What is the True Cost of IT Support?
Prices for the IT support of business computer networks vary. It is important to know what you get when you pay for the different flavors of support available. Is one type of support really better than another and why?
This is a very important question and one that is not asked often enough by business owners. At the end of each fiscal year business owners look at their financials and see an amount they have spent over the past 12 months for their IT Support. Unfortunately, this is only part of the cost of supporting the computer network … possibly the biggest real cost of supporting your computer network is downtime.
What is the cost of downtime?
It is amazing how many mid-sized and small businesses do not have a solid plan for preventing “bad things” from happening on their computer networks. Some of these “bad things” (server/desktop crashes, firewall crashes, router/switch malfunctions) can take down an entire network for many, many hours. Hopefully, these major issues don’t happen frequently and most business owners do not think that they will happen to them at all. They categorize these rare instances as downtime, but downtime has another hidden component that is possibly even more costly than when the server crashes.
Does “downtime” occur only when you are down?
Not really, in fact, this is only a small part of downtime. When talking about your computer network, downtime is anytime when your employees’ performance is negatively affected by your technology. When your employees wait for applications to load on their desktops this is downtime. When employees wait for slow web pages to load on their workstations this is downtime. When employees wait for pages to print on the printer this is downtime. When employees recreate deleted and missing documents this is downtime.
When businesses actually start to track how much of this “hidden downtime” actually occurs in a week/month/year they begin to truly understand the real costs of downtime.
So, what is the cost of this “hidden downtime”?
Your Employee’s Annual Wages Plus Benefits = $35,000.00
Number of Weeks Worked Annually (Deduct Vacation, Paid Sick Time, etc.) = 50 Weeks
Weekly Wages = $700.00
40 hours / $700.00 = $17.50
If during a typical hour at work their workstation is a little slow (causing them to “wait” a couple of minutes) this translates to 16 minutes each day or 1 hour and 20 minutes over the course of the week. The weekly cost of these little minutes would be
$17.50 / 60 = $0.292 per minute
80 minutes @ $0.292 per minute = $23.36 weekly cost
$23.36 X 50 weeks = $1,168.00 annual cost
Times Number of employees = 10 could lose $11,680.00 or more due to these little “wasted minutes each year
Obviously, this does not include those times when there is actually down-and-out time when the server or other network resources have actually crashed and are not usable.
Number of employees 3 @ $20,000 / yr = $ 60,000
Number of employees 4 @ $35,000 / yr = $140,000
Number of employees 2 @ $50,000 / yr = $100,000
1 owner @ $80,000 / yr = $ 80,000
Total payroll Equals $380,000 / year
$380,000. / 50 weeks / 40 hours = $190.
2 hours @ $190. = $380.
8 hours @ $190. = $1,520.
2 hours X 12 months = 24 hours @ $190 = $4,560.
This breaks down to nearly $190. / hr. When the server goes down for a couple of hours and none of the employees can access network resources, this costs $380. plus the cost of the computer guys scrambling to fix the issue. If the business is down for an entire day, the cost is over $1,520. plus, plus, plus. If there is even one of these short outages each month, the business loses another $4,560. over the course of a year plus all of the added fees.
Annual cost for hidden down time $11,680. Plus annual server down time of $4,560. = $16,240
There are certainly additional fees and concerns with these “downtime” problems, but if you just take these two specific instances, the company will lose over $16,240., which is likely considerably more than what they would have paid for an IT Managed Service Support Company to Manage their network over the course of the year. This does not take into account the IT Service Company’s fees related to downtime. Further it does not take into account the negative impact on your clients not being serviced in a timely effective manner.
What about hiring a full-time IT person?
Some midsized and small businesses hire an IT technician as a full time employee of the company. These qualified IT techs usually make between $40,000 – $60,000 with benefits, bonuses and vacation on top of the salary.
Compared to the fee paid to an outsourced IT Managed Service Provider that companies will pay to outsource their IT Support this is a very, very expensive way to support a mid-sized and small business network. In some cases where a business grows to 100 employees or greater it might start to make sense to look at hiring a full time IT guy, but until then it is very expensive.
If you do pay your computer guys an hourly rate:
Business networks that are still supported by companies who use a break-fix methodology will generally pay hourly rates for services provided by these types/sizes of companies.
In the past, some firms allowed their customers to purchase blocks of time. Basically, the customer would pre-pay for 30-40 hours of time at a slightly discounted rate. Although this method of billing was easy for the IT company, most customers did not feel that this method of paying for services was in their best interest. Few businesses use this method of paying for their IT Services.
The Last Thing You Want Is A Flat Monthly Fee – Right?
Managed Service Providers offer flat monthly fees for their services. A Managed Service Provider is continually monitoring your business network to prevent downtime issues from occurring. If there are no problems with your network during a month or over the course of several months that is awesome. This is the ultimate goal, right? You want to walk into your office and have your technology available to help you meet your business goals. You want your employees to do the same thing. Your computer network and surrounding technology should be like lights, water and heat; they should just work when you turn them on. Of course this is a little over-simplified, but this is the ultimate goal!
IT support is a cost of doing business and should, if it doesn’t already, have a line item on your monthly business budget. Your company’s monthly fee for IT support is not only to keep it in business in the event of a disaster, but is as important for your Managed Service Provider to proactively maintain best practices striving 24/7/365 to keep you running at peak efficiency, minimize downtime, reduce your risks of security threats and data loss to their lowest possible levels. In essence, to make your business the very best it can be, technology wise, 24/7/365 which is our ultimate goal!
It is important to embrace the reality of today’s corporate environment specifically in the area of business IT. Today’s business focuses on the requirement of having effective technology in order to be viable in today’s business world. By embracing this fact, a business takes a giant step forward into continued corporate viability and being the most effective business they can be. Doing so helps business accomplish maximum profits and minimum expenses in virtually all areas of business affected by business’s IT quality level, which are virtually all areas of business.
Simply, There Will Be A Cost For IT Support, But At What Cost?
There is financial risk to your company if you pick the wrong IT Service. If you are currently using a break and fix IT support concept, see how expensive it can be.
Look at your true IT costs over the past year. Include IT support expenses, efficiency factors (hidden downtime and actual downtime) employee’s time stifled because constantly dealing with computer or networking issues - small or large. All of these instances of productivity not being 100% because of computer or network issues are like money falling out of the business’s pockets, they are costly and preventable. Saving a penny while a dollar runs out the back door is a poor way to manage your IT expenses.
Whether these funds are divided into consistent, predictable monthly fees you can count on to budget monthly expenses or whether you pay nothing for a month and then pay thousands the next month you will end up paying for your IT Support. It is simply an expense of doing business. Like all other budget items wouldn’t you be better off budgeting a monthly number, instead of never knowing what your IT cost will be?
It is simply the cost of doing business.
What can you expect to pay for Managed Services Support?
As you might imagine, the flat monthly costs for managed services range from one company to the next. Most of these companies charge per device and include 24/7 remote monitoring, remote maintenance when applicable and on-site maintenance and support when necessary.
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