Monday, September 11th 2017 by Kirill Bensonoff
The secret to success for many services businesses is scalability. If a business cannot generate more revenue and provide more services with the same amount of resources, the business will realize only moderate growth and constantly be operating on low margins while dealing with the hassle of increasing staff for relatively small increases in profit.

That adage is no different for MSPs. The 2017 Kaseya MSP Global Pricing Survey found that two of the three characteristics of high-growth MSPs were economies of scale and confidence in delivered value.

Successful services businesses figure out how to do more with the resources they have (or how to do WAY more with only slightly more resources than they’re already using). This means signing larger clients while increasing the repeatability and efficiency of their core offerings, with any additional resources being diverted to high-value, high-visibility activities and not sausage-making administrative side of the business.

For an MSP, that means introducing new offerings, integrating more solutions, and improving the customer experience while keeping up with customer expectations and the continued migration to cloud-based services.

Billing is one of those areas that isn’t on the list of sexy, value-adding things you want your staff spending time on. But it’s often a huge time suck for your staff. On average, your staff is spending 30 minutes per customer on billing. At an industry average hourly rate of $28, that’s $14 per customer per month, which is $168 every year. Multiply that by 50 customers and your billing administration is costing nearly $10,000.

Since billing automation and efficiency doesn’t win new business, it often gets the short shrift of attention as your company focuses on meeting SLAs and delivering award-winning customer service. Yet customer centricity requires transparency and clarity in billing, and it’s a fundamental part of running a services business (not to mention critical to your company’s cash flow and financial viability). With customers focusing on their own budgets and expenses, they have some pretty specific requirements that can have a big impact on your overhead and resource allocation.

The Importance of Transparency

In the old days, an MSP could simply sell its services with flat blanket fees combined with hourly professional services. But cloud solutions aren’t compatible with this paradigm. Instead, everything is sold on a usage-based model — and your customers know that.

Since your customers entered into agreements knowing that they’re paying per-user, per-gigabyte or per-instance, they’re expecting transparency in their billing that shows everything adds up. Customers are demanding visibility into their bills — they want granularity and need to see how much they’re paying for each individual service. But breaking out those charges from a single line item is time consuming and difficult.

Simultaneously, the 2017 Kaseya MSP Global Pricing Survey Report clearly shows that high-growth MSPs are offering more choices and a full suite of solutions. With so many different offerings for customers, MSPs simply can’t afford to spend lots of time on detailed billing processes for each of the point products they’re providing.

When it comes to services such as Office 365, delivering full visibility into customer billing statements has been an arduous task. The product’s default views into billing are PDFs that don’t provide enough details or exporting CSVs with way too much of it. Logging in to individual accounts or exporting data from systems and manually counting licenses, seats, and users is clearly not the best use of an MSP’s time, yet it is often the only way MSPs can give their customers what they require and bill accurately.

This is not only a real cost and burden for your business, but it also affects your valuation. A manual, time-consuming billing process goes straight to your company’s selling, general and administrative costs that any investor or potential acquirer will consider before moving forward on a deal.

Another downside to this labor-intensive billing process is the potential for errors. Anytime you’re relying on humans to perform multiple steps on a recurring basis, there’s ample opportunity for a false calculation or even a typo to lead to a negative customer experience or billing shortfall that impacts your bottom line.

Most importantly, with so much to do and so few people to do it, wouldn’t you rather have your employees spending their time on more interesting and profitable tasks? Misallocated time can impact everything from job satisfaction and retention to missed opportunities to develop new offerings or focus on customer support and account growth.

The margins on Office 365 may not be as great as some of your other offerings, but it is a service many clients now expect, plus it can be a great entry into providing other, more profitable solutions, and it is a great candidate for bundling. In fact, more than 60 percent of MSPs see Office 365 as a growth area.

Plus it’s a recurring revenue stream that’s in no danger of disappearing since it quickly becomes mission-critical for the customers that adopt it. That’s why it’s so important to not eat into those slim margins with a resource-intensive billing process.

The smarter and more efficient way to deliver granular billing data is to rely on solutions that automate this process for MSPs, programmatically exporting key data from Office 365 and dynamically generating invoices that include the exact level of detail customers demand without any need to manually process this information and reformat it for customers.

Interested in learning more about how your business could benefit from automated billing for services such as Microsoft Office 365? Contact your Kaseya rep today to schedule a demo or learn more here.
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