IT Outsourcing Part 3 – The Managed Services Model
My previous two posts talked about some of the IT Outsourcing options available for your small business. In my first Outsourcing post I talked about the Sole Proprietor and in my second I talked about the Break-Fix Model. Much like the break-fix, a sole proprietor could operate under either a break fix model under the managed services model. Scale again is the main difference in why I spent a whole post on Sole Proprietors.
Who your managed services provider is
Generally speaking, your managed services provider (MSP) is a pro-active IT support organization. Instead of simply reacting to every issue that arises they setup both their and your environments to try to put out the fires before they even have a chance to spark. Through the use of monitoring tools and a pro-active thought process the goal of a managed services provider is to completely manage your IT infrastructure and minimize any downtime as much as possible. The big idea is that by keeping your staff more productive with reduced downtime they can be more efficient.
Most managed service providers have a standardized infrastructure that they roll-out to customers when they sign the contract. Servers are updated or replaced, the network is documented, networking equipment upgraded when necessary, and monitoring tools are deployed. Depending on the provider they may centralize things like domain names, Microsoft Exchange, firewalls, and/or your internet provider. The goal with this model is to completely take over your IT so they can deal with any and all issues without having to reinvent the wheel every time.
Why managed services is a good fit
If you have a larger number of users (15-20+) and a couple of servers this is a model that should be investigated fully. This model works very well if you are comfortable with having a static (or nearly static) charge for IT every month. Under most plans there is a per user and/or per computer charge as well as other charges depending on what other services are being provided. The benefit here is that nearly every computer problem you will run into will be covered so you won’t have the up and down cost. In addition, it’s in the MSP’s best interest to reduce calls and outages as much as possible to conserve costs. This is where the strong infrastructure is vital.
Why managed services isn’t a good fit
Managed services will look more expensive on paper in many cases. In fact, it might cost more dollars on the bottom line which can easily send decision makers running in the other direction. If your network is under 10 users it might be a stretch, and certainly if you have fewer than five users. It might be worth checking out but don’t be surprised to have some sticker shock. Also, one of the biggest drawbacks of this model is that some MSPs integrate their network so tightly with the customer network it would be a major cost to switch IT providers should the relationship ever go south. My concern with this is that it might become cost prohibitive to leave the MSP. There is a tough balance here as the MSP can make the argument that they need to tightly integrate the networks together so they can provide better service. In many cases this is true but there is definitely a double edged feel to it. Just make sure you know what you’re getting into.
A couple of other points
There are many shops that call themselves Managed Service Provders but they’re really Break-Fixers calling themselves MSPs. Some will give you a certain number of support hours per month, but won’t necessarily monitor your servers and overall network health. Some might not upgrade your infrastructure to conserve their costs even though it may need it badly. Make sure that you understand what the MSP will be doing to integrate your network into their management solution.
It is also a good idea to pick a MSP that only does MSP work rather than a shop that does Break-Fix and dabbles in MSP. One of the trends in the Small Business IT space has been to migrate customers from the break-fix model to the MSP model. In most cases it makes good business sense for both the IT provider and for most of their customers. The problem that some IT providers don’t finish this process by firing their customers that won’t switch models. I’ve seen it where the IT provider has one foot on each side of the line as a permanent way of doing business which makes it hard to turn away from the extra hours from the BF clients. It’s tough to balance being pro-active with a subset of clients and completely reactive to a different subset. The clients with the biggest issues make the most noise and most likely will get more immediate attention when issues arise. I’ll let you decide on who is likely to make the most noise. . . The exception here is that if your provider is switching their existing client base over and will eventually get rid of ALL OF the remaining BF clients that refuse to switch models.
My Recommendation
If the cost is the primary concern and you previously used a provider that used the break-fix model try this: Take what you spent last year on your IT support. Then assume you’ll have either a small-mid sized project or outage that requires 20 additional hours from your IT provider. Also, account for lost productivity and/or loss of data if you have a major outage. Add those numbers together and see how it matches up.
It’s vital that you learn as much about your IT provider as possible when you’re making your decision. Picking the wrong option could prove very costly. As a business decision maker you need to understand your IT needs from your business requirements and make sure your IT provider can address your concerns. Ideally they’d bring some additional information and reasonable recommendations in your discovery/prospecting meetings. It’s not your job to know the technology, but it is your job to protect your business and make sure that you’re making the right choice.