ITech Insights

10 Ways MSPs Actually Reduce Small Business IT Costs

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Every business, regardless of size, has to deal with a budget. However, some large businesses may have the revenue to swallow some greater costs than small businesses. No small business owner needs to be reminded of the constant challenge to balance the books, investing in the business, and continuing to grow at the same time.

IT costs can be a significant part of any business budget, but for small businesses IT costs will be a bigger hit to the bottomline. This is especially true now that technology is taking a greater role in normal business operations. There are countless new tools and devices that a business must work into its operations.

Of course, with the changing landscape of business technology comes a whole host of new concerns, issues, and challenges.

Small businesses have a few options when it comes to IT. Some small businesses will have IT staff in-house, which can be costly. Some businesses will contact IT vendors for a one-time fix at an hourly rate. And, finally, some small businesses will used managed IT services. There is also the possibility that a business may use some combination of the options above.

This article will focus on managed IT services and how these services can make IT costs much more reasonable for small businesses with tight budgets.

Small Business IT Costs - Comparing Managed IT Services with the Competition

So, how exactly can managed IT services help reduce IT costs for small businesses?

When compared with vendors that charge on an hourly basis, there are a number of potential avenues by which small businesses can seriously cut down on their IT budget - while also ensuring that they are receiving top quality services.

1. Why Would an Hourly Vendor Make Long-Term Fixes?

An IT vendor that charges by the hour for each call has almost no incentive to provide a long-term solution. In fact, their goal is to simply fix the problem they were called out for, and nothing else. Their business model relies on repeat calls from repeat clients.

Using this model, small business IT costs can add up fast. A few visits, billed hourly, with no additional services provided can become a very inefficient way of solving IT issues. For example, if a it support vendor is making a call to fix a malware infection or close a cyber-security hole, what is their incentive to go above and beyond to ensure that all the possible steps are taken to prevent malware infections in the future?Are you going to pay them to look for that same problem in all of your computers or just the one they were called out to fix?

With a new malware program being released every 4.2 seconds, there is a lot of potential for hourly IT providers to make regular calls and bill for solutions that could have been managed all at once in one single visit.

2. Hourly Vendors Require Regular Calls to Support a Business

This point is very similar. IT vendors that charge by the hour rely on regular calls and, in some cases, may actively ignore issues they discover in order to maximize future revenue.

Of course, this is not meant to accuse all hourly IT vendors of unethical business practices or actively causing issues themselves. Many vendors are also small business owners and they have created a model that provides short-term, immediate solutions to businesses in need. The truth of the matter is without ongoing problems they cannot stay in business.

Unfortunately, for the small businesses that they serve, IT costs can quickly get out of hand by trusting this method of delivering IT services.

With managed IT services, hourly cost is not a factor to consider. There is absolutely no incentive for a managed IT provider to ignore issues or to only deliver half measures. In fact, as some of the following points will note, there is actually a disincentive for managed IT providers to do business this way.

3. Proactive Support is Preventative

While IT vendors rely on hourly billing for their business, managed IT providers rely on flat fees from the small businesses that they support. On the surface, this may not seem like a huge difference. However, over time, the difference can drastically affect small business IT costs.

Since managed service providers, or MSPs, are operating on a flat fee, there is no value in constantly fixing small issues. Instead, they are most effective and profitable when they can cover a number of issues all at once. Continually looping around to fix an issue that could have been fixed previously is not a successful way to operate a managed IT business.

4. There’s More to Small Business IT Costs Than the Invoice

Many small businesses look at invoices to compare costs between service providers. However, that is only one part of overall IT costs. In addition to the fee for paying hourly computer support or managed IT providers, businesses must also consider the cost that IT issues and continued downtime can have on their overall operation.

Imagine a scenario where there are two identical small businesses. They want to rollout new computers to their staff. One business hires an hourly vendor to do this, while the other has already taken on the services of a managed IT provider.

The hourly vendor deploys the computers, ensures they are working at a basic level, and then moves on to the next call. The managed IT provider looks beyond just the roll out to ensure that all bases are covered. They typically have a "new computer" and "new user" template that is specific to your company. Because it is a long term and symbiotic relationship the MSP can afford to put effort into making sure new equipment is installed correctly the first time.

In a few days, the business that paid the hourly vendor discovers a certain piece of software is not operating correctly on the new devices and, as a result, cannot service their clients properly. They must now put their operation on hold, often resulting in one or more employees sitting idle, request a service call at an additional expense, and risk potentially losing business.

This is an example of the true cost of IT, and why business need to look at IT costs beyond just the initial invoice.

5. Managed IT Providers Include Strategy

Planning for the future is always important. People do it for their retirement, their child’s education, their major purchases, and a number of other areas in their life. So, it would stand to reason, small businesses need to also plan for the future when it comes to their IT services.

IT vendors that bill by the hour deal very much in the here and now. They solve tickets and move on to the next one.

However, managed IT providers look ahead to the future to ensure that the work being done now also meets the future goals of the organization. This can have an important immediate impact as well as a long-term impact on small business IT costs.

Think of hourly providers as a fast food restaurant and managed IT providers as a 5-star establishment. One restaurant aims to simply take orders and turn them around as fast as possible so that the next customer can pull up to the drive thru window. The other restaurant designs multiple courses that each serve a unique purpose in providing an exceptional dining experience throughout the entire night.

6. Users Crave Long-Term Solutions

For a small business, the most valuable assets they have are typically the people working within the business. These employees must be happy, and they must be given the proper tools to be efficient if they are to be productive for the business.

When IT vendors that bill by the hour only put out existing fires instead of providing solutions, users can become burnt out. Their weekdays can turn into repeated reports of issues with no actual long-term resolution and no way to truly be successful in their position.

Managed IT providers, on the other hand, look to improve the user experience by providing strategy and long-term solutions. For the business, this can mean lower IT costs in the long run. For the users within that business, this means a much less frustrating experience with technology and an ability to be productive, happy, and successful.

7. Can the Staff Keep Up?

One major advantage that managed IT services has over vendor services is staffing. Since vendors are reactive, they will experience busy periods and slow periods. As a result, they may not be able to carry enough staff at all times to quickly address issues as customers reach out.

In addition, finding qualified IT professionals is a challenge. There is a tech worker shortage in the United States and many IT professionals can earn over $100k per year. Finding someone like this to fill in during a busy period is not easy.

On the other hand, managed IT services charge flat fees based on your company size so they and can maintain a full staff regardless of the ebbs and flows in customer needs. Whenever an issue arises, there will be someone to take care of it. There will be no excuses about understaffing or finding temporary workers.

8. Change of Perspective

Many businesses think of IT costs as a one-off job like hiring a repairman for an appliance. A change of perspective is needed if businesses hope to get IT costs under control while also enjoying the level of service they deserve.

A managed IT service provider should be seen as an employee of the business. These people are on-hand to help the business grow and be successful, not just to put out fires as they happen. This tiny change of perspective can have a huge impact on small business IT costs.

9. Managed IT Services Make Budgeting Easier

Whether or not IT services are budgeted for, they will end up effecting the bottom line in one way or another.

There are two ways to budget for IT costs:

  • A business can set aside a lump sum of money from which they will draw for IT costs as-needed.
  • They can hire a managed IT services provider for a flat fee and secure their IT budget for the entire year.

In either case, the budget will be affected. There is no getting around this. However, in the latter situation, the budget is clear and predictable. Paying for IT incidents on a per hour basis could add up quickly and there is no way to predict which issues may arise. The budget could be completely used up in two quarters and then the businesses has to scramble to reorganize and find money for additional repairs.

10. IT Can Be a Competitive Advantage

We mentioned earlier that small business IT costs can be higher than what is shown on the invoice. This is doubly true for the advantages offered by quality managed IT services. When businesses are more productive, they become leaders in their industry.

When your IT initiatives are structured around adding value to the business you’re able to streamline internal operations and approach nearly every aspect of your small business more efficiently.

For example, an MSP’s more sophisticated approach to IT typically involves developing an IT strategy that works to improve each IT facing department. They may determine that by changing your internal collaboration software you could increase productivity in your multi-location business, or that your customer service department would be able to boost customer satisfaction (and future sales) with a series of simple automations.

With the speed at which technology advances there is almost always room to improve the way IT supports your business. The variety of skill sets and experience delivered by an MSP means always looking for ways to improve IT, which adds up to continual improvement of your business’ performance as a whole.

Reactive IT Services vs. Proactive IT Services

Ultimately, this all boils down to being proactive vs. reactive and how those two different mindsets can drastically change small business IT costs.

Reactive providers put out fires and solve issues as they arise. They have no incentive to prevent future issues otherwise they would no longer be in business.

Proactive IT managed services are responsive to your immediate needs, but they also look ahead to plan and prepare for situations with the goal of ensuring they are not needed for emergencies. The flat fee structure requires them to be efficient, forward thinking, and proactive. This is why managed IT services can be an important solution to getting small business IT costs under control.

To learn more about professional managed IT services and how these services could help your business better budget IT costs both now, and in the future, please contact PICS ITech today at 1-609-702-3920.