ERP058 - Getting the most from your PSA

so many times where people have one small aspect of the PSA tool implemented. So, as you say, normally it's ticketing. Right? And I think the fundamental reason for that is that most people go into it with the mindset of needing a ticketing system. Welcome to Evolve Radio, where we explore the evolution of business and technology. I'm your host Todd Kane. Today on the podcast, I'm joined by Chris Tim with Sundella Consulting. Chris is a former MSP owner who now runs a consulting group that focuses on helping manage service providers get the most from their PSA. The PSA or professional services automation tool is a central tool to most MSPs. The trouble is, the tools often don't get as much love or attention as they should. Yes, it can do ticketing, but there's so much more that the PSA can provide for your business. Enjoy my conversation with Chris on why these tools are underutilized and what you can do about it. If you haven't already, please subscribe to the podcast so you get every new episode. Also, if you wouldn't mind, please leave a rating and review in your podcast app. This helps others find the show so we can reach more of the community. Now, on with the show. And welcome to the podcast, Chris. Thank you. Thanks for having me. So we're chatting about uh the the PSA, which is the professional services automation tool, which is uh very central piece of uh software for any IT service company, especially for MSPs. And I think just to to sort of level set, I think most people listening to the podcast and in in the community that we have here will understand what the PSA is. There's sort of a maybe a minor abstraction that I'd like to get to is what are the similarities or differences between an ERP and a PSA, are they similar and is it a fair comparison? What are your thoughts there? So they are very similar. Um, an ERP tool is designed really for for kind of bigger corporate companies to to run their entire business. A PSA tool, I like to refer to it as a mini ERP, right? So it's it's kind of very much the same thing in the fact that it runs your entire business, um it allows you to kind of manage all of your business processes through through the PSA tool in the same way as a as a kind of full-blown ERP system would allow you to do. Yeah, so I I would think similar kind of a mini ERP. It's not not the full scope of dynamics for for for that matter. But I think it is important to for people to to clarify the use of the PSA. I think people tend to focus far too much on the ticketing portion of the PSA and some of the other more advanced portions of the PSA around business management tend to get a little less love or a little less use. And that that goes to kind of my next question is, uh I'm sure you see a lot of this as a as someone who does a lot of consulting with MSPs for for supporting and implementing their their PSA. Uh I tend to see that the PSAs um quite on average are about 30% implemented. Where, you know, they got it, they got stood up, they got ticketing working, maybe they did a couple of other things, hopefully they've got some agreements built into their PSA. And then they get busy and they move on to other things. Do you see something similar and why do you think this is such a thing for for the tools to be not fully implemented in in these companies? So that that's a great question and uh and I can talk around that for for hours, but I know we haven't got that that long on the podcast. So, um, I mean, yeah. I see that all the time first of all, right? So I see so many times where people have one small aspect of the PSA tool implemented. So, as you say, normally it's ticketing. Right? And I think the fundamental reason for that is that most people go into it with the mindset of needing a ticketing system. Right. So what they do is. They say, you know, I need to buy something to to manage um, you know, customer support calls. Um, those kinds of things and they buy it for the specific purpose of of a service desk. And they don't think about all the other bits and pieces that need to fit in to make the PSA work. So as we alluded to earlier on, it's a it's a mini ERP system. So it allows you to run your entire business. And, you know, I think a lot of MSPs don't go into it, like I said, with with that mindset is is, you know, they. They all they want to is ticketing. They do a great job of ticketing, you know, PSA tools. And um and then they get too busy to put all the other stuff in. And and you said, you know, some people even have agreements. I mean, I work with a lot of MSPs that don't even have agreements set up, they literally have uh queues, statuses. Um, those kinds of things and they they use it as a glorified service desk. Yeah. It. It ends up being a very expensive ticketing system in that in that use. Like there's there's cheaper tools that you can use just to collect tickets or create tickets and and manage there. Um. So I I think it's interesting that that people go to the extent, they know that they need these tools and to some extent, maybe it speaks to uh sort of the business maturity, um and also like you said, time. You know, like a lot of these organizations tend to be kind of overwhelmed and hit by the tsunami of incoming tickets and and really struggle to sort of get past that. So they they they can't really make the time to to uh uh to uh spend the time on the to implement the tools as as well as they should. Which is is a shame because I think if you do this right, in a lot of ways it can help you to organize your business and get out from under that reactive approach. Do you agree? Absolutely. I I mean, I fully fully agree with that. And, you know, I think one of the other things I I I notice is certainly in this industry, right, we're very much a kind of a me too industry, right? Where, um, you know, we we ask what everyone else is doing and we kind of see everyone else is using, you know, one of the big PSA tools to to run their service desk. And we suddenly go, oh, that's actually what we need. And we we buy the tool. Um, and very often it's we're actually buying it for the wrong reasons, right, because we're saying, well, everyone else is using it. Therefore, this must be the right tool to use for my business. But instead of thinking, um, you know, what what tool is right for me in my business, um, and is is a PSA tool even what I need, right? Because if if all you're needing is, like we said earlier on, if all you need is a ticketing system, then there's hundreds of ticketing systems. You know, that range from free to very cheap. Um, that would be half the price of a of a PSA tool. And if that's all you need and that's all you have the time to implement and and get working in your business, then by all means go ahead and get yourself a service desk. Um. But, you know, a PSA tool should be implemented as a full business management platform to give you visibility over every aspect of your business and not just the service desk. In fact. I would actually almost go as far as saying the service desk should be one of the last things you actually set up inside the uh the the PSA tool. That's I think that's a really excellent point around the me tooism. I think that you see that a lot, especially when you go to the conferences, people are very curious about. They ask across the table. Like, what are you guys doing here? Uh and and they they just sort of apply, well, that person looks seems to know what they're doing, they seem successful, so maybe if I follow in their footsteps, then that'll help me too. Uh and it's not always the case. So I think that's a really excellent point to call out. Um, another one you hit on is uh maybe we can chat uh a bit about the sort of the the tools available and the expansion of the of the industry. So, you know, we we talked about there's the sort of the primary platforms, there's uh Kaseya, Autotask and Connectwise. Uh all have the sort of the primary platforms in in in the industry. There's a few others uh that have been around for a while as well. Um, I want to get your thoughts on kind of the state of the industry and the state of the tools. Um, you know, there's the big guys that are, you know, maybe slowed down a little bit. Some are innovating better than others. But there's also kind of the upstart market with like Synchro and Acceller uh uh Accello. And and some of the other uh smaller tools that are uh uh kind of coming up and maybe trying to disrupt the industry. What are your thoughts on sort of the the the change in the market with those new tools coming in? Yeah, absolutely. And I think um you're right, I mean, there's there's so many um, you know, PSA tools these days. There used to be kind of the big two and then there's the big three. And I think um well, it's actually probably the big four because um because there's target poor in there as well. Right. Um, so, you know, those are the ones everybody knows. And then as you say, there's there's the smaller ones. I've even seen um, you know, a couple coming out of Australia, there's there's a tool called Blue Trade. And um there's a there's a Halo PSA that's um, you know, coming out of the UK. And and they all designed for for different um, different maturities of MSPs, right? You get some. Um, you know, the the smaller ones like Blue Trade and some of those other smaller tools are designed for the really kind of small startup MSPs. The maybe one or two man bands, those sorts of of people. Um. You know, and then um whereas the the bigger, more traditional tools have been designed for um all well, at least they like to think they've been designed for the bigger MSPs. But I do think that a lot of the small guys can actually still use um the the big boys. Right, the the big four. And. I always say to people, again, you know, it's it's about looking at your your business growth, right? Where am I going to be in two years, five years, 10 years? There's no point buying, you know, one of the small MSPs now if you've got aspirations to grow your business within the next three to five years. Because you're only going to have to change the PSA tool. Because some of those smaller ones aren't going to scale with you as you get bigger and bigger. So, um, you know. And there's nothing wrong, by the way, with staying as a small independent like one or two man band company. And, you know. And it's great if that's what you want to do as a business owner or that's how you want to um, you know, run your business, that's fine. Um, and then by all means stick with those smaller tools. But, um. You know, and I think that's where a lot of people go wrong because they'll see the big tools have been really, really expensive and they'll go, well, I'll just I'll just buy one of these cheaper tools, um, that has much, much less functionality. And then they get to a point in their business and they say, well, actually now I need to go for one of these bigger tools. But it's then such a big um uplift to get into that that bigger um PSA tool. Whereas if you just made the decision right in the beginning and brought somebody in to help you actually implement it properly, um, you know, you wouldn't have to keep kind of chopping and changing tools all the time. Yeah. Strongly agree with that approach. I focus on what you're going to grow into and be honest with yourself about what your needs are going to be in in two to three years. I think that's a excellent advice. Um. So if people are maybe kind of like listening to this and saying, you know, this this sort of sounds like me, I we have a PSA, I don't know that it's uh as optimized as it should be. Are there kind of two or three things that you would suggest people maybe kind of poke around in when they get get either if they're in the office or when they get back to the office, uh or their home office, I guess as it is right now during the pandemic. Uh what were the two or three things that you would tell people to kind of check and validate to make sure that they're using the PSA properly, just to kind of health check or or things to to snoop around on inside? Well, well, first thing I would say absolutely is is if you're just using it as a service desk. Then really kind of um, you know, re-evaluate that. And saying, what did I buy the PSA tool for? If it's just a service desk, then, you know, it might be time to. To either um, you know, think about how else you can use the the service desk, so things like running your your billing through there or running your your um, uh, you know, your your contracts. Your uh projects, all of those kind of things and start to think about how you can actually manage all of those areas through the PSA tool. Um. So so kind of look at what you're using it for and what you could be and should be using it for. So things like. Um, you know, what did you buy it for, right? So when when a company comes in and they say, well, I have a PSA tool that I um. You know, I have all these aspirations to do my billing through it, but I've I've never actually done that. So take a look at your contracts or your billing agreements or or billing arrangements, you know, every PSA tool calls them something different. But have a look at those and say, you know, am I actually. Um, uh, you know, using those properly, am I doing the the billing from there and invoicing from there? Um, is the first thing. The second thing I would say that's really, really important is I notice a lot of MSPs don't enter time properly on on the PSA tool. And that's a real, real biggie because. You know, people end up um adding a a note or or even worse, just not adding any time at all. Um, and if you do that, you're never going to get any profitability out of the system, right? Because you're not going to know whether um uh, you know, a contract is is profitable or not. Um, so all of those kinds of things, I think you need to start looking at and saying, am I actually doing all of those things through the PSA tool? Um. And then and then looking at costs, right? Is what is. What is the cost of my engineers, which we call burden rate? Um, you know, putting that burden rate into the system and then putting in all the costs of the services that you're selling and the products that you're selling, um and making sure that those are as accurate as possible. Because again, that's how, you know, the PSA is going to take the revenue, it's going to minus the costs and that's going to give you your your profitability. So if all your costs are zero, everything's going to show as 100% profitable, which obviously isn't the case. Yeah, that's a big one. I I've I you know, this is a constant debate in the industry of like. Well, you know, I don't want to enter time, my my text don't can't enter time, they they just say it's too much work, blah, blah, blah. It's all excuses and I I think it it is really important for running a sort of a an optimized business in my opinion. Like you sure, if you don't enter the time, you can understand still what your your margins are at a business level. But without that time, it's really difficult to understand our contracts profitable on an individual basis. And, you know, where is the time bleed, who's who's sucking more time out of the service desk than is appropriate relative to their contract? And, you know, IT service companies fundamentally sell time. So if you're not tracking your time, you're missing, you know, 60 to 70% of the cost of your organization. So strongly agree. On on that one in particular and it it's an area in general, like even people that have a good use of the PSA are often victim to this where they're not managing their time in the PSA well. So I would definitely echo that one. Right. And I also think the time needs to be um in in real time, right? I mean, I see a lot of people retrospectively adding the time, right, so they get to the end of the week or or the end of the day and they they enter their time for the whole day right right at the end or or even worse, you know, end of the week, end of the month, whatever the case might be. And it's it's really, really important to make sure that your engineers are entering the time as they're doing the work. So in in real time. Because we're all humans, right? We're going to forget, we're going to get to the end of the day and go, I don't know, how long did I spend with that customer? Or what did I actually do with with that customer on that contract? And you're going to forget and you're just going to make stuff up. And. Um, so it's really important to make sure that um, you know, that that's been entered as as quickly and as accurately as possible. Um. So, yeah, and especially, so I was going to say, especially so some, you know, PSA tools have a timer that allows you to to capture that time really accurately as well. So there's really no reason why you you don't need to do it there and then while you're actually working on on that issue for the customer. Yeah. Agreed. Um, you mentioned uh integration with finance and that that's a a really strong aspect of of having the the information in this tool correct. So that it can feed your your accounting platform. Um. And you you mentioned also having a burden cost and and from your book uh PSA profitability. You advocate for a fully burdened cost. Can you kind of expand on why you would want the fully burdened cost associated with the tech in the PSA? Sure. And I mean. You know, because that's going to give you, obviously, the the cost of the engineer is more than just the hourly rate that you pay. Right, you're going to have things like social security or in the UK, you're going to have national insurance, you're going to have pensions, you're going to have all these things. And and you know, that is that is going to be the true cost of that engineer. It's not just what you're paying him on a on an an hourly basis. And so. Again, if you um, you know, if you're putting in the wrong rate, if you're putting in just a an hourly rate or some kind of made up burden rate. Um. It that's going to mess up your your gross profit, it's going to basically mess up everything um, uh, you know, those figures and that profitability. Overall of of the contracts and the customers and all that kind of thing. Now, is that from like, do you advocate for viewing the finances within the PSA? Because some of the PSAs have that capability of having some financial reporting. Uh but others, like they're they're kind of blind to what the finances look like until it ends up in the accounting platform. Yeah, so I think certainly things like your PNL and and those kind of things you should definitely run those through the accounting platform. Um. But, you know, profitability of customers or um, you know, where the time bleed is and all that kind of thing, definitely run those sorts of reports through your your PSA. But ultimately, um, you know, your your um PNL and and that sort of information. And Ebitda and all that kind of stuff that you need to work out, that that you should be doing through the uh through the accounting platform. Right. Okay. Um, so I mentioned uh the book that you that you've recently published, uh PSA profitability. You want to give us a a sort of a quick uh uh teaser on on what the book is about and who might be interested in reading it? Sure. So the book is in two parts. So the first part is about choosing. And implementing a PSA tool. So, um, you know, what we spoke about earlier on is kind of making that decision to, you know, do I need a PSA tool, do I need a service desk? Um, and actually making that decision and choosing the right tool based on what is right for your business. And then part two goes into setting up the PSA tool for for profitability. So it talks about things like burden rate, um, you know, where to put that into the the PSA tool. Also talks about costs of products and services, um, and where those go. And then running the financial reports, um, once you've got all that information in there. So, um. So it's really designed for kind of those people who are either new to PSAs, um, you know, aren't using one at all or thinking of switching to a different PSA tool. Um, and also designed for those people that are are using a PSA tool predominantly as a service desk, um, but want to actually start to get more profitability information out of it. Um, and and so that's where kind of part two comes in for those people. Okay, great. Uh and one other one that that popped to mind earlier, I didn't ask, so I'll circle back to it. Is uh the use of uh the PSA for project management, I find is is a an area of contention. Uh a lot of organizations, the tech sort of push the owner uh to to get a sauna or Trello or some some external project management tool. Because uh they they feel like the the project management tools in the PSA are not great. And this is a sort of a sore spot for me because I tend to find that if they're not using the PSA project management tool. And they push the owner to get some other separate tool, now you have data in a separate silo, plus they're using the uh uh the secondary tool as poorly as they probably used the PSA for project management. Do you see something similar around this? Have any thoughts? Absolutely. And and it gets back to that whole me too thing, right? Is is, you know, Asana, Trello, all these tools are kind of industry standard, everyone's using them, so they must be good, right? So. Everyone then goes, well, let's use those. And then they only use less than 30% of those tools as well. Um, purely because the exact same thing as as the PSA. They don't have, you know, the time to to actually learn the product or the time to to implement it properly. So, it doesn't matter which tool they end up using, they they they're never really going to use it properly unless they put the time in. Um, although in saying that though, there are actually uh tools now designed specifically. Um, as a as a kind of Kanban board for for PSA tools. So, um. There is a company out there top left that does it, um that's kind of a a Trello Asana type thing for specifically for MSPs. And actually runs the project management side really well as well. So, if you are going to use another tool like that, um, then I would look at something that is going to integrate with the PSA tool. Rather than just using some third party thing like Trello or Asana that where there's no integration at all. Yeah, uh Wim was one of the founders of Top Left. He's been on the on the podcast before. Uh back then it was CW Kanban. But if uh check out the previous episode and and you can take a look at that tool. It is it is good and if you agreed, if it's just the visualization. And that that Kanban representation of what you want, then then that's better. Because like I said, one of the things that I find is is really problematic with having uh different tools that have overlapping features with a PSA. Is then you end up with data silos. Where you've got information here, you've got information there. It becomes more difficult to report on it, plus then people have a legitimate reason to push back against why data is missing. Like, well, I didn't get to that because, you know, I forgot that this part is over here and this is over there. Uh I really try to push people to avoid that fragmentation of data as much as possible. Now, if you're using a project tool really, really well and you find that it's actually limited in what it's capable of. Then sure. Maybe you can have a justification for getting a separate tool. But. If you're using the current one poorly and you think that that will be resolved by getting a different tool. I would argue that's probably not going to happen. Yeah. And and actually that's the whole point of of kind of, I guess, why PSA tools were were invented, right? Is to kind of bring all of those silos together in in one place, right? So that you have a single pane of glass to to run your business. Rather than having the data siloed all over the place. And um, you know, not only then do you is it. You know, difficult to report on that, you're also going to have to um learn multiple different tools, different ways of doing things. You're going to have to learn different interfaces. All those kinds of things and that's really the reason why PSA tools came about. Is to say, you know, bring everything into one place and run um, you know, one tool in your business to do all of those um those different aspects of of your business. Right on. Okay. Okay, great. So, uh Chris, we'll look to wrap up. Uh obviously, if people want to check out your book. I'm sure that's available in wherever you find books. Uh and if if anyone would like to know more about uh the work that you guys do. Where can they find you on the socials and on the interweb? Yeah. So, um, two things, so the book has its own website. So it's PSA profitability.com. Um, or as you say on on all good bookstores. Um, and if you want to contact me directly, my consulting website is Sundella consulting.com. Um, or you can reach me on Twitter at Sundella consult, um and all the other socials. Facebook, LinkedIn, um. Just look me up on there, you'll find me. Okay. And we'll provide links in the show notes as well. Uh, so this be good. Appreciate your time, Chris. And all the best. Awesome, thank you very much for having me. Really appreciate it.