How to handle their IT requirements is one of the issues that many firms confront nowadays. More precisely, how can you ensure that your IT is functional, secure, and assisting you to accomplish your company goals while still staying within your budget? This appears to be a fairly simple assignment on the surface. However, we would like to know if you have a spending plan. What should your spending plan be? How much should you spend on IT?
Unfortunately, and all too often, the approach taken is more like “if it ain’t broke, don’t fix it.” Actually, working with your IT in this manner is more expensive, which will ultimately affect your profitability. And this (method) really isn't brought to light as the incorrect approach until it's too late, either as a result of a work stoppage (which almost always occurs at the worst possible time) or another significant incident that highlights the fact that "there must be a better way."
The fundamental problem, according to what we've discovered, is that most companies view IT as a necessary evil and a cost center rather than a source of revenue. Instead of viewing IT as an investment in how they might improve the performance of their firm, they can say, "Let's keep the prices down." This is a limited perspective, as demonstrated by the latest report's findings indicating firms that value IT do better than those that don't.
Why, then, do the majority of business owners have such a hard time seeing things this way and ultimately make the wrong decision? Personally, I believe that a lot has to do with knowing what is "fair" to spend on technology and why. There is no underlying value to the service when you don't know what it should cost and why. A race to the lowest price results from this. This encourages a reactive approach toward IT rather than a constructive, fruitful, and proactive one.
The support model for IT service providers (ITSPs) has always been based on time billing, just like any other service industry. Unfortunately, this strategy does not align with the objectives of the client. The IT Service Provider charges more money the longer something takes. This becomes difficult to defend when most people view IT as a mysterious black box and all you're doing is charging to cure problems. Because money is being spent on something that we (as the business owners) regard as having a very small return on investment, it then develops the perception that anything preventative is bad. It took some time, but the industry eventually developed Managed IT Services in response to this structural conundrum.
Managed IT Services is a strategy for providing a number of precisely specified IT support services for a set monthly cost. This appears to be a wonderful thing. By doing this, the client and the IT service provider are brought together. This transfers all of the risks from the customer to the ITSP, meaning that from the client's point of view, it doesn't matter how long something takes—when there is a fixed cost, it is up to the ITSP to do tasks efficiently. On the other hand, poorly operated ITSPs that struggle to provide Managed Services effectively end up costing clients more due to wasted time, extra management time, time spent rectifying mistakes that should have been avoided, time spent moving back and forth, etc. As we all know, time is money. And any time that a poorly run ITSP takes away from your business costs you money.
The challenge now is choosing the "ideal" Managed Service Provider (MSP) for your company, and in order to do this, you must be able to evaluate rates fairly. It is more difficult to compare and contrast MSPs' unique value propositions when they offer a different range of services.
Which brings us back to the question, "How much should I budget for IT services?" This is the problem. we would say, "Well, it depends."
What size company do you run? Specifically, how many places, users, and use cases are there?
How sophisticated is your technology? What is the number of servers? What is and is not in the cloud? How many and what kind of applications are there?
What degree of integrations are there?
Is your company expanding or contracting?
How expensive is downtime for your company?
Are you employed in a regulated field? Do you need to be protected against any specific cybersecurity issues in particular?
Does your company require a certain level of industry-specific expertise?
What kind of services are offered?
What kind of services should your company require?
And this is just the beginning of the "it depends" However, the most important factor is the value delivered, not the price. And this relates to the strategy used by the MSP to manage IT for their clients. Do they offer a complete solution? How does their "all in" compare to the subsequent one? Do they really "own" your technology in its entirety? Or are they just a group of "break-fix" contractors attempting to pose as managed service providers? All of this has an effect on your cost, but more importantly, it has an effect on the value you will get. Let's start by imagining what things would be like instead of what MSPs might be charging (which could range widely).
Examining the cost of hiring an internal IT specialist is one of the simplest ways to estimate your possible IT support spending. Most entry-level helpdesk support IT professionals make between $40k and $50k annually; when fully burdened, this equates to between $48k and $60k. This indicates that the monthly average cost is between $4k and $5k. Again, extremely approximate numbers. And the skill level here is at the lower end. The needs that would require this person to work 40 hours per week for most businesses with fewer than 25 to 30 users would be extremely difficult for them to justify (and this is without addressing the skill gap, missing strategy, industry experience, business experience, etc. that a well-oiled MSP would be providing). Additionally, keep in mind that since this is an entry-level employee, you must also take into account the hidden costs of IT, such as the time lost managing, training, and replacing the employee (since they don't often stick around for very long), potential downtime, etc. Costly effects on your company.
Let's now think about what hiring an MSP may cost.
These days, there are various ways to display the expenses of managed IT services. But in the end, and for purposes of comparison, the cost can be reduced to a monthly "per user" or "per seat" cost. In the aforementioned example, if your business employs 25 people and you pay $5k/mo for an internal IT employee, your average monthly cost per user will be $200. really easy Now, how much would an MSP cost in comparison to this? And therein lies the problem once more. It varies.
FPA comes in significantly below $200 per user per month, using the 25-user business as an example to put things in context. Fair enough, the majority of MSPs also do this. Antivirus, internet threat protection, procurement services, workstation replacement services, documentation, after-hours on-call support, true vCIO services (strategy, budgeting, and planning), and concierge white glove service are some of the additional things we include that others don't and that significantly increase the value of the equation.
Again, this is merely a rough illustration. "Your mileage may vary," as they say. The size of the business actually, the number of locations, the complexity of your technology, any industry-specific requirements, cybersecurity considerations, etc. all play a role in this. Sadly, smaller companies do not benefit from the same economies of scale. Your per-user cost increases when your company just has a few users (significantly). If not, take caution. Simply said, you won't be able to obtain the same range of services or level of quality at the same cost per user (as a larger organization). It's simply not feasible.
And let us add that you are NOT getting a deal or saving money if you are paying just under $100 per user per month. You're harming both your reputation and that of your company. Utilizing underqualified personnel for IT services is the fifth IT mistake. If you're doing this, we can almost promise you that your IT is suffering, you're just not aware of it yet. But you will be. And it will be quite expensive. You're really living on the edge if you only pay for service when something has to be addressed or if you use the "break-fix" model of IT assistance.
With that said, you can see how difficult it is to calculate the amount you should be paying for continuing support and how tough it is to do apples-to-apples comparisons between various MSPs given their diverse service offerings. However, at least you have a rough idea of where your costs for continuous support should fall currently. But we also integrate everything in our support model for this reason. We like to make sure that maintaining what you have is only one cost. There should be no need for inquiries. No surprises should arise either. You can make sure your ITSP/MSP is on your side in this way.
How effectively is your managed service provider or IT service provider serving your needs? How much money do you spend on IT support? If you'd want to talk about this more, send us an email or leave your ideas in the comment section below.