A few things to keep in mind as you undertake any KPI project:
1. You are in for a lot of work if you do this without a well-built professional services automation (PSA) system. You have options in terms of PSA systems and consultants. Trust me, once you have it running the right way, you will be happy.
2. This list of metrics is not comprehensive, but rather a foundation. MSPs have a lot in common, but they are also unique. Start with what you want to learn about your business and then work toward building the right metric using the right data.
3. Follow trends. Understand why clients, employees and whatever else is different than it used to be. The best benchmark to start with is previous operating levels.
4. Differentiate between actionable and non-actionable KPIs. This is all about focusing your efforts to maximize the return on your efforts. You should understand if something outside of your control is affecting your business, but you should concentrate on changes you want to make to get your KPIs closer to where you want them.
5. Make sure you understand what you are doing and get help if you don't. Poorly constructed metrics are dangerous. Talk to peer group members or bring in an outside consultant.
Metrics are really just the beginning to improving the management of your business. They let you know which parts of your business need adjustment, not how to make those adjustments.
Larry Cobrin is a director at MSP CFO, a financial services management firm focused strictly on MSPs and VAR IT consulting firms to help them more profitably manage their businesses.
PUBLISHED APRIL 19, 2013