I’ve noticed a lot of chatter on the TruMethods forums about MSP org charts. Many of you are searching for an org chart template. Even though we don’t provide one to our members — for a variety of reasons — there are some guidelines MSPs can follow when developing their org charts.
Not all IT providers are created equally. MSPs approach the business and focus areas differently. These differences can impact organizational charts — and results; however, there is a core structure and framework that we teach at TruMethods that is common and critical to overall MSP success.
Match every service delivery role to revenue and cost
Let’s start with the center of the TruMethods framework — matching every service delivery role to revenue and cost. This is the most critical concept in building a high-performing MSP. You know this as Picanomics — both micro and macro Picanomics — and it defines the center of your organizational chart.
You must match centralized services, technology alignment, vCIO and support to your monthly recurring revenue and your cost per seat; and you must match your professional services to your non-recurring services. The reason this should be the center of your org chart is that these roles along with your tool costs determine your gross profit margins.
Be sure that everyone involved in delivering service is in one of the five delivery areas.
For example, if you include new PC deployments in your monthly fee, and you have a resource focused on deployments, this individual needs to be included in your support delivery areas in order to capture that cost.
Service management of support roles
This will vary greatly based on your design and discipline of your service delivery areas. At TruMethods, we’re believers in team leads and very defined delivery areas. This greatly reduces the need for service management.
When I see a lot of service managers in a company — in other words, management overhead around services — it usually means high support noise — in other words, you have a lot of tickets, relative to your number of seats under management — and undefined roles and metrics for each of those service delivery areas. This leads to lower margins.
If you think about it, 90 percent of the things you deal with — such as service issues — come from support and professional services. The other three service delivery areas should be close to 100 percent proactive, so if you have low noise and strong results in those two delivery areas, the need for management overhead is greatly reduced. Other potential service support roles are project management and customer service as you scale.
Sales and marketing
Sales and marketing are based on your approach and growth plans. The good news is if sales and marketing are aimed at adding new MRR at the right price and you’re achieving your goals, your sales and marketing costs will always be in line as you scale.
Sales and marketing are only expensive if you don’t add new MRR. If you have sales resources that are focused on selling non-recurring products and services, your cost of sales will always be higher.
Accounting and administration
Regarding accounting and administration, overhead should be low — unless you sell a lot of product or other product lines that require more overhead. Many MSPs will combine the finance and HR role into one until they scale.
Here’s the bottom line: Top-performing MSPs are very effective — and their organizational charts show that. Oftentimes, these MSPs have the right leverage and costs in each service delivery area; they have effective returns on sales and marketing expenses; and they have low costs for management and administration.
If the core of your business is your managed customer base and the MRR it generates, your prices are right, you’re generating MRR at the right target percentage and your reactive tickets are relatively low, then your org chart will be lean, and your leverage and margins will be high.