This quarter we’re going to discuss how to take your support services to the next level.
Last quarter we wrote about “Building a Foundation for Best in Class Services” and we introduced the 5 Business Outcomes that our clients are looking for:
- Deliver Support Services – Foundation
- Deliver Support Services – Next Level
- Manage the Company
- Lead the Company
- Grow the Company
As a quick refresher, each of those Outcomes has several Business Challenges, and each of those challenges has a collection of Solutions.
In this illustration, you can see that the Outcome of “Deliver Support Services – Next Level” has several Challenges, and 2 of them are “Agreement Profitability Understood and Measure Client Satisfaction.”
Each of those Challenges has many potential Solutions. For the “Agreement Profitability Understood” Challenge, there are several Solutions, such as “Agreement Hard Costs, Engineer Time Entry, Deliver Proactive Value and Automate Agreement True Up.” The “Measure Client Satisfaction” Challenge contains “Ticket C-Sat, Net Promoter Score and Business Technology Reviews.”
These are just a small subset of Challenges and Solutions for illustration purposes.
Last quarter we discussed getting your services foundation in place by defining your profit centers, organizing your tickets, setting up contracts, and defining the Life of the Ticket with triage, dispatch, time entry and ticket closing.
When you’re working on service foundations, your focus is you, looking at yourself. Once we get the foundations worked out, which could take 6 months to a year depending on how bad it is when you start, your time commitment and how effective you are at leading and measuring change, it’s time to work on taking service delivery to the next level.
When you are working on taking service to the next level, your focus shifts from you – looking at you to your client – looking at you. Expect to be fine-tuning your next level business operations for years to come.
Taking service to the next level involves several key areas:
1. Analyze Data – In foundations, we put a lot of effort into standardizing how we do our ticket processes, which creates data that we can now use to fine-tune our processes, pricing and offerings. Get comfortable working with and analyzing data. Ultimately, working with data will help you understand where processes need to be refreshed to provide better, more granular data.
2. Shift Your KPIs. In foundations, we need to change behavior toward compliance with processes, which means most of what we need to measure revolves around process compliance. For example, we measure whether engineers are entering all of their time all of the time, or not. Early on, if we tried to look at ticket Service Level Agreement attainment, we would likely find that data did not make any sense. As we attain time entry compliance, it is less important to measure, because we can now measure SLA attainment, which is ultimately the more important item to measure.
3. Client Satisfaction – C-Sat is tricky, to say the least. We’ve seen it over and over where the ticket contacts fill out surveys with all 10s out of 10, but the dissatisfied business owner sends a cancellation notice. It’s important to standardize the way you work with your clients and solicit feedback. Consider managing client relationships using what we call 3 wide and 3 deep. While it’s not always possible, it’s a goal to strive for. We want to work with our client at 3 different levels; front line workers, managers and executives (3 wide). We also want to work with them 3 deep, with at least 3 people at each of the 3 levels. That would get us 9 relationships to manage. If we lose any one of those relationships, we still have the other 8 to keep us engaged. We also want to be very deliberate about the client working with us 3 wide and 3 deep. That way, if we lose an engineer or account manager, we still have the other 8 relationships to rely on.
4. Automation – One key to increasing profitability while the company grows is to embrace automation. One common example revolves around contract/agreement additions. When you have only a few clients, it’s no big deal to check each contract against vendor invoices every month, or even every few months, to make sure you are billing your clients for the same quantities that your distributers/vendors are billing you for. As you grow, adding clients and vendors, this process becomes daunting. We generally find that maturity stage 1 companies do not track revenue or cost changes in their PSA with accuracy. Stage 2 companies have better accuracy, but still manage the contracts manually. Stage 3 companies tend to take advantage of synchronizing their PSA systems with their distributors and vendors, even beginning to choose technology tools that offer real-time synchronization with their PSA.
5. Standardize Solution Stack – It’s common for stage 1 companies to “sell anything they think the client will say ‘yes’ to.” Stage 2 companies will generally “loosely” enforce standards around endpoint protection, email filtering, firewalls and, potentially, servers. As the maturity (and generally profitability) increases, you will find more and more adherence to defined standards, including rip and replace policies. It is simply not possible to be highly efficient without technical training and solution standards.
6. Project Management – When we hold our project management workshops, we go to great pains to get the point across that the biggest reason that project management fails is failure to properly set expectations during the sales process. If service is not providing the SOWs, then they need to start. Proper scoping during the sales process is critical to successful project management. The natural progression of project management typically starts with the owner doing it, then the lead engineer, who is typically also the service manager, then transitions to a lead engineer and, as the company passes 40 or so employees, we either see PM move to a dedicated individual or continue with each of the tier 3 engineers in each team/pod. Be sure to account for PM fees as part of the scoping/proposal process.
7. Deliver Proactive Value – When we think of the word proactive, we think of a teeter-totter. The more time you are deliberate about being proactive, the less time you spend being reactive. When you get busy and skip the proactive work, your reactive hours will go up. We recommend that you go through your MSP contract and determine everything you say you are going to do each month/quarter/year and set up recurring tickets for each client. It will take some management effort to ensure you are working and closing all of your proactive tickets every month. Remember, investing in tools, technology and standardization is where the real margins come from to achieve the promises of managed services.
8. Business Reviews – Whatever you choose to call them, Quarterly Business Reviews, Technology Business Reviews or our favorite, Business Technology Reviews, please promise that you will not make them your quarterly sales call. While it is important to review the existing system performance, lifecycle, etc., we say that you should spend no more than 10% of your scheduled meeting time discussing the existing system. That’s 6 minutes of a 1-hour meeting. You need to focus your time on understanding the goals and risks facing your client and determine your (IT’s) role in helping solve your client’s business issues.
9. Financial Management – We have to fight with our small business clients, specifically the owners, to start sharing financial information with the rest of the company. Growth stage 1 companies tend not to share any financial information with anyone. As they move to stage 2, we want to see owners share at least the service gross margin detail with their service executive. As they transition to stage 3, we want to see the full P&L shared with the service executive and other senior leadership members and at least gross margin data shared with the company as a whole. We believe that with the absence of information, people make up their own, and it’s usually inaccurate. People want to work for successful companies, and they want to know how they are doing in their role to help achieve it. We’ve seen amazing things happen when everyone is empowered with information and they are taught how to use it.
10. Leadership Development – The Rule of 7 dictates each manager should have 7 direct reports, which means that for every 7 employees you hire, you need to hire someone that has the technical skills you need and also leadership qualities that you can develop. Lack of leadership in the pipeline is the number one reason companies stop growing. If you hit a leadership deficiency barrier, you can expect to be stuck for at least 2 to 3 years. To create alignment and accountability, as your leadership team reaches around 4 members, you will need to embrace a management strategy such as Gazelle’s Scaling Up or Geno Wickman’s Traction/EOS.
All of this is why we believe that company leaders have to pull themselves away from the tyranny of the urgency to work “ON” the business at least 10% of their time – that’s a mere 4 hours per week.
As always, your Sea-Level team is ready to help!