s sponsorship program.