Managed Services

Understanding the true ROI of managed services

How do you decide if managed services are right for you? There are two main ways you can look at it – from a technical perspective and from a business perspective.

There are many technical reasons to consider managed services, from data security to improved business mobility. But in this article, we’ll be focusing on the business perspective. So how do you calculate your return on investment with managed services?

A lot more goes into calculating ROI than simply comparing dollars spent to services received. That’s not to say that those numbers aren’t important, or that they don’t have their place, but they won’t ever show you the full picture.

To really understand your return on investment, you also need to first understand the potential risks your business faces and what they can cost.

This article will cover:

Identifying and evaluating risks

As a CEO, you probably have a spreadsheet of revenue and cost projections. Your goal is to grow your profits while also protecting your business from potential risks.

Unfortunately, in this day and age, there are many different types of risks a modern business faces. A major supplier could go out of business, impacting your supply chain. Your CFO could experience a health crisis and be out of commission for days or weeks. Your network could experience a data breach.

Part of your job as CEO is to make sure you have a business continuity plan in place to respond to an entire array of possibilities like the ones listed above. But another part of your job is to evaluate just how likely certain scenarios are to actually happen and how much of your resources should be invested in their prevention and/or potential recovery.

Related: Everyday data disasters and how to prevent them

There are many different IT risks your business faces, from hardware and software failure to cybersecurity threats to natural disasters and other major catastrophes. And there are two main ways to deal with your technology, the break-fix method, and managed services.

Break-fix is exactly what it sounds like – something breaks and someone fixes it. Managed services, on the other hand, is a more comprehensive type of IT support that includes fixing things when they break but focuses more on proactive monitoring and preventative maintenance to keep your systems running smoothly.

Break-fix is usually a pay-as-you-need service, whereas managed services typically carries a fixed monthly fee based on your service level. From a purely technical standpoint, it’s easy to see that managed services is the better way to go. But in life and business, nothing is free and money is always a consideration.

So how do you measure the real value of break-fix versus managed services?

Measuring the value of managed services

One way to measure the value is with a simple cost comparison. Look at all the IT issues your business has dealt with in the last year and figure out what the full cost to deal with each issue individually would have been, then compare that total with the total you would have paid for managed services.

Unfortunately, that type of comparison only tells a small part of the overall story. Let’s break this down with a simple example. Your employee named Joe sat down at his computer this morning, turned it on and encountered the blue screen of death. You called a computer repair company who sent someone out to fix the machine. It took them an hour to fix it, so the face value cost of the repair was one hour of work from a computer technician.

But there are other costs that you may not be considering. The first and most obvious one is the value of time lost because Joe was unable to work until his computer was fixed. In addition to the hour lost resolving the issue, how long did Joe have to wait until the technician arrived?

With a managed services agreement, you should have a streamlined process for reporting problems. You should also have an agreed upon time period for your provider to respond and start working on issues. Without such a service-level agreement, you have no guarantee or expectation for issue response time. Which means you could wait hours or even days before someone is available to help.

To really understand the cost of the repair, you also need to consider the amount of downtime that occurred as a result. And to do that, you need to understand how much downtime can cost.

Understanding the real cost of downtime

So let’s take a look at what downtime really costs.

Do a simple internet search about the cost of downtime and you’ll find dozens of studies and reports. A recent Forbes article estimates that an organization loses an average of $100,000 for every hour their website is down. Another study estimates downtime can cost on average $5,600 per minute.

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“545 hours of staff productivity are lost annually because of IT outages. And it’s not just a matter of wasted time—enterprises spend also a lot of money trying to fix application degradations and downtime.” – Forbes

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In addition to impacting your revenue, downtime has the potential to impact your reputation and customer loyalty. The news is full of stories about data breaches and the businesses behind them. When you consider the cost of downtime you also need to consider how much your reputation – and the associated customer satisfaction – is worth.

Finding the right partner

The right managed service provider is not only able to help you with all of the issues above, but they are also a partner who will help you navigate any IT issues your business is faced with. And if the day ever comes where you need to respond to an incident, having the right partner by your side could be the difference that keeps you in business.