Ramblings of a Geek

I’ve covered most of the commonly available outsourcing options for small business in my previous posts, but what happens when you think you need to bring the resource In-House?  

There are a couple of easy scenarios where bringing someone in-house makes pretty clear sense.  The most obvious one is that if you can bring a person (or people) in-house full time for less than you spend on outsourcing. The other is that if you have a relatively complicated network (things like render farms and web server farms come to mind) where outsourcing isn’t all that practical. The other main reason why bringing your support in house is if you want someone on staff fully dedicated to only working on the IT for your business. 

If you have a smaller network whose primary users are essentially standard office users you really should be looking to see if outsourcing is a better fit.  When working as a consultant as both as a Sole Proprietor and as part of a break-fix consultancy I could support networks with 50 users relatively easily – especially when I had other technicians I could count on for assistance.  I think that a qualified in-house tech can likely support at least 100 users in a relatively ‘normal’ environment where a bulk of the users work primarily Microsoft Office and a couple of other line of business applications. 

It really comes down to cost vs. complexity vs. availability.  If you don’t mind spending $50k (and likely more) per year on a full time tech, if you have a large number users, or need someone every single day bringing someone in house might be for your business.  If not – go find a good MSP.  They’ll likely save you some money and should be able to take good care of your network.

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.

In part one of my series of IT support options for small business I talked about Sole Proprietors and some of their positives and negatives for supporting your business.  In this article I will talk about the break-fix model of IT Support.  Future articles will detail the managed services model as well as bringing your support in-house.

Who the break-fixers are:

I define break-fix (BF) as a consultancy with a couple of technicians or perhaps more that primarily focus on waiting for customers to call them when things are broken in addition to project work.  While many SP consultancies also operate in this model (much like I did) I am making the distinction between the two that BF consultancies have more than one tech.  The addition of a second tech really helps the scale issues I mentioned in my previous post.

Normally, the break fix shop has a sales person or two in addition to the techs which allows the techs to keep focused on the customer support and projects while the sales team works on generating leads.  The techs are responsible for billing time, proposing new projects for existing clients, and helping the sales team with proposals.

Why they’re a good fit

Break fix shops are a good fit for small-mid sized customers.  Many of the scale issues I mentioned as a downside for the Sole Proprietors go away as just having two or three techs allows several problems to be fixed at once. An additional benefit of having multiple techs is that they are able to specialize in certain aspects of technology which allows them to provide better technical services to their clients without requiring everybody to be an expert on everything.  This makes it much more likely that they can handle more complicated networks, larger user bases, and frankly a much larger customer base.

This model is especially beneficial to clients that don’t mind occasional expenses (sometimes major depending on the size of outage or project) but don’t want a fixed monthly cost.  There are many times when having a fixed monthly cost makes more sense, but I ran into many clients and prospects in my time that a fixed cost wouldn’t work for them for one reason or another.

Why they’re perhaps not a good fit

This method is much more of a firefighter type of way to work your IT – waiting for bad stuff to happen and then your IT provider comes in to put the fire out.  It’s harder to be pro-active in this environment as between projects and fire fighting there isn’t much time to do the proactive steps that really should be done.  I also found that it was harder to justify pro-active steps to a customer when bills got questioned.  I’m good at putting out fires, but I’d much rather spend my time making sure that the fires didn’t happen in the first place. Unfortunately, billing a customer for reviewing logs and checking the health of their network, servers, and workstations doesn’t always go over well. The thing that goes over worse is the fact that putting out fires is also normally expensive – more expensive than being proactive by a long shot.  Good customers understand this when it’s explained to them, but there are many that simply don’t until they get bit by an outage and get a couple thousand dollar bill.

The whole billable time thing is the other issue.  Outages generate lots of billable time, spyware creates a lot of billable time, and projects create a lot of billable time. Lots of billable time leads to large bills and those bills to customers generate issues.  In addition, techs are praised and in many instances get bigger bonuses when they bill more.  This method is very similar to law firms or other professional services firms where the associates are all trying to generate more time to bill.

In the IT industry constant long hours can easily lead to burnout.  When techs try to squeeze in as much billable time in a given month to bump their bonuses burnout creates itself.  When I was having a good month I might work an extra 10 or 15 hours per week in the evenings or weekends which grew old.  The problem is that once you get used to doing this it’s hard to stop because your clients come to expect it. When techs grind out 50-60 hour weeks and are consistently billing 30-40 hours per week they tend to get tired of it. Burnout leads to turnover. If they’re not part of the ownership or have no potential to earn their way into ownership you can only grind for so long.  I can and am willing to grind out as much billable time as possible but not if my name is never going to be on the door, and frankly that’s precisely why I’m not working at a BF shop any longer.  I billed a lot of time, and could have easily done more if there was a light at the end of the tunnel. My personal rant aside, I really grew my skills in this model so it wasn’t all bad.

My Recommendation

My recommendation is this: In a perfect world, your IT support would be more pro-active than reactive. If you can work this model with either Sole Proprietor or a larger shop and be pro-active more power to you.  The best fit for this model is if you have just a handful of users as it’s conceivable that you could go a month or two without any IT expense. Just make sure you have someone internally monitoring your backups.  Honestly though, if you have more than 10-15 users you should look for a fully managed solution, you’ll have less downtime which will lead to more productive workers.

If you decide to outsource your IT there are a few options.  I’m going to be going over them in my next couple of posts.  I’ll be writing about my experiences as I’ve served as a sole proprietor, as an engineer in a largely break-fix consultancy, as a part of a fully managed organization, and as an in-house IT resource for small businesses.  I’m starting from the most basic – the sole proprietor.  I was a sole proprietor for about four years, and I really enjoyed my time in the trenches.  I am going to highlight some of the positives and negatives about using a sole proprietor (SP) as your IT resource. 

Who your sole proprietor is:

Your sole proprietor is usually one of several things: he/she is currently unemployed and is likely still looking for a new job, working as a consultant on the side of a regular job, or simply has decided to strike out by themselves to make a run at being self employed.  The sole proprietor is usually a jack of all trades – they have to balance servers, workstations, networks, generating business, marketing, and the company finances to name a few things.  It was common for me to work at least 60 hours a week trying to keep my revenue up and clients happy.  As a consequence it’s easy for a SP to be stretched thin.  In my experience I was perhaps over-dedicated to serving my customers as I would handle calls, emails and trouble tickets nearly any hour of the day.  I’ve also met several other SPs that are very similar.  In this job market I also think there’s quite a few people out there that are picking up a few hours to help make ends meet.  I started in the middle scenario as I worked on the side of my regular job for extra cash and then transitioned it into my full time gig once I got laid off from the job I had been with for several years.  Ironically, they outsourced their IT and I was a casualty of that effort.

Why a SP is a good choice:

Choosing a SP is a good for your business if you want to deal with the same tech and decision maker every time.  Chances are that a SP will go out of their way to do everything they can to help.  Also, generally speaking, a SP will either have lower rates and/or will negotiate their rate a bit more than a larger organization.  I know that, especially early on in my business, I would cut my rate for projects if a customer asked – I didn’t want to (and frankly couldn’t afford to) lose the business.  As my business grew and I became more comfortable with how I fit in with customers and prospects I started to raise my rates.  That said, I was still a little bit cheaper than many of my competitors and had the discretion to adjust them if needed.

I think a sole proprietor is a great fit for smaller networks. If your business network is in the 1-10 computer range a SP very likely can handle nearly all of your needs.  If your network is larger than this it might be a good idea to ask your potential SP some questions as to their overall qualifications, other customer sizes and their general availability.  In my experience I could handle a many smaller networks, but the minute you add a 25-50 person network or two to the equation it starts to get a bit difficult to keep everyone happy.  There’s a slippery slope between over-extending yourself and trying to grow your customer base as a SP.  My technical skills grew greatly when I was a SP but there were times when I was definitely in the weeds when I was stretching my tech skills some.

Why a SP might not be a good choice:

Many of the reasons a SP is perhaps not a great choice relate to scale – your SP is a single tech and only has a certain amount of time in a day to work on customer issues.  If the tech is already working on a customer issue across town, is sick, on vacation (though not terribly likely), or is generally unavailable they may not be available to handle your issues immediately which could be frustrating if you’re in a bind.

Most of the issues I experienced around this was for my larger clients.  Since they were larger, they had more users which led to two different types of scale issues that I found frustrating.  The first was emergencies – an emergency at a larger organization will likely result in more panicky phone calls and will have a larger impact on your day.  Additionally, my larger customers typically had more frequent smaller issues that required more calls for support which was a challenge time wise.  This also happened with smaller customers but it was much more apparent in my larger customers.

The other reason why a SP might not be a good choice (and this weighs a little more heavily on true Sole Proprietors than a single tech with support staff) is that there is a higher than average chance that your tech may just disappear.  I landed many new customers who found me when their previous technician either disappeared or went back to a full-time job and didn’t have time to help them any longer.  As it turns out I disappeared as well, though I did find another company and introduced them to as many of my customers as I could before I left.  Most of my customers were very appreciative.

My recommendation:

I think hiring a SP is a great way to get quality support for your organization as clearly I helped support my family for a few years as one.  I think you need to make sure you know your SP a bit before giving them full reign over your network.  How many customers they have, how big their average customer is, what their general availability is, if they’re planning on being around for awhile (not looking for a job), and do they have any backup in case of emergency would be good points to address with them.  It’s also a good idea to make sure that the key points of your IT infrastructure are addressed as early as possible to build a good foundation for their role in your organization.  You can read my key points in my previous post here.

Lastly, it’s a good sign if your SP has a contract for you to sign.  As I grew my business I made my customers sign an agreement that essentially laid out several things such as rates, terms on payment, my availability, and a few other points.  It wasn’t an exclusivity type of contract, but it laid out what our relationship would be.  I found that to be especially helpful as if I was competing against another company just having this made me look a little more organized than some of my competition.