MSPs Have A ‘Lot Of Room For Improvement’ When It Comes To KPIs
‘There really is a process to determine what’s important in your business. … If you don’t know your [key performance indicator] numbers, you are really flying blind,’ says Brett Jaffe, co-owner and strategic coach at ConnectStrat.
The greatest indicator of a channel company’s future success may not be an owner’s knowledge of IT-related issues.
Instead, success may depend on whether a company’s owner has good key performance indicators (KPIs) in place, also known as metrics or “smart numbers.”
That was the message Monday from Brett Jaffe, co-owner and strategic coach at ConnectStrat, a business consulting firm focused on MSPs and other IT companies, to a roomful of attendees at CRN parent The Channel Company’s XChange NexGen conference in Orlando, Fla.
Jaffe, who once owned an MSP, said not setting and monitoring key performance goals—such as financial, sales and marketing, and customer KPIs, among others—is akin to an airplane pilot not checking dashboard instruments to gauge altitude, speed and fuel levels during a flight.
“Now, if any one of those [airplane instruments] is off track, what happens? Crash. Businesses are the same way,” Jaffe said. “There really is a process to determine what’s important in your business. … If you don’t know your [KPI] numbers, you are really flying blind.”
KPIs are not just financial goals, Jaffe said. The numbers produced by thoughtful KPI planning can alert business executives to previously unknown problems within an operation, requiring business adjustments, Jaffe said. They can also alter the strategic direction of a company.
Jaffe dismissed business owners who say that their “business is going great” without providing specifics, or that they “can’t keep up with orders” and have large backlogs. Such boasts can actually be a sign that something is wrong, particularly if a companycan’t keep up with orders it’s agreed to provide, he said.
“If we don’t understand our KPIs, we don’t know why we’re doing [something],” he said.
As an example, he broke down how financial KPIs could be applied to different segments of a business, via debt/asset ratios, effective hourly rates, ranking customers by revenue and other KPI measurement, Jaffe said.
“It helps you dig into the real important stuff,” he said.
After his XChange session, Jaffe told CRN that some channel players do have problems running their companies efficiently.
“A lot of companies struggle with KPIs and not because they don’t understand numbers . They do understand numbers,” Jaffe said.
Instead, it’s sometimes hard for channel companies to “set up a starting point,” or establish standards to reach and then putting those goals into practice.
Jaffe said one of the biggest mistakes that any company can make is not responding to what KPI numbers are telling them, such as failing to hit a goal and then doing nothing.
“They don’t have an action plan,” said Jaffe. “They don’t really have a good plan of attack in a ‘what-if’ scenario.”
He said of channel players and KPIs in general: “There’s a lot of room for improvement.”
Brian Bakkila, sales operations manager at Applied Innovation, a Grand Rapids, Mich.-based MSP, said his company uses KPIs.
“It’s one of those things that evolves,” he said of changing KPI goals and analytics. “The challenge that you have is that things change. … You achieve a certain degree of success in that area to a point where maybe it‘s time for a different focus.”
And he said it’s important to sometimes change a KPI focus.
“If you‘re suffering in customer satisfaction for some reason, you can then focus on that for a period of time until you get that tuned in—and then maybe you can take a little focus off of that to move onto something else,” he said.