How profitable are your services, and how are you measuring and improving that profitability? Maybe you don’t have the time or bandwidth to track where you’re efficient and where your tactics need work.
Fortunately, there’s a tool to help. It’s called Picanomics.
What’s Picanomics? It’s an approach to gaining command of your operations and getting top dollar for your services. Let’s break down how it helps you evaluate the profitability of the services you offer.
Macro-Picanomics involves matching the job functions within your company to your revenue stream. Your company runs on profits, but your employees are the ones bringing value to your IT services. Understanding the macro view of how your company operates is essential to gaining command of your business.
First, you need to understand the key cost-drivers in your operations.
Breaking Down The 5 Service Delivery Areas
Before diving into Macro-Picanomics, you need to identify the various job functions in your company. Every MSP provides IT services that are broken down into five service delivery areas.
1. Centralized Services. This category includes all the services you provide with your RMM (remote monitoring and management tools). Think of it as any service you deliver from your remote, central location.
- Patch Management
- Cloud Services
2. Network Administration. This is where you develop and implement a proactive approach to IT services. Your network administration services align technology between your standards and your customers’ technical environments.
- Development of technical standards and best practices
- Continuous alignment of each client’s technology against standards
- Implementing Your Brand Of Operations
3. Virtual CIO. Your virtual CIO services identify misaligned technology and explain the business impact it has on your customers. This allows you to develop a strategy and budget to best serve your clients.
- Business Impact Of Technology
- Technology Summary
- Develop an IT strategy roadmap for each client
- IT Budget Planning
4. Support. From the day you started your MSP, most of your tasks have been centered on support. When something goes wrong or there’s an IT ticket to respond to, you offer IT support.
- Remote Helpdesk
- On-Site Service
- How-To Questions
5. Professional Services. These encompass all of the services you provide that don’t fall into the monthly recurring revenue model. This category usually entails out-of-scope projects and upgrades.
- Implement New Technology
- SWAT Team
Using Macro-Picanomics To Boost Your Profits
Macro-Picanomics is all about identifying these five service areas in your daily operations and weighing the impact they have on your profit margins. Once you’ve designated each service to a category, you’re prepared to identify areas of profitability, gaps in efficiency and changes to be made.
Take the following steps toward improvement.
- Evaluate your profits. Assess both your monthly recurring revenue and your non-recurring revenue, like out-of-scope projects. Match the five service areas discussed above to the amount of revenue each brings in.
- Compare against your targets. What are your goals, and how could you reach them? Hold the current state of your company up against your future goals to determine what needs to change, and how.
- Identify areas of weakness. After you’ve evaluated the current profits of each service category, identify the areas that really aren’t up to par. What service offerings could be bringing in more money? What areas are profitable, and why? Knowing where inefficiencies exist is the first step toward eliminating them.
- Make changes. You know what areas need improvement. Now, make changes to get results. Where do you have capacity? Fill those service areas to increase your profit margin. Keep your profit goals in mind and develop a path to achieve them.
An Example Application Of Macro-Picanomics
Let’s apply Macro-Picanomics to one area of your business: support. We need to understand the relationship between this role and top-line revenue.
So, what are some of the metrics used to evaluate the profitability of this relationship? The first is the number of IT tickets coming in each month. Knowing how many tickets you’re fielding and how much time employees take to resolve each one helps you understand your costs. What types of tickets are taking the longest? Which ones come in the most often? Look for recurring issues that cut into your profits.
If you see room for capacity in a service area where you’re inefficient, you have the visibility to make changes.
Master Picanomics and the 5 Service Delivery Areas by becoming a World Class MSP. Download your free whitepaper today!