Our goal at ScopeStack is to help MSPs and VARs make more money from IT services by increasing accuracy, consistency, and profitability. We do that by optimizing the pre-sales process, specifically around services, through our CPQ for services.

In addition to our CPQ software, we’re going to help you improve the presales process through our Expert Series of webinars and virtual events. Over the last four years, ScopeStack CEO Jon Scott has been fortunate to talk to a lot of really smart people. Todd Kane of Evolved Management is one of them.

So this series will introduce you to industry leaders so we can all learn from people like Todd how to make IT service projects more efficient and profitable.

Don’t miss upcoming Expert Series events. Register here.

One of the key ways to increase efficiency is to automate where you can with tools like ScopeStack. But, as Todd points out, if you don’t have a good process to begin with, it’s hard to get the full benefit of automation.

Todd has spent over a decade developing a management framework to help managed service providers increase their margins and reduce employee turnover. In this webinar, Todd provides guidance and resources to enable MSPs to reach their full potential.

How to Improve the Presales Process

Todd helps manage service providers and IT service companies to become more profitable by systematizing and building on industry best practices. A lot of stress comes with systemization and delegation, so management is something he focuses on a lot.

One of the things I see as an issue in the industry, especially on the MSP side, is that projects are not viewed as a revenue center.

But it all starts with service. Service has to be in place first, or your customers are not going to listen to you. Then, very near behind service is projects.

“One of the things I see as an issue in the industry, especially on the MSP side, is that projects are not viewed as a revenue center,” Todd says. “In a lot of cases, people are billing for the projects. But 50% of the organizations that he comes across don’t have a good way to measure the profitability of those projects.”

Todd approaches this problem in terms of project management maturity.

Increase Project Management Maturity

Here are a few signs of an organization with a high level of project management maturity:

  • They have formalized project management
  • They create bills of materials (BOM) or some other simplified view of what they’re doing
  • They use statements of work

At ScopeStack,  we think of the SOW as a BOM for services. We break projects down by phase or line of business or practice with all tasks and subtasks. That way, you know all the steps you’ll need to take, and you can decide how much of that information to share with customers.

The platform creates a repeatable process for creating detailed SOWs that can also drive alignment between pre- and post-sales later on.

Increase Scoping Efficiency

Todd recommends that MSPs focus on simply explaining the steps involved, deliverables, and effort during the sales process.

“A big lie that we tell ourselves in this industry is that everything that we do is somehow unique,” he says. “And that’s the furthest thing from the truth. Some organizations may do specialized projects on occasion. But it’s actually kind of rare.”

In Todd’s experience, most of the things MSPs do are relatively routine and repeatable, at least in a modular fashion.

“About 80% of what you do is probably going to be common across multiple clients,” he says. “If you’re doing a 365 migration, or setting up a backup service, or migrating some workloads to the cloud, most of that work is fairly routine.”

Todd suggests that solution providers increase scoping efficiency by itemizing those projects and developing a process to quote them efficiently. You know what the work looks like, and you generally know how long it’s going to take.

A big lie that we tell ourselves in this industry is that everything that we do is somehow unique.

Increase Revenue from Service Projects

Todd sees many organizations get excited about the fact that almost all of their revenue is managed recurring revenue, but he says that’s not necessarily a good thing.

“You do need people to spend money on projects,” he says. “They need to keep their technology current, they need to replace aging architecture, they need to progress things forward.”

But if you predominantly rely on non-recurring revenue, Todd recommends looking at how to create some recurring revenue.

“People have seen how well the MSP approach works,” he says. “If you’re a pure VAR, then you know the history of the roller coaster sales cycle of just constantly looking for the next project, and you end up with a lot of these peaks and valleys on your revenue and profitability.”

He suggests 25% MRR as a baseline and then working up from there.

Turn Projects into a Profit Center

“In the past, people have literally told me that they see projects as a means to an end to keep customers on the on contract,” Todd says. “Not the right way to approach it.”

In the webinar, Todd explains that the beauty of MRR is that it covers your operating costs from day one.

“You can bill the customer on the first of the month and cover the majority, if not all of your costs, and maybe some margin on top. If you’re doing this well, with fixed-fee projects, tight scopes delivered well,  high customer satisfaction, then you can get a 65% margin on your projects.”

Get Resourcing Right

When it comes to resourcing, step one is to define your resource rates. Todd sees a lot of projects built with a default billing rate of, say, $150. And the internal costs don’t necessarily match that.

“If you have a person who is doing tickets most of the day, but they’re trying to complete some projects, the fractional approach can make time management difficult,” Todd says. “When a client is waiting for something, or something has exploded, then, you know, that obviously takes priority. So you end up with projects that are open and incomplete after the end date because your team wasn’t able to break out their time and create the space to be able to focus on the activities necessary to complete those projects.”

Ideally, you would have people dedicated to just doing projects.

“For that to be practical, you have to be able to build a project funnel that feeds the beast and make sure that you can keep that person busy.”

Until you can do that, the fractional approach is necessary. But Todd emphasizes the importance of approaching this thoughtfully. You need to protect each team member’s time so they can manage their time and focus on the right things.

“One of the things that I suggest here, if you are sharing resources, is thinking of each resource’s time in blocks of two to four hours. So if you’re scheduling them for project efforts, then you want to say, you know, Tuesday at 10 am, this person is working on this project until noon, and they can’t be disturbed unless something is blowing up and on fire. That’s a great way to make sure that progress is made and that the projects don’t fall to the wayside.”

Improve the Project Delivery Process

Todd shared four components that are critical for effective project delivery:

1. Project Kickoff

Project kickoffs are crucial to ensure effective project management.

Whether the client needs to be involved in these calls depends on the project. “If it’s a multi-week project, and multiple people are going to be involved, you need the client to be on the call,” Todd says. “But if it’s a one-day effort, then the client might not need to be involved.”

2. Communication During Execution

It’s also essential to update the client to keep them informed about what’s happening.

“This shows that you’re organized, so the client knows you’re on top of what’s happening,” Todd says. “They’re going to trust you a lot more as a result of that.”

It doesn’t have to be a long meeting. It can be a five- to ten-minute phone call or a weekly email.

“The important thing is that it’s done regularly, so the client feels informed and has an understanding of the project’s progress.”

3. Project Close

“This is one that that even in mature organizations tends to be forgotten,” Todd says. “They’re running and gunning, like, ‘Alright, that project is complete, and I’ve already started a different project, so I don’t really have time to focus on that one anymore.”

Todd says that’s a mistake. You need to formalize the close of the project.

“That establishes that the project is complete and the deliverables are complete so an organization doesn’t hold the project hostage, not wanting to pay for it because either you can’t get them to agree that it is closed or there’s some disagreement on the scope.”

4. Document the Project

The final component is to document the project. Some people complete the documentation before the project even starts.

“[Completing documentation before the project] formalizes what’s being delivered and ensures that it’s done,” Todd says.

Three Common Pitfalls to Avoid

1. Letting techs manage their own projects.

“Letting techs manage their own projects is generally a terrible practice. If it’s a single sort of task or a one-day scope of work that they’re completing, sure, they can run it on their own. But otherwise, it’s the foxes looking after the henhouse. And in a lot of cases, it doesn’t come from a nefarious place.”

“There’s just a lot of self-justification that can happen in a person’s head around why they deprioritize something, why something did or didn’t happen. And there needs to be some level of check and balance.”

“So somebody needs to PM each project. Maybe the owner, maybe the service manager, it could be a different senior tech, whoever it is, somebody else needs to watch the the the projects, not the person that is primarily the person responsible for the delivery.”

2. Not managing deliverables

“Being clear about the deliverables, in the scope of work, when you’re doing the kickoff. And as a part of that close, be really tight with that, and what a good quality complete project looks like is often determined by measuring those deliverables.

3. Cold handoffs or no handoff at all, when the project is done

“Say you decommissioned an Exchange server and moved everyone to Office 365. If you didn’t tell anybody about that, the next person that goes to support that environment doesn’t understand where anything is.”

“So a great piece of work that you can do as a part of that project close is a warm handoff to service where they maybe are participating in their stand up and saying, this is what we changed. These are the things that we did in this environment. These are some of the gotchas you might need to look out for. And here are the people you should contact if there’s an escalation related to this project.”

Want to Hear More From Todd?

If you’d like to learn more from Todd, go to IT is a Business to get more industry insights and educational content from him every week. He covers everything from management practices to industry insights, projects, service delivery, managing your ticket queue, and more.

IT services webinars