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Business Case: The need for a Managed Service and not Break/Fix

We hope that this blog serves its purpose in helping your business decide if they need a managed IT service. We know that choosing an IT partner can be a very difficult process and generally cost is the bottom line to any business, but we hope that this document highlights some areas that make you think before you choose the cheapest option, and why race to the bottom is never the best option.

We will first try and educate you as to why a business needs a reputable IT support provider, not just the cheapest option. Every business should understand about system failure and how it will affect their business.

IT Failure is inevitable

One of the easiest ways of looking at system failures is to see just how many people will be affected by the failure of a computer system or even the whole infrastructure.

In every modern business the cost of losing a core service would result in a dramatic event of scrambling for paper copies of everything, but most businesses do not even keep paper records in this era of modern technology. So, this means that a business cannot process its core business, generating revenue, whether it be manufacturing, retail or customer service they all have the same reliance on IT (Information Technology) infrastructure.

Working out the exact costs incurred for any business in not being able to function efficiently is a challenging task, but you can work out the amount of used Op Ex (Operating Expenditure) in staff salaries and business overheads with a comparison of lost revenue on average yearly sales figures. It is a very crude method but gives you an idea.

A race to the bottom

When choosing an IT partner, cost is always a deciding factor to any small business, but the cheapest is not always the best option. Costs between service providers should usually remain about the same in reginal areas, but any business should always look at the cheapest option and think about their decision.

It is the same across every industry vertical – the cheapest option is not always the best option. This is the same when looking at IT service providers. There are often valid reasons for having different qualities of service or product – it depends on the buyer’s needs. Your IT systems support your business, so eventually, opting for the cheapest option does not always mean the ‘lowest' cost if your provider cannot meet your needs and you find out too late!

It will always work out less costly for your business to invest in quality over cost. But why is that?

During an outage you have staff unable to work - this costs your business. It is likely that hourly loses are greater than the hourly rate of an engineer, which means a reduction in the duration of the outage will save you more than a reduction in the hourly rate.

Hourly rates range from about £50/hour to £150/hour. There is a close association with these costs and the quality of the resource (as explained previously). Although you should not pay over the odds. Expect to pay in the region of £70-£100/hour for a decent quality engineer.

A decent quality engineer will often fix a problem quicker and reduce the likelihood of it happening again.

If you have four or five PCs in your organisation, you will not notice much difference between two differing IT service providers – simply because the skills required to support this environment are basic. However, as soon as you add a server, multiple servers, cloud infrastructure to the mix, a network, internet connectivity, firewalls, a website etc. you now have a wide range of technologies to manage. You may only have 10 people in your organisation, but you will still have many different technologies that need looking after.

Service provider differentiation

Look around the IT services marketplace and you will find one company charging £50 an hour while another charges £150 an hour. This is a dramatic difference, but once you apply some common sense, it becomes easier to understand the difference in what you get for your money.

Assume ‘Company A' charges just £50 per hour for its services versus ‘Company B’ which charges £80 per hour. Both Company A & B are in business to make a profit. IT Services is a ‘people' business and as such, most of the cost goes towards paying staff, not to mention recruitment and training. Given that both companies are seeking to make a profit, this implies that Company A is doing so by paying their engineers less than the market rate.

A good IT engineer has a choice where he or she works in a dynamic market like IT services, where better people make a real difference. He or she can go to Company A and be paid £18,000 per year or to Company B and be paid £30,000 per year. Which one would you choose?

Technical skills are important when considering your provider; however, even a good IT engineer does not know everything. The more engineers an IT services provider employs, the more likely they are to be able to excel in the technical areas your organisation requires.

Like all industries, the higher the skills, the higher the salary paid. IT Salaries are growing every year in line with a greater demand for IT services. An engineer on a basic salary may have a reasonable understanding of several technologies, but specialists are continuing to push the boundaries of salaries paid.

Remember that hiring a single, full time PC / Technical support person is equivalent to paying about £20/hour (excluding overheads) to be available 8 hours per day, assuming your organisation even requires someone full time. Paying for ‘high quality' service which can cover all the technologies your organisation needs now and, in the future, can make far more sense than hiring someone internally. Do not forget the less tangible savings of having access to more resource only when required, sickness and holiday cover all year round and a far greater skill set when you need it.

26 points to help you do battle.

If you only have a few PCs, the choice of IT service providers is broad. You don't need the additional expertise offered by a more substantial IT services company; hence the cost differential is not worth paying. So go for a provider that is located as close to your offices as possible.

If you have a server then you will have a network, and the consequences of poor support are very much more serious.

1) Consider support providers with a reasonable number of engineers.

Some IT providers ‘exaggerate' the number of engineers they employ but visiting their offices should give you a real sense of their resources. We strongly suggest that you do this!

2) Website.

Is their website professional? Do you understand it? If it does not look too professional, it is worth asking yourself why? They are IT professionals!

3) Honesty.

Honesty must be one of the most important qualities of an outsourced partner. If they advertise 10 offices, visit a couple of them. If they say they have 50 engineers, check to see they do. If a company is prepared to be dishonest to get your business, they are likely to be dishonest to keep it.

4) Ask to see the companies' professional qualifications.

Are they a Microsoft partner? Ideally, they will be a Gold Partner as they will only be able to achieve this status if they have many qualified engineers, a proven record of accomplishment of ability as judged by Microsoft, not themselves! Do they have Cisco or Juniper accreditations which demonstrate their understanding of firewalls, network security and networking?

5) Comparing apples with oranges.

Every provider has their own pricing model. Some are honest and upfront; others sound amazing but often have hidden costs. It is impossible to make a choice when comparing apples with oranges. So, create a template request form and ask a selection of IT providers to answer your questions. Then you can compare apples with apples!

6) Negotiate.

Do not be afraid to negotiate. Obviously the larger the potential contract the more leverage you will have. If they really want your business then why not let them work for it.

7) Purchasing equipment.

Many IT providers make a significant amount of money from selling equipment. If you are going to listen to a partner's purchasing advice, you need to be confident they do not have their own hidden agenda. You need to be certain that the advice is solely to benefit you and your business. Always ask if you can purchase your own hardware and software, even if this is something you do not particularly have the skills or want to do. If it is compulsory to purchase through them, this should ring warning bells.

8) Pay them a visit.

If possible, go to their offices for a meeting and ask to look around. Remember, you are looking for someone to look after one of your most important assets – if they do not look after their own, will they look after yours?

9) Location, location, location?

Many companies can perform a few IT related activities remotely – so they could be based on the other side of the world. But there is always a need, no matter how occasional, to have an on-site engineer present. You may even warrant a permanent on-site engineer, although that is only necessary if you have 50 or more users or have very demanding users.

10) How will you know they are performing well?

Some companies will happily provide you statistics about their performance; they only do this because they are confident in the quality of their services. You may choose to never look at any statistics, but the very fact they are being offered is a reassuring point. If they do not offer you this information, is it because they do not want to or they cannot? If it is the latter, then how do they measure their own performance?

11) Get references.

Ask every potential partner for references so you can speak to their current customers. Providers will give you references for sites they believe will sing their praises (wouldn't you?). So, the more the better. Ask the contact you are provided with if you can also speak to one of their colleagues to get a feel for how another user experiences their services.

12) Does the SLA hold water?

Even though it is good to have an SLA (service level agreement), many IT companies infrequently honour this because they know the simple fact that you will find it almost impossible to prove a breach in contract or cannot be bothered to follow up a breach. So, ask them for actual performance data. If they do not have any, it begs the question how well they understand their business.

13) Try before you buy!

Many providers have a minimum contract period; see if you can have a “break clause” after the first 3 months so if it does not work out it is easy for you to go elsewhere. Some companies offer a “contract free” service but remember a service level agreement is just as much for your protection as it is for theirs.

14) Case studies

Ask for case studies and review them in detail with the provider. You will get a good understanding of their approach to work that way.

15) One-stop shop.

Find out what other services they offer. You do not want to find yourself in a situation where you need to call one company for IT support, another to look at your security, another to manage backups, or to help with an office move. If you have a good relationship, then ideally you trust them to assist you in other areas. Although remember the provider may be simply acting as a reseller to another company, which means you will pay a little more and the provider is likely to have less control over the service levels.

16) Smiley, happy people.

Try to avoid making a “personal” decision. There are many nice people out there, some work for good companies, some work for bad ones. Rely on the facts.

17) Boom or bust?

Find out how long they have been trading for and that they will be around for the near future. Strong finances are a sign of a solid organisation. It is common to ask for financial information such as audited accounts or management accounts.

18) Vertical specifics.

Do they have other customers in the same vertical as your business? This may give you more confidence but also, if your vertical has specific technology, will show they can support it. Even better, ask if you can talk to the other company about the quality of services.

19) What happens when it goes wrong?

No matter how good the partner, there will be the occasional problem. Hopefully, these will be infrequent but, when problems occur, what processes has the partner put in place to deal with them. Who do you speak to? Can you speak to a manager? Do they have specific client service individuals whose sole purpose is to keep you, the client, happy?

20) Keeping the boss happy, but what about everyone else?

The provider is likely to bend over backwards to keep you and the senior members of your team happy, as they should. Make sure that level of service is provided to all of your colleagues. How can you measure that this is the case?

21) Keeping up with technology?

Does the provider train their staff? This demonstrates real commitment to their people and ensures you are on the receiving end of decent quality people. Ask what training plans are in place.

22) Estimate of costs?

Get an idea of cost but always consider quality. As said before, the cheap providers always cost your business more in the long-term. For a decent quality provider, you should be looking at a figure around £75-£150 per user/month.

23) USPs (Unique Service Point).

What do they believe are their Unique Selling Points.

24) What do the papers say?

It is all very well the provider waxing lyrical about their own abilities, but does anyone else think so? Do they have any published articles, press information, white papers? Google reviews or Facebook reviews? Are they on linked IN?

25) A game of eye spy.

If you can easily and simply monitor things yourself, then why not keep a second eye on things? There are free tools on the market, which require no IT experience to install, which will email you with problems on your servers. These are remarkably simple, but more effective monitoring technologies are available at a cost.

26) Open all hours.

What time do you need support? 9:30am -5:00pm or 24 hours / 365 days a year or something in between? Be certain the provider can support you when you need it.

The battle

Now armed with your probing questions and new insight into IT services, you should be much closer to choosing the right partner. We can provide you with a quick questionnaire that you can customise and send to any potential providers – not all will respond, but at least the ones that do respond are of a decent quality. Good luck!

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