[28] – Autotask Implementation Series: Products & Services, Inventory vs Configuration Items

Welcome to PSA Impact, your podcast for all things PSA, RMM, and MSP, with your hosts Rayanne Buccianico and Chris Tim. Learn how to get the most out of your PSA tool and manage your business by maximizing profitability and increasing efficiency within your MSP business. Let's listen in. Hey, everybody, and welcome to another episode of PSA Impact with your hosts, myself, Chris Tim, and my co-host, Rayanne Buccianico. Hey, Rayanne, how's things going with you?

Going great over here. Chris, how are you today? All good over this side, Rayanne. So today I wanted to follow on with our series that we've been talking about over the last sort of two or three episodes, continuing with our implementation series and talk all about products and services, billing products, all of that kind of thing. And I know you and I have sort of had conversations around this in the past that a lot of people get confused around what are the differences between products and services.

So I mean, what's your take on that? So in my head, I've always been able to separate products as something tangible, something that I'm going to sell, and a service is a service that I'm providing. But when you're talking about setting up contracts and things inside Autotask, it starts to get a little muddy because some of your products that you're selling are actually a service on a recurring service contract because you cannot sell a product on a recurring basis in Autotask. So then you have to change your thought process that the products are going to be those one-time things that you sell, you know, and the service is going to be the recurring service that goes along with it, like the subscription. Your thoughts?

Yeah, exactly the same. So I always explain to people that, yeah, a service is typically something that you're going to sell on a term basis, right? So, you know, monthly, quarterly, annually, whatever it is. So things like your Microsoft 365, your antivirus, your managed backup, all of those kind of things are services. And that's what's going to go on your managed services or your recurring service contract.

But you can see how it would be confusing to somebody who considers Microsoft 365 a product, right? Because it's often called a product. Like if you go into Paxator or, you know, whichever distribution house you use, they are calling it products. So then you go over to Autotask and now you have to change your thinking. OK, so it's not a product here, it's a service here.

Absolutely. And it's and I think it's only Autotask that confuses it because a lot of PSA tools just call them products and everything is a, you know, is either a monthly product or a one off product. But yeah, essentially, Autotask calls it a service and I always like to say, you know, it's something that you're going to attach to your monthly services contract, hence why it's called a service. So whereas a product, like you say, is something that you're going to sell one off, right? So that's going to be a keyboard, a mouse or a monitor, desktop, server, whatever it is, router switch, all those kind of things.

Those are going to be products that you typically going to sell on a one off basis and those you would add to a ticket or you could even go and add those as a charge if you want to do to a contract. But typically those are going to be things that you're going to sell on a one off basis. Now, you mentioned earlier on around the kind of confusion between products and services. Well, here's the thing is Office 365 can actually be both because, you know, you could argue that the actual mailbox itself of Office 365 is actually a product. But the service around that, you know, the fact that maybe you're selling a whole bunch of other stuff and you're supporting them on that Office 365 or Microsoft 365, as we call it now.

That's a service. So you could actually set them up as both. So I have a wrench in my hand, right? And do you mind if I throw it at you? Sure.

Actually, it's really a pencil just for those that, you know, are only listening to the podcast, but I'm going to throw it at you anyway. So we know that the products are going to be the one off sales, right? And we also have the services that are going on the recurring service contracts. Now, what about inventory items? Right.

So you have the products, you've got the services. At what point do these products become inventory or, you know, stock, as you might call it? Yeah, that's a great question. I think a lot of people get confused around. So just talking of the inventory or stock, there's two things.

There's basically inventory stock and there's configuration items or assets. So essentially, people get very, very confused about this. So the way I look at it is an inventory item is basically something that you have in your inventory. So you have that physical product somewhere in your office or in your warehouse or whatever it is, right? So you might have, you know, 10 routers.

So the router itself is a physical product. So that would get entered into all the tasks as a product. And the fact that you've got 10 of them, you know, in a warehouse or a cupboard or a drawer or something, those are your inventory items, right? So those are things that you, the products that you're going to potentially sell to a customer is what you would call an inventory item. So do you do serial numbers on your inventory products?

Yeah. Because I really, really encourage any Autotask user that if you are going to stock your inventory, use the serial number feature, serialize those products so that when you do in fact sell it, pull it out of inventory and sell it to a customer, you can track that serial number throughout the remainder of its life, right? But I always have a lot of questions based around, do we have to, do we have to inventory like everything, you know, is everything an inventory item that we keep in the closet or are we just inventorying things like, you know, workstations and monitors and things that come with serial numbers? And then you also brought up the fact that we're talking about configuration items or installed assets. And so sometimes those inventory items later become installed assets, but they are not the same at the outset, right?

Yeah, exactly. And that's exactly it, right? So you know, an inventory item is something like you say, a physical product that you're going to sell that's typically serialized and you don't have to, in my opinion, you don't have to put everything into inventory, right? Unless it's something that you're going to sell, right? If it's a product.

Or it counts. Yeah, exactly. Or you want to count how many you've got in stock or whatever the case might be, absolutely. And once you've sold it to the customer, at that point it becomes a configuration item or an installed asset. So I kind of always say to my customers, you know, things that you sell to your customer, when it becomes effectively the customer's property, and you could argue you may not sell it, maybe you give it to them or you loan it to them or whatever the case might be.

But when it is in the customer's possession, or installed on their site or something like that, that's when it becomes a configuration item. So you know, and that's when you can then start to track things like, you know, the warranty expiration dates, all of those kinds of things. But the serial number that you had when it was an inventory item that you kept in stock and you've now sold to your customer, that serial number can actually be carried through into the configuration item or the installed asset. So that when it's on your customer's site, you can track, you know, like I said, things like warranty or when it was installed or any of those kinds of things, you can track it right down to that particular serial number. So okay, let me just kind of run this through.

Because if I'm a brand new user of Autotask, and now I want to set up, you know, my customer and all the things that I do for them on a recurring basis, get the recurring contract set up, and set up my services and set up my products. And then, you know, we know that most of the time, if you're using an RMM tool, the RMM tool is going to feed in all of the installed assets or configuration items, right? Then you go into that contract, and you see all of the configuration items for that customer, and then you assign them to their specific contracts. Now, what happens if you want to track this configuration, first, it was an inventory item, then you sold it, now you want to track the services that are associated with that item, and maybe bill based on quantity, you know, so, and we know that Autotask came out with this, these new billing products, you know, and maybe you can just kind of, you know, touch on briefly how that works. Absolutely.

So yeah, just to confuse everyone. So we just mentioned services, we mentioned products, we mentioned all of these things, and then Autotask comes out with this great concept called a billing product, which actually gets set up as a product. So for all intents and purposes, it gets set up in the exact same way that you would set up a router or a switch or a keyboard or whatever it is, a physical piece of hardware or a physical product, it would get set up in exactly the same way. The only difference, there's a little drop down box that says what type of product is this? Is it a one-time product, or is it a, what they call a per-contact billing item or a per-configuration item billing item?

So what that then allows you to do is when, you know, you've got all of the agents installed out there on, you know, an RMM agent, when it brings those items in and creates configuration items within your PSA tool, what you can do is assign this billing product essentially to those configuration items. And then what it does is it says, go and count up how many configuration items you've got with that billing item or that billing product against it, and it counts up how many of those you've got, and then it adds those to your contract, and that's what it bills for every month. So my question is this, because I've looked at this a couple of times, when you are onboarding a new customer's, a customer's new employee, right, so one of your customers is onboarding a new employee and you're setting them up in Autotask as a contact, do you have to assign the billing products to each employee as you onboard them? Like, okay, here comes Jane Smith, and Jane now has one license of, you know, Office 365, E5, or Microsoft 365 Business Premium, or whatever it is, and then do you have to assign each one of those services, you know, or each one of those billing products to Jane Smith? Or is there some way that that can automatically be picked up by Autotask that says, Jane Smith already has this, this, and this, and it's going to update the contract accordingly?

So the way it works with the contact billing products is, so firstly, it automates the entire process that's built into, or it uses Active Directory. So what it does is uses Active Directory or Azure to go and find those users inside Azure, brings them into Autotask, creates them as contacts, or if they're already there, updates the contact information. So that does one of two things, it keeps your contacts up to date, but it also counts how many contacts you've got. And what it then does is it says, okay, I'm going to bring these in from Azure, I'm going to assign a billing product to it, which is a per-user or per-contact billing product. And then when that comes into the contract, you choose how much those users are being billed for.

What you can't do is link a per-configuration item billing product to a per-contact item. So you know, I mean, there's other ways to do it, but you couldn't kind of go, hey, you know, Rayanne has Office 365, and she has this, and she has that. You would basically say, I have a user called Rayanne, and what I'm going to do is I'm going to bill Rayanne at $20 or $30 or $40 a month, and that's what I bill for that user. So it kind of sounds like you need to make a decision. You're either going to bill your customers on a per-seat basis or a per-device, right?

Yeah, you can't mix and match, like you can't go, well, it's a per, well, I mean, you can have on the same contract a per-contact and a per-device. So you can go in and say, right, we've got 20 computers out there that we have the RMM agent on, so it'll bring those 20 in and count them and bill for them, and then we've got 20 users as well, and it'll bring those users in and bill for those. So you could have those two on the same contract, but what you can't do is, or if you had a mismatch in numbers, you might have 23 configuration items and 20 users, it's just that's how it's going to appear on the invoice. So it's going to go 20 users and it names them on the invoice. So it goes, Rayanne, Chris, Frank, Bob, whoever they are, and it names them on the invoice.

And then the next line item under that says, configuration item billing, what that configuration item is, and then the associated price of that. So you can have them like that, but most people either choose to do a per-device billing or per-contact billing or per-user billing, as you would call it. And then that just says, okay, well, we're just going to bill X amount for each user. Okay. So getting back to being the new Autotask setup or the new Autotask user who's trying to get everything set up, what is the first step?

Do they need to set up their services? Do they need to identify their products first? So what is your recommendation as to where to start? Okay. Well, firstly, they need to put both in there, purely because if you want to sell one-off things, as we spoke about earlier on, so the Raptor and the Switch, you want to sell that one-off, it's got to be an Autotask in order to add it to a ticket or a contract or wherever you're going to add it to.

It's got to be attached to something in order to bill for it. So you would need to have it in Autotask to start with. Now, how you get it in there is a different story. You can either manually create it, or if you're using something like QuoteWorks or any of the other quoting tools out there, when you generate the quotes, it'll bring that in, create the opportunity, and then create the product in Autotask for you as well. So one way or another, however you choose to get it in, you need to get the products in.

And then you also need to get the services in, because the services, as we established earlier on, were the things that you're selling on a monthly basis. So your Office 365, all of those kind of things. And most of the CSP providers these days all have integration with Autotask. So ShareAware, Pax8, all the others have integration that when you go and sell an Office 365 license, it automatically brings it in, creates it, and adds it as a service to the Autotask contract. So what I normally say to people is the stuff that you can automate.

So if you're selling a router or a switch, or you're quoting for it, then let your quoting tool control that coming into Autotask. But for the stuff that you might be not quoting through a quoting tool or anything like that, you're going to have to create the list of those products. The same thing with services, right? If you're buying all of your services from Pax8, then just let Pax8 manage bringing them into Autotask, for example. But if you're selling stuff, maybe you've got like a disclaimer or some kind of signature thing that you're not buying from any of those companies, you're going to have to create that service manually within Autotask.

So long-winded answer, but the answer is both, and you need to put the costs against both of those as well. Right. So I have a slightly different answer than that, and I do. I always tell people to start with the services. Just outline your offerings, your service offerings, and understand exactly what you're selling to your customer and how you're charging for it.

Get those services set up so that you can start to build your contracts, because once you have your contracts built, invoicing becomes a snap. Then when you're talking about products, yes, you need products. But like you were saying, Chris, if you're using a quoting tool, like QuoteWorks has a connection with Edelize, and you can get real-time quoting from a lot of the distribution houses. So the integration from QuoteWorks or Connect by Cell or some of the other, I think, glue, G-O-U-H glue, not I-T glue, but glue, they will push the opportunities into Autotask, and they will also create the products for you. And because your products are changing so often and you are hardly ever selling the same thing twice, it just doesn't make sense to start filling up your Autotask with a bunch of products that you may or may not ever use.

And if you do decide to start entering in some products, I might recommend very generic products, router, firewall, PC, things that you can use that you're not going to track quantities on, you know, you're not going to track serial numbers on. If you're just doing like a just-in-time inventory where you are only buying things when you have a sale, then you can use very generic items without having to import a bunch of products that you'll never use again. So like you said, Chris, absolutely, let the quoting tool do its job and let it push the information in. But if you need something right away, I would not spend a bunch of time trying to import a bunch of products and figuring out what products you need to enter because it's going to make its way in there one way or another. Oh, absolutely.

I fully agree. And I think, you know, you need to have both. You need to have products and services because you're going to sell them both through Autotask. You're right. You know, from a product perspective, make it as generic as possible, literally call it workstation or desktop or server.

You know, don't call it Dell Optiplex ABC123-4, you know, because that and especially in that particular instance, right, because that particular device, if you go back to Dell tomorrow, it's probably changed its model name, its model number, it's, you know, everything's changed about it. Just call it something very generic or let the quoting tool handle that, because like you say, users utilize what that does and that and along with the real time pricing will go to tech data or micro or any of these places and it'll pull that product in in real time and it'll bring in the right cost and the right selling price and all of that kind of stuff. So, yeah, let those quoting tools manage the products, but, you know, there's going to come a time when you're going to need to have a small set of generic products in the system anyway, so you might as well go in and set those up. And I think, in fact, when you buy Autotask out of the box anyway, there are a bunch of generic products set up in there. So you can delete most of them, but there are going to be certain ones that you're going to want to, you know, keep in there and then, yeah, let the other tools manage all of that stuff coming into Autotask.

Yeah. And I want to mention something, seemed to be in passing, but I want to make sure before we sign off today that we stress how important it is to make sure that the proper costs get associated with the item that you're selling to the customer, because if you ever hope to have your Autotask provide you with decent profitability reports, the very first step is to make sure that your proper costs are in all of the different places, and that includes products. So the profitability reports is going to be one of the number one things that, you know, we are shooting for at the end of this series, is how to get the proper profitability information out of Autotask. But in order to do that, as you know, we've got to first get it in. Absolutely.

And it's no point putting the costs in once and then forgetting about them, because those costs are going to change. Right. So, you know, and especially with things like services, you know, if you're not using a Pax 8 or one of those kind of things, it's automatically going to integrate stuff in. If you've got Office 365 and you've put it into your service catalog with a price of $3, your buy price of $3 and your sell price of $4, what you want to make sure is every time it's on the contract, if at any time the cost that you're paying for it changes either up or down, you need to make sure that you go into all of those contracts that you have for customers and make sure you change that cost price. Because if you leave it at whatever it was, that's what's going to reflect against your profitability.

It's the same thing. And we mentioned this on one of the earlier podcasts around the burden rates as well. If your burden rate of your engineer is changing, so if you're increasing or decreasing their salary, hopefully you're not decreasing their salary, but if you're increasing their salaries, you need to make sure that you're going in and actually changing that in all the tasks. I see so many times people just leave those costs as they were when they set up the system and then wonder why they're not getting any profitability when they're paying different prices for these products. I've seen people just throw a dollar in to the internal labor rate for people because they didn't want their administrative person to know what everybody was being paid.

Well, while I understand that, you can restrict the administrative person from seeing that information if you really don't want them to, but you really do want to make sure that those burden rates are accurate, otherwise your profitability reports never will be and you'll never know whether you're making money off of a particular contract or customer. Yeah, absolutely. And I think, yeah, it's vitally important to make sure. I think we've hit home on this so many times on the other podcasts we've done and we're going to keep ramming it down people's throats on the rest of these podcasts about how important it is to put costs in and how important it is to make sure that you constantly are monitoring those costs and changing them when they need to be changed because otherwise there's no point in getting profitability information out of your system because it's just going to be screwed anyway. I totally agree.

So what is on our agenda for next week? So next week, we're still kind of talking about setting things up in the back end. So the next thing we're going to be talking about on the system, we're going to talk about kind of entering customers and contacts. We're going to talk about resources and a little bit about those. And then in following episodes from there, we'll start to go into CRM and billing and finance and that kind of stuff.

So on the next episode, we're going to talk about customers, contacts, how to get them into the system, what they mean, all of that kind of stuff. Perfect. I've got a lot of ideas for that, too. Excellent. So this has been such a fun episode, Rayanne, and all that's left for me to say is your PSA is the key to your MSP success.

So go out and make an impact on your world today. Thanks, Chris. Thanks, Rayanne. See you next week. Cheers.

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