In this blog post, we'll cover the three primary ways by which businesses pay for their IT management and support, and then outline the pros and cons of each.
- Internal
- Break/Fix
- Managed Services
Internal IT Teams
In the most traditional of enterprises, all IT support and strategy is hired and managed internally. The CIO, Director, Managers, developers, and front-line staff are all salaried, W2 employees of the company. The Internal IT structure does offer companies the greatest control and oversight of all technical operations, but is significantly limiting in two ways:
- IT personnel are not cheap. A CIO, Infrastructure Director, Software/Web/Applications Director, and their managers, developers, and support staff can easily cost $100k/month in payroll. Most businesses cannot afford this luxury and must seek other means of IT services.
- Organizations are limited to the knowledge and expertise of their in-house team. Internal teams are typically specialized in their skillsets and are not exposed to the broad range of support and consultation responsibilities of their MSP brethren.
Break/Fix Support
A lot like an automotive mechanic, break/fix teams are called only when something breaks. They are typically paid hourly and contracted only for a specific job. Typical rates will be somewhere in the $150-$250/hour range, depending on the complexity of the broken system.
Break/fix support is great for micro businesses who may not need much help outside of initial systems implementations and upgrades; however, there is one major issue: The break/fix IT company only gets paid when something is broken, which is an inherent conflict of interest if you are paying them to fully rectify an issue.
Managed IT Services
Many MSPs (What is an MSP?) who have been in business for some time started out as break/fix outfits and successfully evolved into Managed Service Providers. Others, such as Scalable Business Technologies, started out directly as MSPs by leveraging the MSP experience of their founders.
MSPs provide most of their services as a package deal for a flat monthly fee, allowing services to scale up or down with their clients' needs. Fees typically range between $100-$150/device/month. For the vast majority of small- and medium-sized businesses, this is far less than the equivalent payroll burden of hiring on their own IT staff.
For example, a 25-person company would expect to pay somewhere in the $2500-4000/month range for their total IT services, including all aspects of guidance, support, and vendor management. Additionally, MSPs will usually deploy various softwares - antivirus, remote connectivity, and monitoring solutions, for example - to their clients as part of their service package.
For that same hypothetical 25-person company, the payroll cost of an IT leader and one tech support employee would be 3-5 times the cost of a managed services contract.
While hiring an MSP does make sense for most businesses, it would not be fair to publish this post without at least a brief discussion of who it doesn't make sense for:
- Large Companies. Since MSPs charge either by headcount or machine count, the billing structure will rarely make sense when scaled out past a few hundred employees. For larger companies who have the budget to hire internally, it does indeed make the most sense to do so.
- Tech Companies. This may seem like a no-brainer, but it is worth mentioning. If your small- to medium-sized business is primarily comprise of techie team members who are 100% technologically self-sufficient, then it may make sense to hire a senior IT leader and nothing else. However, even in this scenario, that same leader may seek the assistance of an IT company to assist with things like network management, cyber security, disaster recovery, security auditing, and light tech support.
If you are considering hiring or replacing your MSP, be sure to check out Scalable Business Technology's easy-to-use 12-step guide: How to Interview an MSP.
"I am totally against change. I am passionate, though, about adaptation and evolution."
-- Michael Kouly