Your IT provider is there whenever you call with a problem and always responds within the promised four-hour window. They have an impressive list of certifications and you can tell they are good because whenever you have had an issue, like a security breach or a crashed server, they have managed to eventually fix it, albeit for a big fee. What more could you ask for?
The answer is plenty.
Lots of IT providers still work on a time and materials basis. They sell you hardware and software along with a service level agreement that lays out the terms of what they will do and how quickly whenever you call to report a problem. However, this is an old business model that many savvy businesses are abandoning because new models offer higher quality services for the same or less money.
Here are three important differences between the old “break/fix” model and the new approach, managed services from a managed services provider, which we use at STF Consulting:
- Shared success. Under a time and materials model, the IT provider starts making money when you stop – when your IT is not working.
Under a managed services model, you pay a flat monthly rate to make sure your systems are secure and operational. As soon as something goes wrong, it starts costing both you and the IT provider money because they have to devote resources to getting it fixed. So they have a strong incentive to work proactively and fix issues quickly.
It pays for a managed services provider to continually refine its processes, be more efficient and stay on top of the latest security developments that in turn help you as well.
- Predictable costs. When you work with a traditional IT provider, some months can have low IT costs. But when an issue occurs, the pain comes in two ways. First is in the unpredictable fees the IT provider will charge to first identify the problem, then come up with a game plan, then implement it. The second big bill comes in the cost of the related downtime, which according the Aberdeen Group averages $163,674 per hour. That clock starts the minute your system goes down.
A managed services provider works to prevent all that and the cost of downtime is on them.
- Individual attention. Because it’s hard to predict when clients will need services, traditional IT providers need a lot of clients so resources go to sales instead of current clients. When clients find their services costly and unpredictable, they leave. That’s why shifting from break/fix to services is a big trend among IT service providers, according to CompTIA, an industry association.
When the IT provider is charging a flat monthly rate, they can predict their costs and don’t need to be constantly out recruiting. They make money by keeping current clients happy and tailoring their systems to meet individual company needs. Even a small company is a big fish to managed services IT firms.
When you’ve been doing things one way a long time, it’s easy to get complacent. But there is a better way to buy your IT services today and that’s through a boutique IT firm set up to succeed when you succeed, not when you fail.