ITech Insights

How Hourly IT Services are Eating your Profits 

April 03, 2017 Terry Rossi Managed IT

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Have you started to wonder if your hourly IT contractor is fixing your IT problems to the best of his abilities or just band-aiding things to limp you along? Does he seem to be showing up to your work more often, repairing the same issue over and over? We call this model the Break/Fix model. Something breaks and the hourly IT provider fixes it. The problem is that he is never paid to get to the root cause of the problem or truly fix anything. In fact the terms of the arrangement encourage exactly the opposite behavior. If so, it may be time to consider another option: Flat Fee Managed Services. This alternative could be just the IT solution your business needs, and can even prevent your worst IT nightmare from coming true.

THE ULTIMATE BREAK/FIX HOURLY NIGHTMARE

Your business is running great. Profits and staff productivity have been up, and you haven’t had a single IT problem or expense in a couple of months. Things are good, you haven't even thought about IT for some time.

Then one day your servers crash. Not one of them but all of them! Your business comes to a grinding halt. None of your staff can work. You call your go-to break/fix IT provider, but he’s overloaded with work and can’t make it out to your offices till next week. Next week?! In a panic, you call the first "Window Server Support" contractor you can find on Google that answers the phone. We call this "AOF" or "Ass on Fire". Thankfully he’s available but since you need this work done right away and you have no preexisting agreement with this vendors, he charges you top dollar for the services. You server problem suddenly cost you the equivalent of a mortgage payment. Not including the down time and cost of your employees sitting around waiting for a fix from an unknown vendor that you hope is the expert he clams to be.

This is the delicate nature of break/fix IT services and the risk you take having an MSP partner. Situations like this can and do happen. We get a bunch of these "AOF" calls from people in true panic. Let's look at three reasons why it pays to hire a Managed Services Provider (MSP) or Flat Fee outsourced IT provider instead.

FLAT FEE MSP'S PREVENT PROBLEMS. BREAK/FIX HOURLY PROVIDERS PROFIT FROM THEM.

Think about the relationship dynamics of Managed Services compared to break/fix. If you’re a business owner who currently use a break/fix contractor, when your Network, Server or telephone system goes down your provider gains profit. Your problem equals his gain.

How motivated do you think he is to do an effective job of fixing your issue? If that problem pops up again later, it equals more reward for him. Now that’s not to say all break/fix contractors aren’t fixing your IT to the best of their abilities. In fact, I believe, most are but think about the basic mindset of a break/fix provider: your problem is their profit.

Using a flat fee managed service provider or outsourced it provider works differently. You pay a set fee every month to your MSP. So the reward for the MSP comes every month. If something goes wrong during that month, you don’t pay anymore but the MSP needs to fix your problems. It costs the MSP more money, and therefore affects their profit margin. Because of this, the MSP is more profitable for taking preventative measures to ensure your IT is working as effectively as possible, always. One of the providers main goal is to minimize reactive problems and therefore be able to scale their business, serving more clients with less staff.

That’s not to say problems won’t happen with an MSP, they do. But when they do, they end up costing the MSP money, and they certainly don’t want that. So for an MSP, the basic mindset is: no problems bigger profit

A FLAT FEE MSP MINIMIZE BUDGET SURPRISES

Everyone likes surprises, except when it comes to losing money. And when you have a break/fix IT service provider, big surprises can and do happen - and not the good ones, either.

An MSP is working to prevent problems from happening in the first place. You pay a monthly flat fee, so you always know what you’re paying. You can plan and predict your budget accordingly.

With an hourly break-fix provider, it’s true that some months you won’t have any invoices from your provider, which can seem swell. But other months, you could have bills that are off the charts. So you never know just what you’ll be paying for your IT budget in any given month and if you don’t have that money set aside, then what? In addition to knowing what the monthly fee is, your MSP will work with you to develop a technology budget to minimize the surprises and ensure that a proper technology refresh program is in place.

A FLAT FEE MSP MIGHT JUST MAKE YOUR LIFE BETTER

Yes, as silly and simple as it sounds, with an MSP you’ll probably enjoy life better. The main reason is you won’t have to deal with the frustration of unexpected IT problems eating away at your budget and the never ending downtime that comes with it. Your IT systems will run better. You will have a standardized system that can be supported by anyone, should you choose to change in the future and your budget will be predictable.

Even better, you’re more likely to have a fruitful relationship with your MSP outsourced IT provider since you both have the same goal: effective smooth running IT systems for your business. What business owner doesn’t like the sound of that?

Want to learn more about Managed Services and outsourced IT support? Contact us today to learn more about this effective alternative.

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