Part One- Setting up the Story-

One of the most difficult areas for a company providing services is how to track employee time against accounts.  There has always been a struggle between management and the personnel who provide the service.  The evolution of the IT Consulting industry has made the tracking of time more difficult.  In order to understand where we are today, I believe it is critical for us to look back and where we came from. 

IT Consulting – at least for the SMB space- began with a few rogue administrators who helped their friends or parents with their business IT needs.  These folks began to branch out on their own and work for a few small companies at an hourly rate.  Microsoft and other developers such as Intuit and RIM found an untapped market in the SMB space.  With the advent of Small Business Server, BIS and QuickBooks- many small business found electronic communications and finance more palatable and began to need strong IT consulting.

As admins began to delve into this world, they would bill companies by the hour.  Most of the work was done from a reactionary or project position.  The client would request work and admins would show up to perform the task for an hourly fee.  This worked well until there began to be growth in the market and firms began to employ multiple consultants.  Being able to predict revenue stream was difficult.  Some firms began to sell pre-billed blocks of time.  Tracking this was difficult and many companies did not have a good method for tracking the time of their consultants.

I know that I had worked for a firm that tracked all time in Outlook and Exchange.  Other firms tracked time in spreadsheets and Word documents.  The need to track time was essential because of the billing at an hourly rate.  The problem was that entering time was difficult and was not a part of most IT administrator’s culture. 

Enter companies like Connectwise and Alert- These firms were able to create a time tracking product specifically for IT consulting firms in the SMB space.  Now the SMB IT market was in the same boat as legal, accounting and other service verticals.  There were industry specific pieces of software to aid in their tracking and delivery of service. 

The Connectwise revolution was tracking on the cusp of an even larger movement-  the shift from billing by the hour to billing as a flat fee service.  Much like the pre-billed blocks of time- Managed Services was a focus on a flat fee for all the needs of a client.  The need for tracking time was still critical- but different.  Rather than losing revenue for time not accounted for, the ability to track the profit margins on accounts for flat fee clients was now the focus of attention.  All of this seems simple if taken in a homogenous billing system.  But- as firms shifted from hourly to flat fee, there were challenges in how to track time, reinforce the need for time tracking with consultants and ensure effective rates were measured against hourly bill methods in an accurate fashion.

Part Two will discuss the solution to entering time for firms focused on an hourly model and the setup for tracking time and employee satisfaction for Managed Services Firms

Tagged with: