For many small and midsized businesses (SMBs)—especially those that don’t have a long history with technology—plunking down a fixed sum each month for managed IT services seems uneconomical. Decision makers usually wait for problems to crop up and address them—what we call a “break-fix” model.
This may seem like a cost-savings strategy, but statistics prove that for even newly launched businesses with new equipment, managed services are more cost effective, and we can prove it.
Think of it this way. If you purchased a car, new or old, that you depended upon to get you from place to place, would you drive it until it broke down, with no tune-ups, oil changes, or brake/tire replacements until it failed? Most people would answer a resounding “No!” Now, imagine that the car was needed not only for personal transportation but also to earn your living—you carried merchandise in it, used it to visit clients and more. The value of a proactive service and maintenance approach would become even greater.
Financial Benefits of Managed Services
With your company’s infrastructure and systems, the necessity for a managed service approach is even stronger. Managed services are proven not only to save money on computer repairs but also to minimize downtime, reduce infrastructure spending, boost employee productivity, and increase business innovation and agility.
One recent survey, from IBM, found that implementing managed IT services reduces server and network downtime by more than 85 percent. The study further found that organizations moving to a fully managed services model could achieve payback for their investment in fewer than six months, with the three-year ROI of managed services hitting 224 percent. Let’s see how such payback happens:
Downtime Reduction: Estimates for the cost of downtime vary, and a lot of statistics cite “big company” losses that seem unreasonable. Here’s a metric that isn’t.
Based only on lost sales and lost work time, and excluding recovery costs, replacement equipment and intangibles such as customer dissatisfaction, a firm of 20, with yearly revenue of $1 million and without managed services, could easily lose nearly $20,000 per year due to downtime.* That equates to $1,000 per employee, per year.
Reduced Technology Investment: Just like cars, well-maintained networks and systems run better for longer. Additionally, managed service providers generally implement “hardware reduction” techniques, such as virtualization, that reduce the amount of infrastructure needed. Per the study cited above, that savings equates to approximately $1,500 per user, per year.
User Productivity: With downtime essentially eliminated, and users freed from spending hours trying to fix problems themselves rather than risk the loss of their PC for days, productivity soars. One IDC survey found that user productivity could rise 20%, or more, across the board, excluding productivity gains from reducing system downtime.
Business Agility and Innovation
Without the intrusion of broken equipment and service calls, and with increased productivity at both the executive and employee levels, decision makers are better able to think strategically, seize emerging opportunities and increase competitiveness. These benefits are hard to quantify, but there are anecdotes all around the globe that support them.
To learn more about Carmichael Consulting Solutions managed services offering, tailored specifically to the needs of SMBS, please give us a call at 678-917-9671.
*Per IDC, the average company on a break-fix model loses 12.4 hours a year due to server downtime and 6.2 hours a year for network downtime for a total of 18.6 hours of downtime.
- A 20-person shop with an average payrate of $22 hour (the 2017 national average), will lose $8,084 in wasted wages due to downtime.
- Assuming the firm earns $1 million operating 52 weeks a year; an average of 40 hours a week, the profit in an hour of sales is $481.00. That pegs the sales loss for the average break-fix downtime at $8,942.