Are managed services worth it?

And how to get on board if it is

You'll likely have heard of IT managed services, and will probably appreciate that it sounds pretty good – but do the costs really stack up? Under a true managed services offering, you pay a fixed price per user every month. This is only one half of the IT managed service coin. Updating and replacing old hardware, refreshing aged and neglected IT systems and essentially getting your IT house in order come part and parcel.

While these costs may seem expensive at first, this may be because your current time-and-materials (T&M) rate hides many of its costs. The long-term benefits of a reliable IT environment can also be hard to quantify – but will reveal themselves as your managed services gets underway.

Here we break down how to decide if managed services are right for your business and if it is, how to prepare to get on board.

Find out how much T&M has really cost

Once you know where to look, it’s simple to uncover the hidden costs in your T&M services – and this helps put the cost of managed services into perspective.  

Here’s how to calculate the true cost of your T&M IT:

Total your IT expenditure for the year

This may surprise you – it’s easy to forget about charges that crop up here and there. You may find this total equals, or is greater than, what you’re expecting to pay per user per month on a managed services plan. If that’s the case, your decision is simple– managed services won’t cost you any more money and will net a better service through pre-emptive action versus putting out fires.

Put a dollar figure against IT issues

Look back over your previous year of T&M invoices from your IT company and create a spreadsheet detailing each issue. Ask yourself what those really cost you. Consider:

  1. Staff downtime or reduced productivity. What loss of productivity did you experience leading up to and during these events? You may like to review time sheets or ask key staff about the time they spent working around IT issues or waiting for them to be resolved. Add this figure to your total cost.

  2. Loss of client good will. Ask yourself – and your staff – if the IT issues you’ve experienced impacted on the service delivered to clients. Was work late, or of a lower quality, for example? If so, you might like to draw a broad-brush figure – maybe record the average value of a new client (one you may have otherwise been referred to if your customers had been happier). Or a percentage of the annual average revenue per customer, who is now choosing to work with you less – whatever makes sense to your business. Add this to your total.

  3. Loss of a client. Did you lose a client or experience reduced sales due, at least in part, to issues with your technology? If so, add the lost revenue to your total – or you might choose to estimate how much the loss was related to technology issues, and include that percentage only.

  4. Lack of site awareness. T&M arrangements typically present longer resolution times as site knowledge isn’t held and the longer a T&M ticket is open and worked on the longer it ends up costing. While resolving your issue is still the goal, efficiency isn’t guaranteed. This can cause you longer than required periods of downtime, adding to the cost of the service itself.

Calculate the risk of a catastrophic technology failure or breach

While these out-of-the-blue events happen very infrequently, it’s still worth understanding the potential impact on your business. Ask your IT professionals to give you a rundown of the risks your current system may be open to, and the likelihood of them happening. Once you are aware of these, ask yourself how easily your business could recover – do you have excellent insurance policies to cope with a data breach or ransomware attack? Do you have a flexible or mobile workforce that would make it easy to work around a total system shutdown? How much would it cost you in lost productivity and wages if you were shut down for a day, a week or a month?

Once you have calculated your T&M IT expenses you’ll likely have a clearer understanding not only of the monetary cost of those services but also what issues and their total impact on your business are. In contrast, managed services are a more streamlined approach to IT services as issues are handled in a proactive manner, addressing the root cause of a problem minimising re-occurrence.

Outside of issues arising, a managed services agreement leverages our experience in the IT sector to assist in IT direction and decision-making to ensure you’re getting the most from your environment and services utilised. Your technology partner in business, getting everything you are now and more, for likely what you’re already paying for.