More Value Than You Think
5 Reasons Why Managed IT Services Pay for Themselves – and Then Some!
Are you a small to medium-sized business considering working with a Managed Service Provider (MSP)? Maybe you’ve heard about MSPs – how they can take over all IT-related tasks at your organization, not only saving you loads of time and money, but also, driving your business forward with better, faster, and more cost-effective technology. It sounds great, and you’re definitely curious, but …
At a glance, it looks pricey! Your budget is limited, and besides, is working with an MSP really all it’s cracked up to be?
Let’s talk about that, and get to the bottom of your burning question: How much value do managed IT services really bring to a small business like mine?
If you’re pressed for time and already convinced that working with an MSP is the best option for your business, you can skip ahead to the last section – “Getting Concrete” – where we talk about specific monthly fees and what they entail.
The Rise of Managed IT Services
First, a little history lesson (don’t worry – it’ll be short and sweet). Managed IT Services haven’t always been a thing. In the 90s, the idea of a Managed Service Provider was primarily that – an idea. IT support, on the whole, followed the “break/fix” model: if your computers break, you call your IT provider, who charges you – usually by the hour – to fix the problem.
But as computing technology took off, managing IT became an exponentially more complicated affair, and a lot of companies found themselves dissatisfied with traditional break/fix support – and unable to afford what was then the only alternative: building a large, in-house IT team.
IT providers saw what was happening, and the idea of a Managed Service Provider – an outsourced IT department that takes care of most (if not all) of an organization’s IT tasks – went from being an idea to a gigantic industry. MSPs met a very real demand, as the numbers show:
- The global MSP market is expected to grow to a staggering $557 billion by 2028 (it was valued at $243 billion in 2021).
- A 2022 survey found that 88% of SMEs (small and medium-sized enterprises) surveyed were working with an MSP or considering one.
It’s like they say, people vote with their feet, and it’s clear that businesses of all sizes are migrating to managed services. But you’re not going to do something just because everyone else is. You don’t follow trends, you follow reason – and you need to see some reasons why working with an MSP isn’t just trendy, but a great business decision.
So, without further ado, here are five reasons why managed IT services pay for themselves – and then some!
Reason #1 – Soft Costs
The value of working with an MSP is often most apparent when you consider the cost of not working with one. A big chunk of that cost comes from “soft costs,” which are difficult to measure precisely, but that doesn’t make them any less real. So, what are soft costs, exactly?
The “hard cost” of getting IT support is what you pay for that support. “Soft costs,” on the other hand, are the costs that arise from unreliable or inadequate technology – as well as from an unreliable or inadequate IT provider!
Businesses that are still working with break/fix IT providers or relying on a small in-house IT team often feel like they’re saving money on IT support compared to their competitors who’ve opted for managed services. But this is generally because they’re drastically underestimating the “soft costs” of their decision – or ignoring them altogether!
But soft costs are no joke …
- Data loss
- Cyberattacks (and the accompanying reputational damage)
- Outdated tech
- Sluggish response times from your IT provider and the ensuing loss of productivity
- The many costs associated with hiring in-house IT staff (training alone is a doozy!)
Bottom line – underestimate the soft costs of not working with an MSP at your own peril, because they add up and can really hurt your bottom line.
Reason #2 – Downtime
Downtime, defined as the period of time when your business (or a significant part of it) can’t operate because of technological failure, is considered a soft cost, but it’s anything but soft – downtime hits harder than a wrecking ball at a Jenga party!
We devoted an entire blog post to the cost of downtime (check it out), because it’s something business owners tend to forget about when making decisions about their IT budget.
A study by Gartner found that the average cost of downtime is $5,600 per minute – yes, per minute. That average is certainly skewed by the colossal losses gigantic corporations experience due to downtime, but don’t think for one second that downtime won’t be a killer for your small to medium-sized business. A recent study found that downtime costs SMBs an average of $12,500 per hour. Yikes is right!
OK, you might be thinking, downtime sucks, but who’s to say that working with MSP is really going to reduce my company’s downtime?
This is a great question, and it brings up a crucial difference between MSPs and break/fix providers: MSPs are proactive whereas break/fix providers are reactive. Instead of responding to your IT issues after they’ve arisen, MSPs proactively monitor your entire IT environment to prevent issues from arising in the first place – or, at the very least, to prevent small issues from turning into big ones that bring your business to a grinding halt.
Plus, a good MSP will clearly state how much uptime they guarantee in their Service Level Agreement (SLA). So, if you’re considering hiring a particular MSP, make sure that you’re getting an acceptable level of guaranteed uptime in writing.
Reason #3 – Alignment
This one is huge – the reason behind the other reasons. So, what is alignment? It’s the extent to which your goals and objectives line up with those of your IT provider. Does your IT provider want – and work hard to achieve – the same things you want?
First, let’s consider what it is you want in regard to technology. If you’re like most business owners we encounter, you just want your technology to work! Increased efficiency and productivity, next-level cybersecurity, elevated expertise – those aspects of working with an MSP sound cool, but what really matters to you is that your computers do what they’re supposed to, and never slow you down.
Now, let’s consider what break/fix providers want vs. what MSPs want in regard to your technology.
Does a break/fix provider want your technology to work perfectly? Of course not! The reason is right there in the term “break/fix” – if your computers don’t break, these companies have nothing to fix, and thus, no source of revenue. What’s more, when you do experience IT issues, break/fix companies aren’t incentivized to solve the problem quickly, as they generally charge by the hour. They take their dear, sweet time because it makes them more money!
A good MSP, in stark contrast to a break/fix outfit, is deeply incentivized to prevent problems and keep your network and systems up and running. Why’s that?
Pricing! MSPs offer different pricing models, but the best MSPs – in our opinion – offer some form of all-inclusive, flat-rate pricing. That’s what it sounds like: you get comprehensive IT support for a fixed fee (usually monthly). Not-so-good MSPs will say their services are all-inclusive, but don’t just take their word for it; look closely at any contract before signing to see what, if anything, the MSP considers “out of scope” labor (i.e., something you have to pay extra for, above and beyond your monthly fee). Here at The 20, we pride ourselves on our truly flat – not ‘kinda flat’ – pricing model.
OK, linking this back to alignment: MSPs with truly flat-rate pricing don’t want to be constantly fixing problems because doing so makes them no money, and MSPs are businesses too. The better your technology works, the better the MSP’s margin. In short, a good MSP is on your side!
That’s alignment, and it’s a beautiful thing.
Reason #4 – Technological Change
MSPs, in addition to keeping your current technology stack in good working order, can also help you adopt newer, faster, and more cost-effective IT solutions and tools.
You might be thinking: But I’m not a ‘techie’ – I don’t need the latest shiny tools. I just want stuff that works!
We hear you, but remember, upgrading and evolving your technology isn’t about keeping up with the Joneses – it’s about making more money! Most business owners are surprised to learn that they could achieve significant savings simply by replacing their old PCs with newer models. A study conducted by Pan-Asia found that replacing PCs older than four years actually saves a business money; PCs older than four years require so many repairs and undermine productivity to such an extent, it’s cheaper to simply get rid of them!
But you’re busy, and besides, you’re not sure if newer machines will work well with your business applications …
Exactly! That’s why an MSP is such a boon for small business owners. Your MSP is your very own outsourced IT department. We figure out the ins and outs of technology upgrades for you, using our expertise to find technology that helps your business operate more efficiently and profitably. Good luck finding a break/fix company that does that, or hiring a large enough team of in-house experts with a top-tier MSP’s level of expertise.
Reason #5 – Security
How does the cybersecurity you get from a quality MSP compare to the cybersecurity you get from a break/fix company or a small, in-house IT team (1 to 5 people)?
In short, there’s no comparison! A quality MSP will provide top-of-the-line cybersecurity tools and training, and proactively monitor your entire IT environment 24/7 to catch threats and breaches before they turn into business-destroying disasters.
And yes, cybercriminals do target small businesses like yours. A recent study revealed that 61% of SMBs have experienced a cyberattack over the past year. Truth is, threat actors are coming after ‘the little guy’ more and more, because they know that most small businesses have major gaps in their defenses.
Does working with an MSP cost a little more up front than a break/fix provider? Generally, yes. But if you get hit with a cyberattack because there’s no one looking after your network, you’ll wish you’d spent a little more to prevent the worst from happening. That’s because cyberattacks are devastating to small businesses – nearly two-thirds of SMBs close up shop within six months of a breach!
Maybe you’re ready to work with an MSP, which raises the question – which one? Obviously, price is a major consideration, but remember, with managed IT services, as with anything else, you get what you pay for. In fact, when it comes to managed IT services, skimping can backfire in a big way. But what constitutes ‘skimping’? How much are managed IT services typically?
MSPs offer a wide range of pricing levels and structures, but generally speaking, you should expect to pay between $100 and $300 per user per month. A “user” is anyone who consistently uses the technology at your company, so for practical purposes, user = employee.
A lot of small businesses are reluctant to make the switch to managed services, and this can push them into going with the cheapest option (something close to the $100/user/month end of the spectrum).
But here’s the problem: in our experience talking to thousands of small business owners, MSPs that charge so little tend not to engage in the sort of proactive support that makes managed IT services worth it in the first place. Why not? Because if they did – if they actually put in the time and energy that proactive support requires – they wouldn’t make any money!
In other words, there’s a threshold somewhere in the neighborhood of $150/user/month. In order to truly reap the benefits of working with an MSP, you have to spend enough to secure proactive support. If you skimp, you might save a little on “hard costs,” but those savings will be wiped out by the “soft costs” that inevitably arise when you go with a “cheap MSP.”
We understand that switching to managed services can be scary – change always is! But if you’re going to make the switch, don’t let your fear get in the way of making a good decision. Instead of looking for the cheapest MSP, look for the one that has …
- Clear, predictable, and truly flat-rate pricing
- Comprehensive and proactive services
- A proven track record of client success
This last point cannot be overlooked. It’s one thing to hear about how great an MSP is from the MSP itself, and a whole other thing to hear it from the MSP’s clients. An MSP is supposed to be a true business partner that helps clients operate more efficiently and profitably. If an MSP regularly helps its clients win, you’d better believe those clients are going to sing the MSP’s praises!
If you do your research and find a quality MSP to work with, you’re going to find out why so many small and medium-sized businesses pay for managed IT services …
Because they pay for themselves and then some!