We recently received a request for a quote from a local business. Despite having an in-house IT team, the client expressed dissatisfaction with the speed and level of attention provided to their business. The company, which operates with 40 computers and approximately 10 full-time users, also has a rotating user base.
One of the grievances shared was the prolonged transition from POP to Office365 for their email system, a process that had extended over several months. Another concern highlighted the perceived lack of presence and responsiveness from their existing IT team.
Upon providing our quote, the client sought confirmation of the pricing, revealing that they were currently paying a mere $1600 annually for their IT services. Yes, you read it right—$1600 per year. This amount supposedly covered a range of services, including:
Phone, Email and Remote Support (See Below)
Phone, Email and Remote Support
How can this possibly work?
Considering an average annual cost of $40,000 to $60,000 for an IT technician, our analysis raises an important question: how many clients must an IT technician serve to cover these expenses, excluding additional costs like rent, tools, travel expenses, and a modest profit margin? To focus solely on the cost of an IT technician providing remote support, it becomes evident that the technician would need to cater to 32 businesses. Assuming each business operates with 40 computers, a minimum of 10 hours per month is required for tasks such as patch verification and virus/network performance reviews. Including a few servers, which typically demand around 4 hours each, the total monthly requirement for proper IT maintenance would be approximately 18 hours per business.
In this scenario, servicing 32 clients at an average of 18 hours per month accumulates to 576 hours. However, most Managed Service Providers (MSPs) typically bill out at no more than 60% of tech time, translating to around 100 billable hours per month. This prompts the question: How can MSPs offer UNLIMITED block hours when they actually need six times the number of technicians to handle fundamental IT tasks effectively?
The truth is, maintaining the promised level of service at such rates is impractical. Basic tasks like checking backups and conducting test restores for business continuity often fall by the wayside. Consequently, businesses that opt for an IT supplier following this pricing model expose themselves to increased risks. The supplier simply lacks the bandwidth to perform proper remote maintenance. This discrepancy in service levels is a significant concern for businesses seeking reliable IT support and explains why they were exploring alternative options.
An alternative perspective on the IT supplier’s strategy suggests it might be a thinly veiled Break-Fix company, potentially leading to unforeseen expenses for the business. A closer examination of their pricing reveals charges for onsite work and a lack of services outside regular business hours. However, technical issues don’t adhere to a schedule, making this approach less transparent and potentially detrimental to the overall customer experience.
The question arises: Is it advisable to enroll your business in a program that misrepresents these fundamental facts?
Break-Fix vs Managed Services
To summarize the difference between break fix and managed services:
|The Break-Fix Scenario
|The Managed Services Scenario
NetAccess gives you comprehensive reports every month and quarter to show work performed, identify issues, and support optimized IT budgeting (as requested by clients).
What to Budget?
When considering a budget, it has been our experience that budgeting is an interesting artform, but there are some practical truths for example in any given event that certain businesses are lighter than others, and some are more heavy even in like/similar industries. That is why we always do a network assessment, and find that some combinations of per user fees per month is most applicable to provide a satisfactory level of service matched to an appropriate budget.
Budgeting $125 to $200 per user per month in most cases provides enough revenue to have enough technicians to provide a decent level of service; if corners are not skipped (having someone available to answer the phone, do regular maintenance, stay on top of security, check backups and be there to support your infrastructure 24 x 7 – not when it’s just convenient for them).
Our MSP program for example provides an all-in IT support and monitoring/alerting and management practice and we regularly evaluate in an open and transparent engagement with our clients. Upgrades and projects are always quoted in advance and based off an hourly rate. Once completed the project is rolled into the regular monthly rate and annually reviewed. Case load and level of activity is evaluated annually.
Some factors to consider:
There are some economies of scale, that larger businesses can get a smaller per user rate as some tasks apply to all users.
Some clients want monthly updates, quarterly updates or weekly phone calls.
Some clients are very straight forward offices with a standard suite of office applications, some are a high level of mission critical services, some area blend.
Some clients have legacy and old equipment that haven’t been maintained properly and require a higher level of monthly maintenance. Once the environment gets under properly management, the dreaded “I can’t function” type calls reduce and business interruptions become very few and far between.
Get your Network Assessment (Value!)
If you would like an evaluation, we typically charge for a Network Assessment but waive this fee should you consider working with our team. This Network Assessment is useful we find even to provide businesses with some third party independent view on work being done, the status of patching, virus and security protection. It also can be useful to help shine some light on problem areas before they become very large business interrupting areas, even to be shared with your existing break-fix team.
We often work with an existing team in compliment where we have some broader areas of expertise or very specific skills to compliment your team, provide some overlap and redundancies and enable a single IT technician to get a break for holidays without business risks.
If you are interested, please reach out to us via email or call us 905-524-2001 for a free consult. We’d love to chat in person about your business and learn what your pain points are. We would love the opportunity to become part of your solution that helps you sleep better at night.
Minimize stress, maximize success.