Save Money by Outsourcing Managed IT
Running a business in today’s fast-paced landscape requires constantly keeping up with industry trends and advancements and making sure that the data the company handles is safe. In a time when remote workers are a significant portion of talent and company networks are no longer bound by the traditional physical borders of a building, network maintenance, security, and general IT flexibility are crucial to success. Outsourcing Managed IT is becoming a more common solution to this challenge, but even though outsourced IT solutions may be cheaper, are they really saving money, or are they costing the company more in the long run? We’re going to dig into whether or not they’ll save you money and just how that money saving is accomplished.
What Is Managed IT?
Managed IT is what it’s called when a business contracts out its information technology (IT) to a third-party entity. The business and the managed service provider have a contractual agreement between them that assigns ownership and accountability for the overall IT functionality of the company in exchange for a monthly or annual fee.
Depending on the service plan chosen and the needs of the business, this often puts the third party in charge of everything from maintaining the physical computer and network equipment and other digital devices to keeping the security policies current and properly configured. This third-party contracting is transparent from the customer’s viewpoint in most cases.
The Primary Benefits Of Managed IT Services
There are many different potential benefits of outsourcing IT services, many of which will depend on the industry and specifics of the business. Some of the most commonly-cited benefits are below.
Managed IT services let the business decide what contractual terms the service provider must meet. These are called service level agreements, or SLAs. These agreements generally remove the burden of recruitment, onboarding, and training of the IT department, since the provider is working with talent ready to be implemented as a turn-key IT solution. This is one of the reasons that managed IT is also more cost-effective since the business is only paying for services or time that they use.
Increased Overall Uptime
Since an outsourced IT solution won’t be bound by your business’s hours of operation nor by your after-hours IT overtime policies, they can maintain a schedule that fits your needs best. In many cases, this means they are on-call 24 hours a day and able to address downtime issues within minutes, instead of the traditional solution of calling in-house IT and having them commute to the worksite to bring a server back up. When your network goes down, managed IT is often monitored and can reboot in moments.
More Effective Uptime Management
Another benefit to your IT solution not being affected by local business hours is that maintenance can be handled much more efficiently. Updates and similar maintenance can be scheduled for off-hours when network usage will be at its lowest level, and the fewest employees will be affected. More uptime and network availability during regular business hours mean fewer disruptions and more consistent workflow.
Easily Fill Skills Gaps
Outsourcing your managed IT services can hold huge benefits for teams that have skill gaps or simply don’t have time in their day to address internal IT issues. This means your talent can keep their focus where it belongs, on their job duties, and not in a secondary capacity as in-house shadow IT. Filling those still gaps also means you’ll always have someone addressing an issue who is an expert in it, not just handy at the time.
Minimize Effects Of Talent Shortages
One of the biggest challenges facing businesses right now is finding, hiring, and retaining the talent they need. It is notoriously challenging to fill IT vacancies, and outsourcing your IT services eliminates that shortage. When you contract with a competent managed service provider, you no longer have to worry about finding someone to fill a role, nor will you need to focus on onboarding them as that will already be done.
Does Outsouricing Managed IT Actually Save Your Business Money?
Depending on what industry or space your business operates in, there are likely significant savings in outsourcing your IT services. Businesses that rely on apps, coding, and other functions that lie largely in the tech space can see 31% lower costs compared to in-house IT operations. In fact, the reason cited by 71% of businesses that switched to outsourced managed IT services was to reduce overall costs.
Primary Ways Outsourcing Managed IT Saves Money
While this list isn’t exhaustive, it does have some of the most common reasons that outsourcing IT services can help your business cut costs.
Eliminating Onboarding & Training Needs
One of the highest costs for any business is recruiting, hiring, and onboarding new talent. This can be a considerable expense for many smaller companies that are still in the growing stage, and reducing or even eliminating those expenses can dramatically improve liquidity and pivotability for smaller businesses.
Reductions In Benefit Funding
Since your managed IT solution will be its own business entity and operate as a contractor, your business will not have to worry about funding employee benefits for those contractors. This can save incredible amounts of money in the context of your entire IT team and the cost per year for their benefits.
Elimination Of Shadow IT Costs
Shadow IT is the term used for leveraging talent committed to other roles for in-house IT support. While this may be highly convenient, it also works against your business in two ways. Not only are people you hired for a different job now focused on something that isn’t their responsibility, but they’re also getting paid for a job they aren’t doing right now. Outsourcing your IT needs keeps this phenomenon to a minimum, saving you money and keeping talent-focused where it needs to be.
Immediate On-Call IT Support
In-house IT personnel will have on-call rotations, but while they will need to then commute to the business site and begin addressing the problem, outsourced IT providers will already be aware of the outages or downtime and can be counted on to be proactive. Additionally, no matter what the issue is, they are available 24/7 to address it.
Managed IT Services Are Highly Efficient
When you use internal associates for IT, you’re drawing on the knowledge of a few individuals and their resources to be able to fix your problems. However, when you outsource managed IT, your needs are addressed by entire teams of a company, which allows them to pull solutions from a far larger pool of knowledge and resources. The IT field is incredibly wide and diverse, so being able to have a diverse array of personnel attending to the needs of your company can be crucial to success.
Scalability That Aligns With Your Business Needs
Most managed IT solutions can rapidly scale their abilities to your business needs. This means you can easily scale down during slow periods of the year to save even more while ramping up for your busy season and using the increased seasonal revenue to make sure your company’s network and abilities are on point for your customers. Scalability is also great if you’re planning an expansion but don’t necessarily want to dedicate additional resources for in-house infrastructure.
Your managed IT provider won’t be taking sick days, doesn’t need a vacation, and will never put in their two weeks while leaving you scrambling to find a replacement. While in-house IT talent will have lives outside of work and will require a work-life balance, your outsourced IT solution will operate as a company, not an individual, and will constantly work toward fulfilling your service level agreement.
What Factors Can Affect Your IT Spending & How Much Outsourcing Managed IT Can Save You
Many service providers will offer a variety of options for service, but they will often depend on several factors. These factors will include the size and complexity of your network, the number of users, the estimated amount of support time the business will need each month, and more.
Average Service Time Needed
Some service providers will charge hourly rates while others will have a more standardized “plan” structure, similar to picking a monthly cell phone plan, that will let you customize the services you get for the price you pay. If you go with a provider that charges an hourly rate, expect to pay anywhere from $125 to nearly $300 per hour, which can rise or fall depending on the provider. This is a prime consideration if you have a larger company that may require support for many employees on a near-constant basis.
Total Number Of Network Users
More users mean more devices, which leads to larger and more complex networks and the resulting management that goes into that network. Before you start pricing out a service provider, you’ll probably want to do a full inventory of all your users, as well as exactly how many devices your provider will need to maintain.
The Amount Of Data You Deal With
If you need your service provider to secure or backup your data, you will need to know just how much data you deal with daily. This is crucial for businesses looking to protect large databases of customer information and records from data breaches and potential leaks. Many businesses take backups for granted, but securing your company against catastrophic data loss could be worth the price of the service provider alone.
How Many Servers You’ll Need
Just as you should know how much data your business handles, you should also be aware of how many servers your company owns or rents. If you plan on having your outsourced IT department manage your servers and associated data security, you will want to know what your business needs from them to determine if the move is cost-effective.
Your Service & Planned Upgrades
One final consideration when choosing a managed IT provider is what you expect in terms of ongoing security patches and equipment upgrades. Will they be responsible for security, or will you keep that in-house? Will they be accountable for the entirety of your network and its associated health? Will your need potentially extend beyond computing to possibly encompass your VOIP phone system and similar needs? These are all things to consider when evaluating a provider and its costs.
Are There Different Types Of Managed IT?
Depending on your needs, you may only need specific types of managed IT support. Here are some of the most common types you’ll encounter, though many Managed IT providers offer multiple:
Conventional Break/Fix Modeling
These plans only address your needs when something needs to be fixed or patched. They often will not perform any general maintenance or monitoring, and while they can be the most cost-effective for companies that don’t need much, they are also the most limited.
Security services are one of the most frequently outsourced IT tasks. These providers will offer managed IT security solutions and assistance. They will frequently develop or configure the security policies for your entire network.
Software as a service, or SaaS, is most frequently used for companies that need customer relationship management or CRM software that is frequently hosted in the cloud. SaaS is very application-specific and will generally deal with individual software suites.
Infrastructure as a service, or IaaS, is where your provider will leverage cloud services like AWS and Microsoft to provide cloud service for your company’s operation and storage.
Data management services are used to help secure data, databases, and backup services. Data breaches in 2021 cost the average business more than $4 million, a 17-year high. This makes it a matter of not only customer security but also financial security for the business.
Understanding The Benefits Of Outsourcing Managed IT Can Help Your Business Save
There’s no telling how much your business could save by leveraging an outsourced IT service provider until you speak to one and get a quote. The key is understanding not only how it will affect your bottom line but also the non-monetary benefits that can lead to indirect savings. Once you know what you need from your managed service provider, you’ll be able to create an IT solution plan that works for both your IT needs and your budget.