Budgeting for IT with an MSP Provider
We were asked recently to quote on a local business and although they had an IT team engaged, they indicated that they were not happy with the speed and level of attention to their business. This business had 40 computers and about 10 fulltime users and a compliment of rotating users.
One complaint was that they were transitioning email from POP to Office365, and it was taking months.
Another complaint was that they felt their IT team was scarcely present and wondered why they were not being responsive.
After quoting, they asked us to verify the price as they were currently paying $1600 a year for IT services. For this $1600 a year (YES per Year!) they were supposedly getting:
|Phone, Email and Remote Support (See Below)
• Monday to Friday, 8am – 8pm
• Saturday 9am – 12pm
• $90/hr Onsite Service
• Urgent Response Time within 2 hours
• UNLIMITED Block of hours
• Courtesy loaner ServerPhone, Email and Remote Support
– Monday to Friday, 8am – 8pm
– Saturday 9am to 12pm – Remote Support Only**
– Block of hours are valid for a 12 month term or when hours are used up
– Auto-renew of contract at end of term
– 3 months notice required for plan cancellation
– Weekend onsite service based on techician availability (Overtime Rates Apply)**Hardware, software & delivery costs not included. Dispatch Fees not included.
Plans are reviewed every 12 months and subject to change.
So from our point of view, taking an average price of $40,000 to 60,000 per year for an IT technician, how many clients are needed to support this technician, not including rent, tools, travel costs and a small bit of profit. Just looking at the cost of an IT technician to provide remote support would require 32 businesses. Each business with 40 computers needs at least 10 hours a month likely just for patch verification and virus/network performance review. Add in a few servers which likely need 4 hours or so each, so this business needs about 18 hours a month for proper IT maintenance.
So 32 clients at average 18 hours per month is 576 hours. Most MSP’s don’t bill out more than 60% of tech time, which would be about 100 hours per month. How can they offer UNLIMITED block hours when they need 6 times the technicians to handle basic IT properly?
The answer is that they can’t provide the level of service that is required at that rate.
Who is checking the backups? Who is test restoring to ensure that business continuity exists? It isn’t happening!
So their IT supplier just doesn’t have the time to do proper remote maintenance. This means that business risks are increasing by involving themselves with an organization that prices their IT maintenance in this fashion and the end result will be unexpected billing as it just isn’t possible to support that many clients with 1 technician and provide any level of decent service and response; which is exactly why the business was out shopping.
Another take on this IT supplier’s strategy is that this is just a cleverly designed Break Fix company and the business would end up being nickeled and dimed. Looking closely at their pricing, they charge for onsite work, and don’t provide service outside of business hours. Things do not usually break on a schedule. This isn’t really best representing themselves or this business and isn’t being truthful; the customer experience suffers as a result of these tactics.
Do you really want to put your business under a program that misrepresents these basic facts?
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).
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 $75 to $150 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.
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.