Fix the Short-Staffing Dilemma at Your MSP Part 1
Key takeaways:
The short staffing dilemma
Knowing the right decision
4 #’s of Utilization to know
Find. Benchmark. Analyze.
Your next steps…
Short staffing. These days, who isn’t dealing with this common dilemma?
What about your MSP? Have you wrestled with how to fix short staffing?
If so, you’re far from alone.
Over the years, many MSPs have struggled with how to deal with this common dilemma.
You’re probably being hit with very different opinions on the cause:
Your Techs say they’re overworked. More Techs are needed.
Hmmm, are they really overworked? And are more Techs the right answer?
Your Accountant tells a different story – your Techs are underutilized, not overworked.
Whether or not that’s true is anyone’s guess…because it would be pretty hard to get a straight answer when their timesheets aren’t even complete.
And while we’re on the topic of efficiency: Where does this come into the picture? If the Techs worked smarter, not harder, would all the work get done with the existing Service Delivery staff?
These are tough questions and hard ones to answer - if it were that simple, you'd have figured it out years ago.
So why haven’t you figured it out yet? One reason is because of how much time it takes. Spend just a few minutes of your scarce time, and follow our thought process…
There are three components that go into knowing the right decision:
1) Utilization (Supply/Inventory)
2) Workload (Demand/Sales)
3) Service Delivery Efficiency (Technician Effort / Noise per Seat)
Each of these three components merits a discussion on its own.
A Short-Staffing exercise takes a few hours to get through. If you'd like me to walk you through the process, please let me know.
Utilization:
Four numbers go into the conversation on Utilization. The difference between them is the underutilization portion of the short staffing equation that the accountant sees.
1) Weekly Billable Hours Goal – This is an Autotask data field that should be reviewed and updated for each Billable Resource. Dividing this number by the individual hours gives you the % of Resource Utilization the MSP is targeting.
2) Industry Average – It’s been a while since I've seen 70% Resource Utilization in print, but the industry Average Utilization was pegged at 70% for years.
3) Best-in-class – We regularly see well-run Service Delivery Operations attaining 80-84% Resource Utilization. We at AGMSPC set a target of coaching MSPs to 80% Resource Utilization. The eBook: Resource Utilizations for MSPs is our methodology for attaining best-in-class Resource Utilization.
4) Actual – In our experience, this is the lowest of the four numbers, and again, the difference between this number and any of the other three is the portion the accountant is complaining about.
Finding the Data:
1) In a spreadsheet, list every resource:
a. Add a row, name it 'Totals'
2) In the 1st column, put their total Availability in hours (40 or 37.5 for full-time Employees)
a. Sum the column in the Totals row ("Total Hours Available")
3) 2nd column, put their Weekly Billable Hours Goal out of Autotask
a. Sum the column in the Totals row ("Target Billable Hours Available")
4) 3rd column, divide the second column (Weekly Billable Hours Goal) by the first column (Total Hours Available). Format this column as a percentage
a. Average the column in the Totals row (Target Utilization)
5) 4th column, multiply their total Availability by .7 (70%)
a. Sum the column in the Totals row (Industry Average Billable Hours Available)
6) 5th column, multiply their total Availability by .8 (80%)
a. Sum the column in the Totals row (Best-in-Class Billable Hours Available)
7) Run the Autotask default Resource Utilization report over the last 3 months and divide each resource's Total Client Hours Worked hours by 13 (the number of weeks in three months). This is their Actual Averaged Hours Worked per Week
8) 6th column, put the Actual Averaged Hours Worked per Week
a. Sum the column in the Totals row (Actual Hours Available)
9) And in the 7th column, divide the 6th column (Actual Averaged Hours Worked per Week) by the 1st column (Total Hours Available). Format this column as a percentage
a. Average the column in the Totals row (Actual Utilization)
Benchmarking:
At this point, what we usually see is:
Target Resource Utilization is in the mid-60 to 70% range or around 25 hours per tech
70% Resource Utilization is 28/26 hours per tech
80% Resource Utilization is 32/30 hours per tech
Actual Resource Utilization is below 50% or less than 20 hours per tech**
**Fred V has verified that Kaseya is seeing the same underutilization across the industry.
Analyzing:
For a 6-tech shop, the difference between best-in-class MSPs and the other 3 levels of Resource Utilization is:
Target – 42 hours per week ((32-25)*6)
@ USD150 per hour Standard Role rate, that's $6,300 per week or $327,600 per year
70% Utilization – 24 hours per week ((32-28)*6)
@ USD150 per hour Standard Role rate, that's $3,600 per week or $187,200 per year
Actual – (32 hours – Your Actual Utilization) * 6
@ USD150 per hour Standard Role rate, that's (Actual * USD 150) per week or (Actual * USD 150) * 52 per year
A short staffing exercise takes a few hours to get through. If you would like me to walk you through the process, please let me know.
Next week, we'll pick up the discussion with Workload and continue this 4-part series until we get all the way through the short staffing exercise.
If your Actual Resource Utilization is a wake-up call, and you want someone to guide you through the improvement process, either:
1) Download the Resource Utilization for MSPs eBook.
2) Schedule a Call with Advanced Global to discuss the next steps.