Managed IT Services: Cost vs. Value

November 12th, 2019 | Business Operations, IT Consulting

The cost of Managed IT services are often based on the IT provider’s experience and their range of services. Providing effective managed IT services requires a team of technical experts who will take the time to learn your business and create your business’ best-fit IT solution, which is unfortunately not always cheap. While some IT firms may advertise offerings at a surprisingly low rate, it’s important you evaluate their services carefully. If an IT firm has a very low rate it is likely for one of these reasons:

  • Their rate only includes a limited number of services. Anything that isn’t routine may incur additional charges to your organization.
  • They aren’t doing long-term planning or creating an IT strategy that aligns with your business goals. They are simply “keeping the lights on.”

Here is a list of questions you can use to evaluate the services of a managed IT services provider:

  • Do they…
    • offer scheduled business reviews?
    • reduce unexpected IT costs via proactive IT planning and budgeting?
    • offer CIO (Chief Information Officer) services?
    • maintain consistent service fees and results?
    • meet its Service Level Agreement (SLA) standards?
    • perform a thorough audit of your IT environment before becoming a partner?
    • have a ticket-priority system in place?

If you answered ‘yes’ to all (or most) of the above questions, you’re likely considering a managed IT services provider with a higher operational maturity level (OML), thus, a higher average cost for services. While the upfront onboarding costs may be a shock to the company in need of immediate hardware replacements or IT projects, the long-term benefit of a reliable IT environment can result in increased productivity across your business.

Average managed IT services cost

One of the most significant challenges managed IT service providers face is distinguishing themselves from break-fix IT providers. This is primarily because of the confusion between IT outsourcing, managed IT services, IT staffing, etc. While these terms overlap, a true managed IT services offering cost will range from $120 to $175 per user, per month. IT consulting rates below that range generally lack the maturity of processes and level of proactive planning necessary to optimize your IT environment. In addition, they’re likely lacking the ability to integrate core business applications that accompany a higher-priced IT consultant. Managed IT services above $175, without special services included, are likely inflated and should be thoroughly considered before purchasing.

Are managed IT services worth the cost?

When we talk to companies considering an outsourced IT solution, naturally, their first concern is justifying the cost of managed IT services. Kaseya’s MSP Global Pricing Survey found managed IT service providers with more expensive offerings generally exhibited higher rates of growth than their competitors. Though it’s important to avoid overpaying for services, a lower-cost provider is likely to deliver lower-level services. While more expensive managed IT services correlate with the IT firm’s business maturity, it does not determine the value of the offering. As stated previously, a managed IT service provider’s value is generally synonymous with its Operational Maturity Level (OML). A mature managed IT services provider will generally exhibit more stability and longevity than their competitors, in turn, providing more stability for your business. Hiring and managing a team of IT professionals who possess the knowledge and resources of a managed IT services provider can cost your business more money than outsourcing IT in the first place. Your business will have more than just the IT team’s salaries to consider when calculating costs. Recruitment, training, IT certifications, payroll, benefits, 401(k), and advancement opportunities are all factors that must be considered. These costs can accumulate quickly, and when IT team member decides to leave your organization, your business will lose the investment and knowledge associated with the individual.

How MSPs can add value to your IT environment and business processes

Reduce business downtime

Business downtime is a common IT problem plaguing small-to-medium size companies with limited IT resources and support. Most people associate downtime with server crashes, network invasions, internet outages, etc. However, downtime accumulates in a variety of different ways and your business may be suffering more productivity loss than you think. Business downtime includes any period when the performance of your employees is inhibited by technology deficiencies; slow internet connections, data loss, tracking documents, and lagging applications are some of the everyday IT issues that result in downtime.

Availability and expertise

Most small-to-medium size businesses with an in-house IT department are restricted to the availability and skill set of those few in-house techs. It may be convenient to have “George” the IT guy at your beck and call, but what if George goes on vacation, gets sick, or suffers an accident that renders him unable to work? Best case, George can remotely handle any IT emergencies that arise. However, there is a range of network responsibilities that can’t be managed remotely, and there isn’t anyone else capable of handling these responsibilities. A capable managed IT service provider will have a detailed record of your company’s IT environment and an IT team that can access your documented needs and network history. This way, if an employee unexpectedly leaves the organization, their knowledge of your business does not leave with them.

CIO-level consulting

Chief Information Officer (CIO) services are necessary to help your business build a strategic and productive IT environment. If your company is dependent on one or two individuals to handle your IT strategy and needs, you may not be receiving a full picture of your IT situation. Consider the following questions to determine if your IT department/service is supporting your business needs…

  • Does your business suffer from delayed IT support?
  • Do your users report the same IT issues again and again?
  • Has your business been presented with unexpected IT costs?
  • Is your network often slow or down?
  • Have your users suffered from data loss?
  • Are your hardware and applications outdated or in need of patches?
  • Do you only hear from your IT team when a problem occurs?

If you answered ‘yes’ to any of the above questions, your business may be lacking the proactive IT support it needs to reach your goals or simply maintain operations. If you’re still unsure if managed IT services are right for your business talk to our team to schedule a free consultation today.