Analysing the profitability of your service company is central to ensuring its long-term viability, measuring your investment capacity and improving your growth. This issue is especially important for companies that produce and deliver services. Project management is not always straightforward, given all the different types of contracts to manage, resource allocation, SLA constraints, etc. It is essential, however.
Here are three tips for you to follow (and improve on as required!) to ensure your IT service company’s profitability.
| 15% of billable activities fall through the cracks in digital service companies. Source: Consultancy.uk (2016) |
Accurate customer billing
Whatever billing method a service company chooses, whether it’s a fixed price, fee-based or subscription service, its services must always be profitable. Seems self-evident, doesn’t it? And yet, many IT companies struggle with profitability issues. Project deadline overruns, goal slippage, spiralling costs, over- or under-resourcing… Any or all of these can compromise service profitability. As a result, delivering the right level of service remains a challenge for some IT companies. If you find yourself in this situation, go back to basics: perhaps it’s time to re-evaluate your service rates in relation to the returns on annual contracts, reviewing the time spent and resources allocated to each project.
How can iTop help you?
The iTop ITSM software tool enables you to effectively measure revenue from IT services. The software provides visibility at all levels and combines disparate information (customer contracts, equipment, infrastructure, tickets, etc.) to track service costs in real time. But also to guarantee profitability for the IT service provider.
- Time tracking helps manage time spent performing tasks on behalf of customers.
- The comprehensive resource view avoids assigning the same employees to different projects, exceeding their production capacity.
- Supplier contract costing enables you to include all the costs of providing a service.
Appropriate resources
An IT company’s operations depend on its staff: IT consultants, developers, support personnel, etc. Services are invoiced on the basis of resources allocated and time spent. Also, it is important to ensure that teams are sufficiently staffed to carry out the customers’ assignments and respond to their requests. “Do we need to hire?” is a question that comes up regularly for IT company management, and they sometimes lack the concrete information to answer it.
Being able to monitor the indicators on appropriate team composition is vital! It is essential to be able to see your teams’ workload in real time (service activity). It is also essential to identify any “holes in the racket” or problems due to inefficient processes… These can lead to slippage, whether in terms of additional service delivery costs or an inability to honor service commitments.
How can iTop help you?
iTop is a key solution, designed specifically for IT service provision management. In particular, it ensures that teams have adequate staffing levels in relation to the volume of incidents received.
Better still, iTop helps rationalise responses, clearly situating incident or change levels. iTop helps teams improve performance thanks to its CMDB and powerful impact analysis diagram. For example, when an incident is raised by a customer via iTop, the person responsible for its resolution will immediately have visibility on the problem and its potential impacts.
There’s no need to visit the customer’s premises several times and root around trying to find out where the problem is coming from and what its consequences are: the problem is identified ahead of time via the tool, for greater efficiency.
iTop is a genuine decision-making tool, which can also be used as a basis for discussions with customers, backed up by reliable data.
Actionable data for continuous improvement
IT production statistics are essential for monitoring service profitability. That data must be available in real time. And must be comprehensive enough to:
Provide full visibility on customers, contracts, equipment, etc.
Measure the disparities between what was sold and what was delivered to the customer.
Assess user satisfaction (through the ticket reopen rate for example).
How can iTop help you?
iTop’s shared repository enables IT service companies to obtain a complete, real-time view of dependencies between components, contracts, users, infrastructure, customers, etc. The advantage is that everything is linked in the tool , providing comprehensive information that can then be easily used to monitor the costs and efficiency of the services provided.
With iTop, it is possible to extract indicators and monitor their evolution with a view to improving them (for example, the average time to deal with a ticket compared to agreed service levels).
To sum up, iTop is a competitively-priced (open source) tool that enables you to provide IT services more efficiently. iTop helps you to measure the profitability of the services you provide and to improve them by leveraging the appropriate mechanisms: resource allocation, cost control, process optimisation and pricing adjustment.
Director of Operations at AVA6
