Thursday, February 21, 2013

Understanding the True Business Value of PSA


We normally think of Professional Services Automation (PSA) software as a tool for tracking the time and cost of technical resources to ensure timely and accurate customer billing for IT services rendered. However, in our VPG session this week, James Foxall, CEO of Tigerpaw Software, a CRM and service management software provider, gave us all a lesson in how to think differently about PSA as a toolset and how to operationally integrate the tool into an MSP or CSP business to drive higher growth and profitability.

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The session, titled "Nine Proven Tactics to Increase Profitability", was a grand tour of business best practices for how to better organize, optimize customer experience, manage cash flow and continuously improve efficiencies with any software tool - not just Tigerpaw. The presentation was pretty extensive - you would really have to view the entire session to reap the full benefit (a recorded session is available here).  So let me summarize my own take-aways here.

Take-away #1:  Think of technicians as attorneys. Their time equals your money (your cost of service delivery). So set minimum and rounded-up cost points (1o or 15 minute intervals) and track the utilization of technicians as a business resource. Build this cost basis into your business model and automate the collection of cost data and the invoicing of service fees.

Take-away #2:  Transition to recurring revenue. It will even out your cash flow tremendously. Imagine starting every month with guaranteed revenue coming in the door instead of playing catchup every month to cover ongoing labor and facilities expenses.  Even better, your customers will prefer, and even pay a premium for, a predictable opex approach to covering the cost of IT.

Take-away #3:  Base business decisions on accurate data. As you transform from a one-time revenue model (consulting fees, break-fix support, product sales) to a recurring revenue model (managed services fees, SaaS license revenues, hosting fees), a PSA tool will ensure accurate historical data. It can provide your true cost of service delivery (labor, facilities, licenses, overhead) on a per-customer and per-month basis with the touch of a button. This data will allow you to set monthly fees at the optimum level to balance cost, margin and a competitive selling price.

Take-away #4:  Sell the value of managed services. It's not the same as selling stand-alone consulting projects, IT products or break-fix services. It's a value sell and it requires consistent, quality contact with your customers and prospects.  This is where PSA leaves off and CRM begins. James demonstrated ways to take your service histories and customer interactions and build them into an automated email campaign that builds a quality sales pipeline of prospects and builds customer satisfaction and up-sell opportunities with existing clients.  If customer case studies are the most effective way to communicate the value of your services, then measure it and do more of what works and less of what doesn't work.

We see a lot of synergy between using a tool like Tigerpaw to manage a CSP business and our own CSP blueprints for pricing and packaging cloud services as well as enabling a sales team to sell their value and drive customer acquisition.  Let us know your thoughts or questions on this subject as well. If they were not fully answered or addressed by this VPG session, we will continue the subject in a future session.

8 comments:

  1. I enjoyed doing the webinar and look forward to doing more with MSPexcellense! :)

    James Foxall
    President/CEO Tigerpaw Software

    ReplyDelete


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