Whether you’re already working with a Managed Services provider or considering outsourcing some of your IT needs to an MSP to cut costs, the potential return on your investment with any MSP is going to be a major part of your decision to either sign an agreement or run for the hills.
So, are Managed Services really worth the cost? Do they offer a reasonable return on your investment? The short answer is yes, but it depends on many different factors—some of which can be a bit complex to nail down.
Most importantly, a successful Managed Services relationship depends on you having an accurate understanding of your organizational needs and selecting the correct Managed Services Provider (MSP) to align with your needs and budget. Picking the wrong partner or misunderstanding what your business really needs will result in a poor relationship and ultimately a failed partnership.
Unfortunately, this translates to something along the lines of, “Managed Services are worth the cost if you find a good MSP who provides the exact services you need,” and that’s not a very helpful sentiment. To make this a bit clearer—and hopefully provide a more concrete answer you can apply to your specific situation—let’s discuss some of the influencing factors more thoroughly.
Comparative Costs of Outsourcing IT vs. an Internal IT Team
Managed Services is often used as an alternative to hiring internally, so understanding the cost of hiring and maintaining IT staff is important. According to Robert Half Technologies, a System Administrator 2019 midpoint salary is $94,000 in Denver, CO ($119,000 in New York, NY).
This doesn’t include training, benefits, bonuses, and other employee-related expenses, which can add an additional 30% on top of salary. For our Denver example, that ends up being over $10,000 per month for one Sys Admin.
Depending on your environment and your needs, it’s quite likely you’d be able to find a Managed Service Provider to deliver similar services at a fraction of the price. Most MSPs price their plans between $110/user and $170/user per month, which depends on several different factors from response times and whether they outsource their help desk, to if they’re available 24/7 and the skill level of their engineers.
However, this doesn’t always mean signing up for Managed Services is the right option for your business. There are pros and cons to each option.
Benefits and Risks of Hiring a Managed IT Service Provider
Hiring Internally for IT Needs: The Pros
- Typically, when you hire internally, the engineer is on-site to assist during business hours. This can be an advantage for any physical repairs needed or for management that prefers an on-site resource to remote resources.
- You have complete control over the employee, including their working hours and their processes for supporting your staff or systems.
- As an employee, your engineer is immersed in your corporate culture and end users know who they are reaching out to.
Hiring Internally for IT Needs: The Cons
- Depending on the number of IT employees you can afford to hire, your engineers might have a limited skill set in comparison to the large number of engineers at your disposal should you work with an MSP. It can be difficult to find a single Sys Admin who is proficient in everything you’ll need for your IT environment, which might mean looking at hiring more than one employee and significantly increasing your costs.
- Vacation, after-hours support, and high IT turnover can be difficult to work around as you are limited by your internal employees.
Choosing Managed Services Over Hiring IT Internally: The Pros
- Typically, the cost for the Managed Services contract will be considerably lower than that of a full-time employee depending on how big or complex your environment is. For smaller businesses under 100 users, this is likely to be the case.
- The cost for managing and supporting your environment—including a ticketing system—will be covered by your monthly contract. In fact, MSPs often use a slew of highly advanced tools to manage their clients, and you’ll get all the benefits of having these tools for your environment without having to pay direct-to-consumer prices for them.
- MSPs have a large IT team with extensive skills across a range of technologies. This means you always have someone who’s an expert to assist with each piece of your environment instead of relying on one system administrator to know everything “well enough” to get by.
- Many MSPs offer high-level CIO consulting to help drive your business forward and make strategic IT decisions. This means they’re not just managing your environment, but they’re helping you understand it better so you can make the best decisions for your business.
- You won’t need to worry about coverage internally as most MSPs have a 24/7/365 coverage model.
- Some MSPs are also implementation partners—they will be able to help with projects and already have a deep understanding about your environment. This is one of the questions you should always ask when evaluating a new Managed Service Provider. While it’s not a deal breaker if the MSP doesn’t have a project engineering team, it can streamline operations for an MSP who already knows your business and your strategies to be the one who implements new technologies.
Choosing Managed Services Over Hiring IT Internally: The Cons
- You’re giving over some control of your environment to a third party. In almost all cases an MSP will move your business onto their platforms and toolsets. Ultimately, you’ll have less control of your environment.
- Managed Services Providers are not physically located in your office, which means items that require hands-on troubleshooting would require waiting for a resource to come on site.
- The lack of in-office presence can sometimes lead to a lack of relationship between the MSP and your internal employees, though a good MSP will work to bridge this gap.
After looking at the benefits and drawbacks of both internal hiring and outsourcing, the question of “Is it worth it?” comes down to your business and what you value. If you want increased control of your organization, a butt-in-seat model, and are willing to pay for it, then hiring internally is the path for you. However, if you are interested in having a deeper bench of IT talent and support that comes will both a smaller price tag and decreased control over your environment—plus a support team that interacts with your business most often remotely—Managed Services is the best pick for you.
Picking the Right MSP to Ensure the Price is Worth it
If you choose to contract a Managed Services Provider, it’s important to do the research and determine the specific needs of your business before selecting a partner. Once you’ve created a list of things you need from an MSP, you can start searching for and evaluating MSPs to see which best aligns with those needs and your culture.
Here’s a good list of key evaluation questions for choosing a Managed Services Provider. These questions will help you decipher between an average MSP and a great MSP. However, there may be more specific questions that make your organization unique that a provider must be able to cover. Here are a few examples:
Question 1: Does your organization have a large number of Mac computers?
Many MSPs are built around Windows as it is the preferred professional platform. However, organizations that have design/specialty divisions typically are running Macs. If that’s you, make sure your MSP can cover and service them.
Question 2: Do you have a specialty application within your organization that is the lifeblood of the company?
If you have specialty applications, you’ll want to make sure any potential MSPs are able to work with them. These highly specialized MSPs may come at a higher price, or more general MSPs may charge more for time with a highly specialized engineer working on this application for you. For instance, many healthcare offices run Compulink and need a provider who can service and manage it.
Question 3: What can you live with in terms of response time from an MSP?
This can be a big cost differentiator. If you need a live body to answer the phone immediately every single time, you’ll find yourself paying much higher prices. Most MSPs have ticketing systems where you send in an email with an issue and they have SLAs on how long it takes them to respond to it.
Question 4: What type of afterhours support do you need?
If you are looking for 24/7/365 end-user support (fully outsourced IT), you are going to be paying a much higher rate than if you are looking for just 24/7/365 systems support (co-managed IT).
The difference is that MSPs who are covering only systems support are responsible for consistently monitoring and performing administrative tasks on these systems to ensure they’re running properly. If any systems go down, their engineers will be alerted immediately and jump in to ensure it’s fixed.
However, this group of processes and tasks takes significantly less time than fielding frequent calls for password resets or similar end-user issues, which is why fully outsourced IT plans tend to cost significantly more depending on how many users you have.
If You’ve picked the wrong MSP
After you’ve gone through your checklist and vetted each MSP, you can usually rest assured you’ve done your homework and picked the right one for your organization.
But what happens if you’re already in a partnership with an MSP and aren’t sure if they are right for you? How do you know if it’s time to leave? Here are a few things to look for when determining if it’s time to call it quits on your current MSP:
- Service Breakdown: If the services your MSP provides are no longer (or never were) satisfactory for your business, then it’s time to move on.
- Communication Breakdown: If you feel like the communication between you and your MSP is lacking, that could be a sign it’s time to move on.
- Lack of Cybersecurity and Backup Plans: If your MSP has not discussed an internal plan of security as well as their own security practices, it’s time to find another provider.
- You’ve Outgrown Them: Sometimes your MSP just isn’t ready to scale with your organization. If you’re growing too big for your MSP to catch up, it’s time to move one.
If these issues above plague you it’s time to break your contract and move on to someone who’ll have your company’s best interest in mind.
Making Your Decision on Managed Services
If you’re asking whether a Managed Services Provider would be worth the investment for your business, it’s essential to weigh the pros and cons of each IT model and compare them to the priorities of your business.
Your MSP should feel like an extension of your organization that helps you resolve the smallest end-user issues as well as help drive you toward becoming more secure and efficient with your IT strategy.
If you’re already working with an MSP and this is not what you are getting, then it’s likely time to go back to the drawing board!