What Is the Total Cost of Ownership of Managed IT Services?

David Southern | Date: February 14, 2017

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Assess the return on investment from outsourcing IT services

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For many SMEs, it makes complete sense to outsource some, or all, of their IT function to a Managed Service Provider (MSP). Half of SMEs have reported difficulties in recruiting qualified IT staff but two-thirds feel that creating a digital workplace,  using the cloud, applications and mobile devices, is a strategic priority. So partnering with IT experts, who can keep them up to date with fast-moving technologies as well as maintain essential everyday IT systems, is the obvious choice for many SMEs.

Whatever your approach to IT, it’s important to carry out a cost-benefit analysis to make sure you’re getting the best return on your investment and that the business is realising the benefits your IT systems should offer. This means not just looking at the cost of outsourcing IT services but all the ways that IT can affect the bottom line. Here are just some of the areas to consider when assessing the total cost of ownership of managed IT services:

IT costs

The biggest advantage of outsourcing IT services is that they take away the unpredictable and unplanned costs that cause SMEs so many issues. You pay a fixed monthly cost for the support services you actually use. Most service level agreements will include access to an IT helpdesk to resolve issues quickly as well as a schedule of routine management and maintenance tasks. Many managed services include an element of planning to help you budget for phased upgrades and improvements. You may also choose to add on a ‘virtual CIO’ service for strategic advice to develop an IT roadmap to manage future growth. All these resources are available without the cost of recruiting, training and retaining staff yourself.  

Focus on core business

By taking away day-to-day IT tasks, you can free up staff to be more productive and focus all their time on business priorities. In many SMEs, staff step in to fix problems and keep systems up and running, even if IT is not a formal part of their role. By removing this burden you can direct all their energy into the roles you really employed them to do.

The same applies to managers, who often assume responsibility for IT because someone has to, even if they aren’t IT specialists. Of course, there’s a cost involved in outsourcing IT services, such as the time involved in selecting the right MSP and managing the relationship, but the MSP should take the lead with proactive reports that give full visibility of how IT systems are performing.

Access to expertise

Partnering with an IT specialist means that you can access industry-standard expertise as well as benefit from economies of scale and volume discounts. Their advice will be based on a best practice approach and a breadth of knowledge and experience that might not otherwise be affordable. MSPs can suggest improvements and identify areas where operational performance can be improved, leading to less downtime and increased efficiency.

Flexibility and agility

Almost half of UK companies fear their business models will disappear in the next five years as tech-savvy start-ups deploy disruptive digital technologies faster than ever. By partnering with an IT specialist, managers can focus more of their time and effort on dealing with rapidly evolving core business challenges rather than the day to day running of IT.

With a managed IT service, SMEs can put themselves in a stronger position to respond faster to changes in the market too, implementing innovation and scaling capabilities almost on demand. At the same time, they can compete with larger organisations by accessing technology that may have been beyond their reach on their own. In a volatile business climate, with so many uncertainties likely to pervade markets for the next few years, the ability to be agile and competitive will help SMEs navigate the choppy waters ahead. 

Risk management

The threat of cybercrime is growing. 75% of SMEs think that it won’t happen to them despite a huge rise in the number of reported cyber attacks. Having the right security, business continuity and disaster recovery strategies in place is critical to surviving any threat to data or the integrity of IT systems. IT security is a rapidly evolving specialist area, so an IT partner who can provide ongoing security expertise will quickly prove their value.

Perhaps the greatest value of outsourcing IT services comes from working with an MSP who will act as a business partner and a genuine extension of your in-house teams.  As they invest the time in getting to know your business, they can take a more strategic approach to solving your business pains and develop a long-term relationship that will help you stay competitive and successful as market conditions change.

Takeaways:

  • When assessing the cost of managed IT services, it's important to consider all the ways that IT impacts business performance.
  • Outsourcing IT services can reduce unpredictable and unplanned IT costs and replace them with a fixed monthly cost and a phased approach to IT.
  • Access to the right expertise will keep the business up and running, and free up time for business leaders to focus on business growth and innovation.
  • Outsourcing IT services can help business be more agile and responsive to change with faster implementations and access to industry-leading solutions .
  • Managed Service Providers can become valued long-term business partners providing the expertise to protect and grow your business. 

Find out more about how to assess the value of your IT services.
Download: Get 70% More Value from Your Finance Systems: The Business Leader’s Guide to IT Strategy

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