3 Mistakes Most IT Business Make
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Transcript of 3 Mistakes Most IT Business Make
Top 3 Mistakes Most IT Businesses MakeManaging Profit Margins and More…
Presented by:
Frank Coker, CMC, MBACEOCoreConnex, Inc.Producer of theCorelyticsTM Financial Dashboard
Agenda• Business Stages• Models & Trends• Top 3 Mistakes• Management Tips• Q&A
How do you manage?
What road is your company on?
Start Up Lifestyle
Business Stages
Experienced Team
Building for Exit
LifestylePersonal freedoms
• Primarily T&M• Some fixed fee• Personal
management• Income, expenses
& cash
• Multiple LOBs• Contracts• Develop
Management skills
• Growth
Start UpBuild, build, build!
• Client Portfolio• Client service #1• Line managers• EBITDA
Experienced TeamDevelop rhythm
• Succession• Most optimal
value with smoothest transition
• Valuation
Building for ExitThe right fit
Different models, different style
Trends
• MSPs - the lure of recurring revenues
• Blended services complex to manage, higher profits
- Taken from Corelytics Industry Performance Report February 2011
Believe the hype about RMM software
Trends
49% more profitable if installed in more than 72% of clients
- Taken from Corelytics RMM Industry Performance Report June 2011
Top 9 Key Financial Metrics
1. Revenue
2. Margins
3. Profit
4. Rev./Billable FTE
5. Expense/Billable FTE
6. EBITDA
7. Marketing Expense
8. Sale Expense
9. Gross Margin
Key Financial Metrics By LOBUnderstand…
… revenues by LOB
… cost structure of each LOB
… how billable staff are contributing / consuming
… EBITDA: operating profitability
… are expenses for marketing/sales generating results
I t ’ s a M a n a g e m e n t S o l u t i o n
#3: Lack of Clarity of Business ModelHave consistency
• Predominant Business Model® (PBM®)– Managed Services– Product Resell– Project– 7 others…
• Variations– Sell – Manage– Support
http://support.coreconnex.com/corelytics/define-pbm/
Types of Gross Margin
Price determined by market -
Cost determined by vendor
More hours xRate per hour -Cost per hour
Less hours xRate per hour -Cost per hour
Product
T&M
Flat FeeHow do you optimize?
Solution• Know your business model• Know what to optimize• Optimize each Line-of-Business
(LOB)
#2: Unable to Articulate Financial GoalsPick a target
• Pick your goals – Growth– Percent of Revenue
• Track benchmarks for your model
• Forecast performance – Know best and worst
case scenarios
Solution• Set goals for financial performance
– Company-wide– By LOB
• Communicate goals – show the picture!
• Link operational priorities to financial metrics you track
• Assign ownership (this may be you!)
• Visibility of business performance
TOP 3ACTION ITEMS
assign ownership
# 1: No Management Process
30 Minutes a Month
Management Tips
S t a r t To d a y !
Learn More
https://dashboard.corelytics.com