1. Eliminates costly inefficiencies related to routine work

Repetitive tasks do not generate revenue, they drain it. Every hour spent on routine maintenance is an hour not spent improving client systems, identifying upsell opportunities or expanding service offerings. This inefficiency slows response times, reduces client satisfaction and ultimately leads to higher churn rates, which negatively impacts your bottom line.

Automation solves this by eliminating the manual workload, allowing technicians to focus on high-value tasks that drive profitability. According to our upcoming 2025 Global MSP Benchmark Survey Report, nearly 60% of MSPs ranked automation, including auto-remediation of tickets, as the most valuable RMM feature.

Some of the ways automation helps cut costs and improve efficiency are:

• Fewer on-site visits and emergency calls: Automated monitoring and remediation allow for remote issue resolution, reducing infrastructure and labor costs.
• Optimized software licensing: Better resource allocation ensures that MSPs only pay for the licenses they actually need instead of overprovisioning.
• Reduce downtime-related losses: Proactive automation keeps systems up and running, reducing financial losses associated with downtime for both MSPs and their clients.
• Minimize SLA breaches and penalties: Automated alerts, patching and system optimizations help meet SLAs consistently, preventing costly service credits or contract penalties.

2. Helps you scale cost-effectively

Every new client brings more tickets, more maintenance and bigger security challenges. Without streamlined processes, the only way to keep up is to hire more technicians, which drives up payroll costs and cuts into precious profits.

Instead of expanding your team, automation helps you do more with the resources you already have. Tasks that once took hours can now be completed in minutes without constant technician intervention. This efficiency increases revenue per technician, driving higher profitability per client and improving overall margins.

The survey also found that winning new clients is the biggest challenge for MSPs in 2025, with competition making it harder to stand out. Without automation, scaling will only get tougher. By automating routine tasks, the leadership team can shift focus from daily IT operations to building a strong sales infrastructure, improving marketing efforts and expanding the client base.

Check out Kaseya’s Partner First Pledge, designed to share both the success and risk our partners experience.

3. Enables more reliable service for higher profitability

MSPs that struggle with slow response times, unresolved tickets and inconsistent service risk losing business to competitors who deliver faster, more reliable support. Frustrated clients lead to churn, negative reviews and lost revenue.

Automation makes IT support faster, more proactive and highly efficient. Instead of waiting for problems to escalate, MSPs can resolve issues instantly, often before clients even realize there is a problem. Here’s how automation helps you deliver better service and drive profitability:

• Faster resolution, happier clients: Automated IT monitoring fixes issues in real-time, reducing downtime and ticket volume. Clients enjoy seamless IT support, leading to stronger retention and fewer escalations.
• Proactive vs. reactive support: Scheduled maintenance, automated updates and AI-driven diagnostics reduce emergency fixes, lowering operational costs while improving service efficiency.
• Consistent, high-quality service: Manual processes leave room for human error and inconsistency. Automation creates standardized workflows and delivers predictable outcomes, so every client receives the same high level of service — critical for securing long-term contracts.
• Increased client referrals and upsell opportunities: Happy clients stay longer, renew contracts and recommend your MSP to others.

4. Makes security your strong suite

Security is not just another service on your roster — it is a key driver of profitability. Our MSP Benchmark Survey found that MSPs earning 15% or higher margins have advanced security services in their portfolio. However, offering cybersecurity alone is not enough. To command higher prices and scale profitably, automation is essential.

Cyberthreats are relentless, and ransomware attacks, data breaches and compliance failures can lead to devastating legal fees, regulatory fines, downtime and lost business. Worse, a single security lapse can permanently damage your reputation, making it harder to retain or attract clients.

Automation is the key to delivering strong, scalable security while keeping costs under control. Here’s how:

• Premium security equals higher margins: You can differentiate your MSP by offering advanced security solutions, like managed detection and response (MDR), AI-driven threat protection and automated compliance management, that justify higher service fees.
• Lower incident response costs: Automating patching, vulnerability scanning and endpoint protection prevents issues before they escalate, reducing the need for expensive emergency response efforts.
• Scaling without hiring a full security team: Cybersecurity expertise is expensive. Instead of hiring a team of specialists, automation enables your team to manage security at scale with AI-driven threat detection, automated response playbooks and proactive monitoring.
• Stronger compliance: Meeting security and compliance standards manually is time-consuming and expensive. Automated security tools ensure policies are enforced, logs are maintained and reports are generated instantly, helping avoid costly fines and contract breaches.

5. Empower technicians to perform and drive revenue

When technicians are buried under repetitive tasks, productivity drops, burnout sets in and top talent walks out the door. Losing skilled IT professionals is costly and disruptive, making it harder to scale your MSP.

Now, imagine a stress-free team where technicians log in to start their day and see that routine patches, updates and security scans have already run overnight. Instead of wasting time on tedious maintenance, they focus on high-impact projects that strengthen client relationships, improve service quality and create new revenue opportunities.

Automation frees technicians to do their best work and actively contribute to business growth. Here’s how:

• Lower stress, fewer mistakes: Automating routine tasks reduces errors, prevents downtime and helps meet SLAs effortlessly.
• More time for high-value work: Technicians can focus on strategic initiatives, security improvements and proactive client support instead of endless troubleshooting.
• Increased revenue potential: A technician who is not overwhelmed with busy work can spot upsell opportunities, recommend security enhancements and drive service expansions — turning IT support into a profit center.

Scale and save with Kaseya 365 Endpoint

You don’t need multiple tools or a complicated strategy to achieve everything we just covered. One solution does it all. Kaseya 365 Endpoint gives you everything you need to manage, secure, back up and automate your endpoints, all under a single subscription. By consolidating tools into one powerful platform, you reduce licensing costs, eliminate manual inefficiencies and lighten the administrative workload. With up to 70% cost savings, your MSP is set up for success — less stress, more control and the confidence todominate your market. Click here to know more about Kaseya 365 Endpoint.

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Learn How Kaseya is Changing the Game for MSPs

As an MSP, you know how essential you are to your customers’ viability and ultimate success.

Your role in ensuring all systems are always available and always secure has become exponentially more difficult in the past decade. Shouldn’t your books reflect that?

Unfortunately, the unit economics of the MSP industry have not yet caught up with the complex challenges and the value that MSPs provide. Unlike legal, financial and other professional services firms — which can take a month-long hiatus without significantly impacting their clients’ day-to-day operations — an MSP that goes dark for even a short time could return to find customers’ doors shuttered.

Similarly, a corporate legal or accounting crisis at midnight is rare and can wait until morning; an IT outage typically demands immediate resolution.

Yet, despite being the unsung heroes who keep SMBs (and, by extension, the broader economy) running smoothly, MSPs worldwide average profit margins of only 8% to 12%, while legal and financial services firms consistently achieve 30% to 35% profit margins.

Kaseya’s mission: To change the unit economics for MSPs

A decade ago, Kaseya set out on a journey to right this financial injustice. A major milestone in this mission came with the recent launch Kaseya 365.

Kaseya 365 is the first significant step toward enabling MSPs to achieve profit margins comparable to those of the legal, financial and other professional service firms that also serve their customers.

In the few short months it’s been available, Kaseya 365 has added over $300 million of annual run rate profitability to the 4,000-plus partners that have adopted it.

This is just the beginning. The next step in this transformation will be announced at DattoCon Miami in October. Following DattoCon, we’ll have an announcement in Washington, D.C. in late January 2025. The fourth and final announcement will be made in Las Vegas in April 2025 at Kaseya Connect Global.

Don’t wait. See the impact Kaseya 365 can have on your business.

The post Transform Your MSP’s Financial Future appeared first on Kaseya.

In this blog, we will explore the importance of automated billing solutions for MSPs, how they work and their benefits. We’ll also introduce you to Kaseya Quote Manager, a powerful MSP quoting software designed to enhance the MSP billing processes and drive efficiency. Let’s see why investing in a robust billing solution is crucial for your MSP business.

What are billing solutions?

Billing solutions are software applications designed to manage the entire billing process for businesses. These solutions automate various tasks such as invoicing, payment processing, subscription management, revenue recognition and financial reporting. By streamlining these processes, billing solutions help businesses reduce manual errors, improve efficiency and ensure compliance with regulatory requirements.

Billing solutions are vital for businesses because they provide a structured and efficient way to handle financial transactions. They ensure that invoices are generated accurately and sent out on time, payments are processed swiftly, and financial data is recorded and reported correctly. This not only enhances cash flow but also improves customer satisfaction by providing a seamless billing experience.

Why are billing solutions important for MSPs?

For MSPs, billing solutions are essential tools that help manage the complexity of their financial operations. Here’s why they are crucial:

Invoicing

Creating and customizing professional invoices with itemized billing details, payment terms and branding is vital for MSPs. Automated billing solutions allow MSPs to generate accurate invoices quickly, reducing the chances of errors and ensuring that clients receive clear and detailed bills.

Payment processing

Integration with multiple payment gateways is a key feature of billing solutions. This capability enables MSPs to accept various payment methods, such as credit cards, bank transfers and digital wallets, providing flexibility and convenience to their clients.

Subscription management

For MSPs offering subscription-based services, the management of recurring billing and renewals can be challenging. Billing solutions automate these processes, including proration, upgrades, downgrades and cancellations, ensuring that subscriptions are handled smoothly and accurately.

Revenue recognition

Accurate revenue recognition is critical for financial reporting and compliance. Billing solutions help MSPs recognize and allocate revenue according to accounting standards and business rules, providing accurate financial statements and reducing the risk of compliance issues.

Reporting and analytics

Financial reports, customizable dashboards and business insights are essential for tracking revenue, monitoring billing performance and identifying trends. Billing solutions provide robust reporting and analytics tools that help MSPs make informed business decisions.

Compliance and security

Adhering to regulatory requirements, such as tax laws, data protection regulations and compliance with the Payment Card Industry Data Security Standard (PCI-DSS), is crucial for MSPs. Billing solutions ensure that data is secure and compliant with legal obligations, reducing the risk of breaches and penalties.

What are the benefits of an MSP billing platform?

Implementing a dedicated billing platform offers numerous advantages for MSPs, including:

• Improved efficiency: Automating manual billing processes reduces errors, saves time and streamlines financial operations. MSPs can focus more on their core services rather than spending time on administrative tasks.
• Enhanced accuracy: Standardized billing templates and automated calculations minimize billing discrepancies and improve invoice accuracy. This leads to fewer disputes and ensures that clients are billed correctly.
• Faster payments: Integration with payment gateways enables swift payment processing, reducing payment delays and improving cash flow. MSPs can maintain a healthy financial position and reinvest in their business growth.
• Scalability: As MSPs grow, their billing needs become more complex. Scalable billing solutions accommodate business growth and expansion by supporting a growing customer base and increasing transaction volumes.
• Customer satisfaction: Providing a seamless billing experience, personalized invoices and self-service billing portals enhances customer satisfaction and retention. Clients appreciate the transparency and convenience of automated billing processes.
• Cost savings: Automating billing processes reduces administrative overhead, lowers processing costs and optimizes revenue collection. This leads to cost savings and improved profitability for MSPs.

What are the different types of billing solutions?

There are several types of billing solutions available, each catering to different business needs. Let’s discuss the three common types of MSP billing solutions.

Standalone Billing Software

Standalone billing software is a dedicated platform focused solely on managing the billing process. These systems offer a comprehensive suite of features tailored to handle every aspect of billing, from invoicing and payment processing to revenue recognition and financial reporting.

Advantages:

• Comprehensive functionality: Provides all the tools necessary to manage the entire billing cycle.
• Customization: Allows for significant customization to match the unique needs of your business.
• Specialization: As a dedicated solution, it often includes advanced features not found in more generalized systems.

Integrated Billing Modules

Integrated billing modules are components embedded within larger enterprise resource planning (ERP) or customer relationship management (CRM) systems. These modules streamline billing processes as part of a broader suite of business management tools, ensuring that billing is seamlessly integrated with other business functions.

Advantages:

• Seamless integration: Enhances operational efficiency by connecting billing with other business processes such as sales, finance and customer management.
• Centralized data: Provides a unified platform where all business data is stored and managed, reducing data silos.
• Efficiency: Streamlines workflows by automating billing tasks and eliminating the need for manual data entry across systems.

Subscription Billing Platforms

Subscription billing platforms are specialized solutions designed for businesses that offer subscription-based services. These platforms handle recurring billing, metered billing and usage-based pricing models, making them ideal for MSPs with a subscription-based revenue model.

Advantages:

• Recurring billing: Automates the process of billing customers on a recurring basis, reducing manual effort and ensuring timely payments.
• Flexibility: Supports various billing models, such as flat-rate, tiered, usage-based and hybrid billing.
• Customer management: Includes features like proration, upgrades, downgrades and cancellations, allowing for flexible subscription management.

What are the key considerations while choosing billing solutions?

When selecting a billing solution, MSPs should consider the following factors:

Business needs and requirements

Evaluate the specific billing requirements, transaction volumes and industry-specific regulations to choose a solution that meets your organization’s needs. Ensure that the solution can effectively handle your current and future billing processes.

Scalability and flexibility

Ensure that the billing solution can scale with your business and adapt to evolving billing models and revenue streams. A flexible solution will accommodate business growth and changing customer demands.

Integration capabilities

Assess the compatibility and ease of integration with existing systems, such as accounting software, CRM platforms and payment gateways. Seamless integration ensures smooth data flow and reduces manual data entry.

User experience and support

Consider the user interface, ease of use and availability of customer support and training resources. A user-friendly solution with excellent support ensures a smooth implementation and user adoption.

What are the risks of not using MSP billing software?

Not using dedicated billing software can pose several risks for MSPs, such as:

• Manual errors: Increased likelihood of billing errors, leading to disputes and customer dissatisfaction.
• Delayed payments: Slow payment processing can impact cash flow and financial stability.
• Compliance issues: Difficulty in adhering to regulatory requirements, risking legal penalties and breaches.
• Inefficiency: Time-consuming manual processes that divert focus from core business activities.
• Inaccurate reporting: Challenges in generating accurate financial reports, affecting business decision-making.
• Scalability problems: Inability to handle growing transaction volumes and complex billing scenarios.

Kaseya Quote Manager automates, simplifies and enhances your billing process

Kaseya Quote Manager is a powerful tool that is purpose-built for MSPs to automate and simplify their billing process. Here’s how it can help:

• Expedite the quoting process: Quote Manager streamlines the quoting process, allowing MSPs to generate accurate and professional quotes quickly. This speeds up the sales cycle and improves customer experience.
• Boost productivity with automated procurement: Automating procurement processes reduces manual tasks and increases efficiency. MSPs can manage their procurement activities seamlessly, ensuring timely service delivery.
• Increase sales and customer satisfaction: By providing clear and detailed quotes, Quote Manager enhances customer satisfaction and helps close sales faster. Satisfied customers are more likely to stay loyal and recommend your services.
• Drive efficiency with seamless integrations: Quote Manager integrates seamlessly with other business systems, ensuring smooth data flow and reducing manual data entry. This enhances overall operational efficiency and accuracy.
• Enhance financial reporting and compliance: With robust reporting and analytics tools, Quote Manager provides insights into financial performance and ensures compliance with regulatory requirements. MSPs can make informed business decisions based on accurate data.

Quote Manager is a superior automated billing solution that helps MSPs streamline their billing processes, improve efficiency and enhance customer satisfaction. For more information on how Quote Manager can transform your billing process, get a demo. MSPs like you often have to use different pricing models for your IT services. Read our eBook, “MSP Pricing and Billing: Flexible Models,” to discover a few different pricing models that may be right for you.

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What is cloud billing management?

Cloud billing management encompasses the processes and tools that businesses, particularly MSPs, employ to oversee the billing of cloud services. It involves tracking usage, managing costs and invoicing clients for cloud resources consumed. In the context of MSPs, cloud billing management is pivotal for accurately charging clients based on their usage, offering transparent billing practices and ensuring that billing operations align with the dynamic nature of cloud services.

Why are cloud billing management tools important?

Cloud billing management tools or cloud billing software are specialized applications designed to aid MSPs in the efficient management of cloud billing operations. These tools are essential for several reasons:

• Cost efficiency and strategic financial planning: They enable MSPs to offer cost-effective solutions by closely monitoring and optimizing cloud resource usage, ensuring clients pay only for what they use.
• Navigating complexities: Cloud services often come with complex pricing models and the challenge of managing multi-cloud and hybrid environments. Cloud billing management tools simplify these complexities by allowing MSPs to maximize client investments.
• Maintaining competitive advantage: By ensuring accurate and transparent billing, MSPs can enhance client satisfaction and loyalty, thereby maintaining a competitive advantage in the market.

What makes cloud billing software essential for MSPs?

Cloud billing software automates the collection of usage data from cloud platforms, calculates charges based on predefined pricing models and generates invoices accordingly. It integrates with various cloud services and platforms to provide a unified view of consumption across different cloud environments. This automation and integration capability are crucial for handling the billing complexities associated with cloud services.

Here’s a detailed breakdown of how these sophisticated tools function:

• Automated data collection: The software automatically gathers usage data from various cloud platforms. This ensures that all resource consumption is accurately tracked without the need for manual input, reducing the likelihood of errors.
• Calculation of charges: Based on the usage data collected, the software calculates charges using predefined pricing models. These models can vary depending on the cloud services used and may include pay-as-you-go rates, subscription fees or a combination of both.
• Invoice generation: After calculating the charges, the software generates detailed invoices that are sent to clients. These invoices clearly outline the services used, the amount of resources consumed and the total cost, providing transparency to clients about their cloud usage and associated charges.
• Integration with cloud services: Cloud billing software is designed to integrate seamlessly with a wide range of cloud services and platforms. This integration capability allows it to collect usage data across multiple environments, ensuring that billing is comprehensive and covers all cloud resources utilized by a client.
• Unified consumption view: By consolidating data from various cloud platforms, the software offers businesses a unified view of their cloud consumption. This holistic perspective is invaluable for managing cloud expenses by optimizing resource usage and planning future cloud expenditures.
• Complexity management: The automation and integration features of cloud billing software are essential for navigating the complexities of cloud service billing. Whether dealing with variable pricing models, multiple cloud environments or intricate service agreements, the software simplifies these challenges, making cloud billing management more manageable for businesses.

Cloud billing software eliminates the manual effort and complexities associated with cloud service billing by enabling businesses to focus on their core operations while ensuring accurate and transparent billing for their cloud usage.

Challenges in cloud billing management

Managing cloud billing presents a unique set of challenges for MSPs who must navigate a landscape marked by complex pricing, diverse environments and the need for precision and adaptability. These obstacles require meticulous management to ensure accuracy, client satisfaction and sustainable growth. Some of the challenges in cloud billing management include:

• Complex pricing models: Cloud services often have intricate pricing structures that can be difficult to manage manually.
• Multi-cloud and hybrid environments: Managing billing across diverse cloud environments adds to the complexity.
• Billing inaccuracies and disputes: Manual billing processes are prone to errors, leading to disputes and client dissatisfaction.
• Keeping up with changes: Cloud service models are continually evolving, requiring MSPs to stay updated to ensure accurate billing.
• Customization and scalability: MSPs need the ability to customize billing reports and scale billing operations in line with business growth.

Overcoming challenges with cloud billing management systems

Cloud billing management systems are vital tools for MSPs facing the intricate challenges of cloud service billing. These systems not only streamline billing processes but also enhance financial management and client relations through various features. Here’s how MSPs can tackle common hurdles in cloud billing management.

• Cost control and optimization: These tools provide detailed insights into usage patterns, enabling MSPs to identify and eliminate wasteful expenditures.
• Transparency and accountability: By offering clear visibility into consumption and expenditures, these systems foster trust and strengthen client relationships.
• Forecasting and budgeting: They assist in accurate budget planning by helping clients avoid unexpected costs and align expenditures with business objectives.
• Compliance and governance: These systems ensure that billing practices comply with industry standards and regulations, crucial for clients in regulated sectors.

Selecting the right cloud billing management tool

For MSPs, selecting the right cloud billing management tool is crucial for optimizing their billing processes and enhancing service delivery. Here’s a deeper look into what MSPs should consider:

• Billing automation: Automated billing ensures timely and accurate invoicing by eliminating the chances of human error, thus enhancing the reliability of billing processes.
• Integration capabilities: This feature allows MSPs to streamline billing across different environments, providing a comprehensive overview of cloud usage and facilitating a unified billing system for clients.
• Customizability: Customizable billing solutions offer the flexibility to adapt to the unique requirements of each client, allowing MSPs to provide personalized service and detailed, understandable billing reports.
• Cost and ease of use: A cost-effective solution maximizes the return on investment, while ease of use ensures that MSP staff can manage the billing process efficiently without extensive training.
• Customer support: To receive timely assistance when issues arise. Reliable customer support guarantees that any problems or queries regarding the billing system can be resolved quickly by ensuring uninterrupted service delivery and client satisfaction.

How can Kaseya Quote Manager help?

Kaseya Quote Manager is a cutting-edge cloud billing management solution tailored for MSPs. It simplifies the billing process by automating data collection, cost calculation and invoice generation. With its robust integration capabilities, customizability and user-friendly interface, Kaseya Quote Manager empowers MSPs to manage cloud billing efficiently, ensuring accuracy, transparency and client satisfaction.

Cloud billing management is a vital aspect of MSP operations, directly impacting cost efficiency, client satisfaction and competitive advantage. By leveraging advanced cloud billing management tools like Kaseya Quote Manager, MSPs can overcome the challenges associated with cloud billing, optimize their billing operations and deliver exceptional value to their clients. Explore the strategic advantage gained through effective cloud billing management and discover how Kaseya Quote Manager can transform your billing processes by reading our comprehensive eBook on flexible pricing and billing for MSPs.

Ready to see Kaseya Quote Manager in action and understand how it can specifically benefit your business? Request a demo today and we’ll take care of the rest!

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What is recurring revenue?

Monthly Recurring Revenue (MRR)

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So, if you want your business to succeed and grow, you must not only design a practical budget but also execute it intelligently. Here are some of the best budgeting tips and lessons you can use to get the most out of your finances this year.

What’s a business budget and why is it important to have one?

A business budget is a statement of your business’ finances. The report tells you how much money you have, how much money each vertical or department receives, and how much money you want to earn. Budgets also consider expenses and costs and give you the financial information you need to determine the direction of your business.

Making an annual budget is something you likely know all about as a business owner. Yet sometimes, budgets don’t lead to the kind of financial freedom, operational efficiency and business growth you might be hoping to achieve. However, with a few smart and effective changes to your budget, you can get more bang for your buck and finally meet those high-sitting goals.

You should create a budget for your business even if you are a solo entrepreneur. By doing this, you’ll identify the unknowns and be prepared for contingencies that would otherwise throw your budget out of whack. If you are just starting out as a small business owner, you can use this blog as a guideline to allocate your money and set your financial goals.

But before that, here are some tips that will immediately help you unlock value in your business budget and make it more effective.

4 simple tips to build a better budget

According to a U.S. Bank study, a whopping 82% of businesses that failed did so due to cash flow difficulties. Improper budgeting is often to blame for this. To avoid this particular pitfall, here are four budget-boosting tips to help you get a better handle on your money.

• Set clear expectations right from the start

Budgets enable businesses to track their spending throughout the fiscal year. However, budgets often fail because the expectations and ambitions of business owners are not based on analysis and numbers. They simply allocate resources based on wishful thinking. A successful budget must be based on realistic expectations and must take into account risks and challenges.

As important as it is to target growth, a good budget also helps in identifying money-draining trouble spots, plugging them and redirecting resources to more profitable and growth-supporting verticals.

Setting small and realistic budget goals and achieving them is much more effective than setting ambitious ones that might spiral out of control and make you feel like you are losing your grip on your business.

• Build a supply-demand model for each business unit

With budgeting, the more granular you are, the better. This step can be thought of as a pre-budgeting step that allows you to examine in depth the various facets of each business vertical before allocating resources to it. Generally, businesses allocate more budget to verticals where demand is expected to grow. While this approach addresses the supply side of the equation, it doesn’t address the demand side. You must be ready to answer questions like why the demand is expected to increase, and if it is expected to increase, how will your business capture some of that demand. As you balance both the supply and demand sides of the equation, your forecasts will become more accurate.

• Analyze the contribution of each business unit to the portfolio

Budgeting and business evaluation are intertwined, and if the two aren’t coordinated, it can easily lead to massive budget and business failure. It’s crucial that the budgeting team maps and plots the growth factors of each business unit and establishes methods for studying its progress. This will help to allocate resources appropriately based on the performance of each business unit and contribution to the company’s overall revenue.

• Allocate resources vertically

Typically, businesses allocate resources horizontally across verticals, resulting in equal distribution of money among them. In this structure, high-growth sectors are left starved of resources while slow growth businesses sit on a pile of cash without generating sufficient ROI.

In the vertical methods, various business units are stacked on top of each other and adequate resources are allocated to the strongest vertical first. Each vertical then gets its share of money based on how it performs. Sometimes, business units right at the bottom might not get a penny, which is good. Eliminating an unprofitable vertical frees up cash flow for the company.

Additionally, businesses can set performance targets for each vertical based on resource allocation. This will help them streamline their operations and achieve immense growth, profitability and success.

How to create a budget for your small business in 7 steps

Small businesses face financial challenges in 66% of cases, with 43% citing operating expenses as their biggest problem. Small businesses are the least likely to have a budget. This is because they find creating one restrictive. Yet, small businesses must create a budget since it allows them to generate consistent growth and drive business forward.

Where large corporations must demonstrate sound financial management to manage their large coffers, small businesses must use creativity to get the most value out of their money since funding doesn’t come easy. As a small business, consider these seven points when creating your budget.

1. Examine your revenue: The first step is to determine how much money you have or how much money you make monthly and annually. In other words, add up all the income from all the verticals to determine the gross sales figure. This figure will appear at the top of your financial statements.
2. Calculate your fixed cost: Next, you need to calculate your fixed costs. These are costs that remain the same month-over-month like payroll, rent and website hosting.
3. Calculate your variable expenses: Variable expenses vary from month to month. These could include your utility bills, shipment and travel expenses, and commissions. Each of these costs has an impact on your profit. By reducing variable costs, you can increase your bottom line and scale up.
4. Keep funds aside for one-time charges: A one-time cost is a non-operating expense deducted from a company’s income for a one-off or isolated event that is unlikely to occur again. It could be a cost associated with buying office space, relocating or even putting aside funds to pay a security consultant should a cyber incident occur.
5. Renegotiate your deals with vendors: If you have a yearly contract with your vendors, you can renegotiate deals with them each year to get better prices. Small price reductions with multiple vendors can have a significant impact on your profits and contribute to the growth of your business.
6. Forecast revenue and profit: Budgeting also involves forecasting your revenue. You can use the forecast to determine the direction your business should take. If you analyze possible future outcomes to estimate the forecast, you are automatically better equipped to handle risks and pitfalls than businesses that simply take everything as it comes.
7. Put it all together: Finally, it’s time to add up all the numbers and subtract expenses from income. This will show you your profits, and you will be able to make informed financial decisions. A negative balance means you must reduce your expenses or find ways to increase sales. If your business is profitable, you can take calculated risks that will help you grow.

How to improve your business budget

Often, sales figure. However, companies are looking to increase their IT spending this year because of changes brought about by the COVID-19 pandemic and rampant cybercrime. According to Gartner’s 2022 CIO and Technology Executive Survey, CIOs expect IT budgets to grow by 3.6% this year — the fastest rate in more than a decade.

Here are a few budgeting tips businesses can follow to get a better return on their investment.

Use live data: We live in a fast-moving world where trends and circumstances change instantly. In order to keep up, you need to incorporate the latest data into your budget. There’s every possibility you could nip some expenses in the bud and even make more accurate financial projections when you have access to the latest expense and reimbursement reports.

Create both macro and micro budgets: Macro budgets provide a larger picture of an industry, country and economy as a whole. Alternatively, micro budgets can be monthly or weekly budgets that give you a better handle on your expenses, which could otherwise spiral out of control if left unaddressed for too long.

Keep it flexible: Having live data and micro budgets gives you the flexibility to react quickly to changes in the business climate. Small businesses need this important capability, especially since changes in business environments happen at a rapid pace in this day and age.

Align budget with strategy: Once you manage to break even or start operating at a healthy profit margin, you need to align your budget with your strategy. Whether you need to build a new office, expand to new markets, hire new IT specialists or make an acquisition, you can achieve your goal only when your budget and strategy work hand in hand.

A well-documented budget is a well-executed budget: Document all budget discussions and ensure that they are available to all departments so that there is transparency at work and business heads know exactly what they are expected to do and what resources they have.

Have alternative budgets: Budgets designed to accommodate any major changes you expect to impact the company are alternatives budgets. It could be a positive development, like getting a round of funding, or a negative outcome, like not earning revenue during an especially slow period.

Assess your cash flow: With a healthy cash flow, you will never run into pesky liquidity issues that can cripple businesses even with soaring revenues.

Choose the right budgeting methods: There is no one budgeting method that fits all businesses, just as there is no one-size-fits-all business model. You must choose a budgeting method based on your company size, product, objective or goal. You could choose:

• Activity-based budgeting — which is creating a budget based on an end goal.
• Value-based budgeting — which assigns budgets to departments based on the value they generate.
• Zero-based budgeting — where each department’s budget must be justified before funding is provided.

The options are many.

A well-defined IT budget can be a roadmap to your IT strategy. IT budgets are created not only to secure funds from your C-level executives but to also help you identify and execute crucial IT initiatives for your organization. To help you create an annual IT budget more easily, we’ve put together a checklist that not only caters specifically to your IT needs but, on implementation, also helps you maximize the benefits of your IT investments. Click here to download the checklist.

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IT budgeting is the process of allocating money to be spent on an organization’s IT systems and services. It includes budgeting for all technologies and projects across all departments within the organization. This includes one-time expenses, such as those dedicated to specific IT initiatives or projects, as well as recurring expenses related to staffing and maintenance of IT infrastructure.

Why Is IT Budgeting Important?

As an integral part of your business’s financial planning, IT budgeting is imperative to tracking and controlling your IT expenses and strategizing ways to optimize and save money wherever possible. It serves as the backbone for several critical company initiatives and helps allocate resources necessary for the entire year’s business plans.

IT budgeting helps provide funds required to keep your department running. It helps in identifying and implementing IT initiatives that are critical to your department. IT budgeting can be viewed as an investment in IT resources that not only helps improve business efficiency but also drives growth and profits in the long term

IT budgeting can boost your business productivity and ensure that you make lucrative business decisions. It can help you focus on updating your technology and attract more customers. It is often assumed that IT budgeting is only required to gain an understanding of the costs involved in buying new technology or equipment and figuring out how to make the payments. While that may be true to an extent, IT budgeting also helps ensure that you are making optimum and efficient use of your resources.

Planning for regular maintenance and repairs also helps avoid expensive malfunctions and breakdowns at a later stage. It not only helps in making sure that your equipment keeps running smoothly but also minimizes downtime and business interruption.

How Often Should IT Budgeting Take Place?

Typically, most organizations plan for their IT budget at the beginning of the financial year and review it annually. However, business owners should take the time to review their IT budget at periodic intervals throughout the course of the year.

Establishing a practice of more frequent IT budget reviews can help businesses identify any trouble spots or unexpected expenses early on and ensure that they have enough capital to cater to their unique needs at any given time.

What Is a Typical IT Budget?

Most companies derive their IT expenditure levels by using IT spending as a percentage of their revenue as a key metric. The IT spending levels are calculated by dividing the organization’s IT operational spending (including depreciation) by their total revenue. However, the metric varies largely by various factors, such as region, company size and industry.

A study by Ailean Inc. revealed that while small and medium-size businesses spend around 6.9% of revenue on IT, midsize companies spend around 4.1%. In addition to that, the 2021 IT Operations Survey Report from Kaseya reported 38% of the respondents having increased their IT budgets in 2021.

Who Controls IT Budgets?

The chief information officer, or CIO, is typically responsible for preparing the IT budget for a company. However, the CIO is not the only person responsible for devising and approving the entire IT budget package. The CIO usually works in conjunction with executive IT steering committees, information executives, directors and other C-level executives, such as the chief analytics officer, the chief data officer and the chief digital officer, to analyze and decide on the various aspects of the centralized IT budget.

What Is Included in an IT budget?

An IT budget is usually divided into three categories of expenses:

IT Personnel

The first category of expenses factored into an IT budget are IT personnel costs or compensation costs for IT professionals that also include costs for external consultants that are used by the IT department on a project basis.

IT Infrastructure Expenses

Expenses associated with building and maintaining enterprise-wide systems and networks are categorized as IT infrastructure expenses. These include:

• Hardware — Organization-issued mobile devices, laptops and networking equipment such as routers and servers
• Software — Tools used to run day-to-day business operations such as CRM software and security software like AV/AM
• Services — Server hosting, implementation of services like Microsoft 365, network maintenance
• Subscriptions — Subscriptions for Zoom, Calendly and so on

IT Expenditure Categories

IT expenditures can be classified into three categories.

• Capital Expenditures (CapEx) — Any major purchases that an organization makes in order to use them over the long term are categorized as capital expenditures or CapEx.
• Operating Expenditures (OpEx) — The day-to-day expenses an organization incurs in order to keep the business running smoothly are termed as operating expenses or OpEx.
• Project Expenditures — The funds required to run and successfully complete an IT project are categorized under project expenditures. These expenditures are incurred on a case-to-case basis.

IT Budgeting Tips and Best Practices

Effective IT budgeting can be a significant factor in improving business efficiency, optimizing operational costs and boosting revenue. Let’s look at some of the best practices that can help make your IT budgeting more efficient:

Define IT Expense Types and Categories

Essentially, you want to have a clear vision of where your money is being spent and what areas account for what percentages of your budget. These different expense types and categories are talked about more heavily in the next section.

Review and Audit Previous Budgets

Reviewing and auditing previous budgets can be an effective strategy to learn from the past. Of course, you will eventually end up altering a lot from previous years’ budgets to meet the evolving needs of your business.

Maintain a Level of Flexibility

You want to have some wiggle room in case unforeseen expenditures come up. Don’t max out and leave yourself without room to pivot.

Plan Your Budget Accordingly

Make sure your budget reflects company and departmental goals. You want to set yourself up to be successful.

Identify Roles and Important Dates

Make sure stakeholders are aware of when certain expenses are due, which payments are in line and accounted for, and so on to ensure smooth execution of your IT budget.

Ultimate IT Budgeting for IT Professionals

A well-defined IT budget can be a roadmap to your IT strategy. IT budgets are created not only to secure funds from your C-level executives but to also help you identify and execute crucial IT initiatives for your organization.

If you are like most IT leaders that aim to reduce their IT operational costs and do more with less, then you need to plan and implement a smart budgeting strategy for your business.

Looking to create a more efficient annual IT budget and maximize the benefits of your IT investments? Our IT budgeting checklist offers a straightforward guide.

The post IT Budgeting: Tips and Best Practices for IT Professionals appeared first on Kaseya.

But MSPs aren’t doing this out of the goodness of their hearts. This is a business, and profitability is key to growth and sustainability for MSPs of all shapes and sizes. In a services-based business model, MSPs must maximize their productivity, minimize their costs and seamlessly scale to accommodate a growing customer base.

At the same time, MSPs are being asked to manage more than ever. Not only is the volume of endpoints growing, thanks to increasing numbers of customers and devices to worry about, but the scope of MSP engagements is also broader.

Remote monitoring and management and managing cloud-based services might be the key value proposition that MSPs started with and that attracted early customers, but MSPs now have a far more complex array of solutions they must offer to meet customer demand and stave off competitors.

From password management to foothold monitoring to supporting a huge surge in remote work, MSPs have their hands full maintaining an up-to-date awareness of the key issues their customers face and the evolving landscape of needs to be met. Each different solution requires a commitment to staff training and the man-hours to get it all done.

Variety Brings Complexity

For the humans performing this work, their job has gotten a lot more complicated and demanding. Customers that previously subscribed to only a handful of offerings now have a full buffet to choose from, and wise SMBs are investing in everything from disaster recovery as a service to dark web monitoring to compliance documentation.

While it’s a testament to the value MSPs offer their clients and the versatility of their staff, it’s also a serious logistical and management challenge. Keeping track of who bought what and making it all run like clockwork requires a ton of visibility and context switching that could strain the most talented multitaskers.

In addition to all that, MSPs must continually invest in training their staff to handle the diverse portfolio of products and solutions they provide. The only realistic way for MSPs to keep all their ducks in a row and maintain the level of service customers demand is via tools and technology.

Read the complete blog post at Channel Futures.

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A major expense that most modern businesses incur is IT infrastructure costs. In fact, based on data in the Spiceworks 2020 State of IT report, hardware and software infrastructure costs are typically about 29% of the IT budget. And, according to Deloitte Insights, on average, IT budgets are about 3.3% of revenue. There are several potential ways to optimize your IT infrastructure costs and keep your business moving forward in these turbulent times.

Switch to Serverless Computing

While businesses the world over have been making a definitive shift to cloud services, the pandemic has further fueled the transition to the cloud. Serverless computing is a more recent development that offers an array of potential benefits ranging from cost savings and easier scalability, to faster deployment of new applications. With serverless computing, you ‘pay as you use’ for backend services. This can be less costly than traditional ‘server-full’ cloud services where you typically have to pay for a certain amount of capacity, even if it is not used.

Move from VMs to Containerization

Containers offer huge cost-saving potential for businesses looking for new ways of cutting back on their infrastructure expenses. Containerization reduces infrastructure costs because containers are more lightweight compared to virtual machines (VMs). Since you don’t need to have multiple OS images—one for each application on the server—more applications can run on the same hardware. This could reduce the number of hosts needed to deploy your applications.

In addition, containerization also promotes better coordination between the engineering and development teams, facilitates faster CI/CD pipelines and involves low maintenance costs. Container orchestration and containerized applications not only promote cost savings but also allow your developers to utilize their time and resources more productively. You can not only maximize your hardware utilization with the help of containers but also get the opportunity to run your applications on cheaper devices. For example, you can link together powerful PCs that will perform as well as more expensive mid-range servers when you are using containers.

Leverage Other Cloud Services, Such as DRaaS

In many cases, leveraging a cloud service can prove to be an excellent way to cut back on IT infrastructure costs. You can outsource the infrastructure components on a pay-per-use model and gain access to various advanced services and technologies. For example, DRaaS (Disaster Recover as-a-Service) is an advanced IT solution that can be accessed at a reasonable price. You can get the backup protection you need, with pricing based on the recovery time you want. The DRaaS provider should provide automated testing of recoveries on a weekly or monthly basis.

Consolidate IT Management Tools

Another portion of your operational costs involves the licensing and/or maintenance fees for your IT management tools. You can optimize these costs by eliminating the fees for IT management tools you no longer need once you have a core IT management platform in place.

The essential tools you need include Endpoint Management (RMM), Service Desk (or PSA in the case of MSPs), and Knowledge and Configuration Management (IT Documentation).

An IT management platform that offers seamless workflows across this core set of applications can be extremely helpful in boosting your IT efficiency and reducing costs that are otherwise spent on multiple, disparate tools. Workflow integrations mean that you can easily access other functions from the tool you are already working in. For example, access the remote endpoint management function from your IT documentation solution. Another example is the ability to run automation scripts from the service desk solution to automatically remediate IT incidents and close tickets faster.

We estimate that you can improve IT technician efficiency by 25 percent by using “workflow integrated” tools and IT automation.

You can also save money by eliminating redundant and overlapping tools. For example, having separate remote management and patch management tools or separate endpoint management and network management tools shouldn’t be necessary.

Consolidating multiple IT solutions into a core, streamlined platform helps businesses save a lot in terms of both time and money. Workflow integration helps eliminate the time wasted looking up information, retrieving passwords and switching between applications. Having a consolidated IT management platform enables your technicians to be more productive, which should also reduce operational costs.

Reducing your IT infrastructure costs is an excellent strategy for optimizing your overall business expenditures and maintaining profitability in a slow economy.

To learn more about strategic ways to reduce IT costs, please read our eBook: Strategic Ways to Boost IT Operational Efficiency & Cut Costs.

The post Key Ways to Cut IT Infrastructure Costs appeared first on Kaseya.

While most MSPs focus on the services, they miss out on leveraging the managed services contract to increase their profit margins, without which sustenance of their business would be unfeasible. 

So how do you ensure the profitability of your contract? 

Measure and Track the Services Provided 

The first step towards ensuring that your contract is profitable is to track the time spent working with your customers in your professional services automation (PSA) software. 

What cannot be tracked cannot be measured.  If you are still using spreadsheets, it is time to transition to efficient PSA software. Managing spreadsheets can be a humungous task leading to fragmented processes, missed deadlines and inaccurate invoices. 

If you are providing additional support to your clients for any ad hoc services, track the effort spent by your engineers. Bill the customer based on the contract terms and as per the resources consumed. 

Meet Your SLAs Regularly 

Honor your SLAs to avoid penalties. One of the flaws of MSP processes is not being able to track SLAs and addressing customer issues on time. 

Create an IT environment where any incident is tracked and re-mediated even before the customer is aware they have occurred.

Look for a PSA that provides help desk managers with real-time information about the status and progress of tickets and generals alerts along the way until the final resolution is complete. 

Select the Profitable Pricing Model 

Lower prices do not equate to more business. They only lead to employees spread too thin and a business that is barely getting by.

Evaluate your pricing strategy based on the needs of your customers.

Value-based pricing model, a strategy of setting prices primarily based on a consumer’s perceived value of a product, or service has been the most popular choice among our MSP Benchmark Survey Report respondents for at least four years. In the 2019 Kaseya MSP Benchmark Survey Report, about 38 percent of participants said that more than 50 percent of their revenue comes from a value-based pricing strategy. 

Ensure the Renewal of Your Managed Services Contract

Build trusted relationships with your customers. Acquiring a new client can cost five times more than retaining an existing client. Also, increasing customer retention by 5 percent can lead to an increase in profits of between 25 percent to 95 percent.

Have quarterly business reviews (QBRs) with your clients to demonstrate the value of your services. Use tools like Kaseya VSA that can show all backend fixes done by you that your client probably wouldn’t be aware of.

Kaseya VSA is a remote monitoring and management (RMM) solution that manages both your endpoints and infrastructure, enabling you to deliver better service and improve your team’s efficiency.

To learn more about Kaseya VSA, request a demo.

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