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What Do IT Managed Services Really Cost?

July 20, 2015

The best managed service providers have a few goals: increase efficiency, reduce downtime, provide a stable environment, and allow your engineers to innovate.

 

Understanding both the cost and value in outsourcing managed services and will assist you in your journey toward IT optimization and success.

 
Delivering Labor and Saving Money: On-Site Vs. Remote

 

Labor can be delivered in several ways. On-site, off-site, or even a hybrid of the two.

 

In general, on-site managed services have a higher cost. In these cases a premium is paid on both proximity as well as utilization rate. On-site labor typically has a 1-1 relationship and provides oversight, monitoring, and management for that single customer.

 

Remote labor saves on actual costs. The ability to source those individuals from a larger candidate pool plus the ability to spread those resources across multiple customers allows for greater control on fixed costs.

 

Is one better than the other? That is entirely dependent on your needs. Your unique scenario may dictate which model is required. But if it’s a matter of personal choice? You may need to evaluate if the additional costs are worth your comfort-level.

 
On Technology Complexity

 

Another driving factor in cost is the underlying technology’s complexity.

Well-defined technologies with appropriate documentation is easier (and therefore less costly) to support. Non-defined or ill-defined processes and outdated technologies can lead to a higher cost point.

 

Additionally, technology with physical (and logical) moving parts also increase the cost of managed services. The complexity here is tied to higher failure risks, leading to requirements where a well-trained, support resource is needed to reduce impacts to your network.

 
Labor Contribution Times: Tools for Success

 

 

Many managed services organizations leverage open source tools to reduce their cost to serve.

 

Additionally, collaborative efforts can reduce operational overhead. This approach may reduce the capital cost to install these tools and may reduce the variable cost to scale.

Ultimately, managed service providers calculate cost (and your quote) on projected contribution times. But that’s only half of the equation you need in evaluating an outsourced managed services team.

 

The other half is in the benefits you receive beyond reducing business losses, downtime, and achieving a stable environment. The ability to focus on innovation time can redefine the impact your IT projects have on your business. The extra time your engineers have will ensure projects are delivered on time, in scope, and in budget.

 

 

 

 

 

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