Why You Can't Be A Successful MSP Without A PSA

By The Business Solutions Network

To make money selling managed services, you have to minimize your labor costs by working smarter, not harder, and that’s where a PSA (professional services automation) solution can help.

Whether you’re a VAR who’s considering becoming a managed services provider (MSP) or a new MSP looking to grow your recurring revenue, chances are good that you’ve looked into business automation tools, such as a PSA to track your labor costs, active projects, and billable hours.

Selecting a PSA is a major undertaking. A lot of times, VARs and MSPs who are early in the transition process will say, “We don’t want a full-fledged PSA just yet. We’ve got simple tools we’re using for now, and we’re hoping to grow into a PSA down the road.” Recently, I spoke with PSA vendor ConnectWise and three MSPs and got their perspectives on the best time to invest in a PSA and how to maximize its potential.

Don’t Delay Your PSA Investment
One of the misconceptions about PSAs is that they are primarily ticketing tools, but that is far from the case, says Linda Brotherton, general manager, ConnectWise. “A PSA allows a technology solutions provider to successfully run a variety of business processes that range from onboarding new clients to invoicing. One point to remember is that each solutions provider has unique requirements and processes. This means an organization needs to choose a software application that is flexible and customizable as well as scalable. Making the right choice at the beginning will allow the company to set up processes and procedures exactly as needed, so it can deliver quality services and accurate billing to its clients.”

Dave DelVecchio, president of Innovative Business Systems, concurs with Brotherton and adds, “A poorly run MSP can fail just like a break-fix company, and a well-run break-fix company can outperform an MSP. To be a successful MSP you have to squeeze every ounce of efficiency out of your business. If you change your service delivery model but continue scheduling technicians on clipboards and using Excel-generated invoices, your profitability is going to tank.”

DelVecchio believes many of the horror stories that circulate about the industry are a result of companies changing their sales model to managed services without changing the tools they use to manage their businesses. “Sometimes you have to experience that painful feeling before you start asking, ‘How do we get more efficient?’ he says. “The reason efficiency is so important is that managed services only works if you’re able to support more customers with fewer people.”

Craig Raubenheimer, CEO of Roan Solutions, knows from experience what it’s like to run a managed services practice without a PSA. “Before we invested in a PSA, we used several different tools that were cobbled together,” he says. “It was best described as silos of chaos.”

After investing in a PSA and going through the learning curve, he’s now a believer. “You absolutely have to have a PSA system to run a managed services business. It makes your whole organization more efficient; it enables you to scale.”

Steve Martocchio, VP operations, Cooperative Systems, concurs and adds, “As an MSP practice matures, there comes a point where you realize it’s not just about managing tickets and issues; it’s about managing the customer. That’s the difference between a ticketing system and a PSA. A PSA is really a CRM [customer relationship management] system. Yes, ticketing is in there, but that’s just a part of what a PSA does. From within a single tool, you manage ticketing, billing, projects, customer information, sales pipeline, even procurement. The more mature an MSP becomes, and as more processes are defined, the more dependent you become on your PSA tool. For us, it’s really the lifeblood of the organization.”

What A PSA Helps You See That You Might Otherwise Overlook
One of the primary ways a PSA leads to greater efficiency gains is by giving MSPs visibility of their data, says Brotherton. “For example, a services manager gains full visibility into technician scheduling and is able to better utilize technicians’ time. Additionally, technicians using a PSA are better able to support their clients in a number of ways. For instance, they have a ticketing system that offers a complete client history and gives them the ability to sort tickets based on priority, severity, and client impact. They also can get a detailed view of all supported client devices, and they can access those devices and resolve any issues.”

Some of the metrics Raubenheimer says are most important to his organization are the daily metrics of tickets opened, unassigned tickets, tickets opened more than x days, tickets reopened, and the profitability of each client. “We use our PSA dashboard each day to ask ourselves, ‘Am I entering in enough time per day? How much time goes to payroll versus billable time? All these data points can be displayed visually, which has been helpful in catching missed data entry points and correcting inefficiencies,” he says.

Martocchio says everyone in his organization uses the PSA for something. “Our finance team uses all the billing features for service agreements, hardware and software, and project labor. Our sales and marketing teams use the company’s information and sales opportunity sections for customer management and keeping track of the sales pipeline. Our project employees use the project module for project management. We also use our PSA for our hiring process. A ticket is created for all applicants, and they move through our processes for screening, interviewing, and testing. Behind all these functions, we use workflow rules which allow us to better manage customers, tickets, and sales opportunities.”

Don’t Skimp On PSA Fine-Tuning And Training
For those who find value in investing in a PSA to manage their business, there’s a word of caution seasoned MSPs say you should heed: Expect a learning curve. “If anybody has a PSA system and they are struggling with getting the data out of it, there’s absolutely nothing wrong with hiring a third party to come out and take a look at it,” says DelVecchio. “The guy I hired came to our facility, and he was with us for two days. We ran through the software menus, he helped us revamp a lot of the features and displays, and the value that I got from that investment was well worth it.”

Martocchio says his company’s biggest PSA problems early on weren’t training related; rather, they were about taking ownership of the tool. “We used specific components, but didn’t dedicate resources to developing and enhancing it; therefore, we really weren’t gaining all the efficiencies we could out of the system,” he says. “Once we selected a person within our company whose primary responsibility was management and development of scripts and automated processes, we’ve been able to better leverage our PSA [and remote monitoring and management tool] and save engineering time.”

Raubenheimer sums up the sentiment of the group by admitting that making the transition from using spreadsheets to a PSA was a difficult learning process. “But, after going through the implementation experience and persevering through the learning curve, it wasn’t long afterwards that I asked myself, “How did I ever run my business without it?"