You’ve heard the term bandied about in various contexts, but what are managed IT service providers? Can they really help rationally reduce your business’ operating costs, as is claimed?
A managed IT service provider is a company offering vetted IT services for your business/product on a long-term, short-term, or subscription basis. They do it in multiple ways, including offering options to provide their talent on-demand at your location for support, or doing so remotely. Companies make a variety of managed IT service options available for you to cater to your business requirements appropriately.
Do businesses need MSPs?
Almost all businesses today require IT infrastructure and support. While some organizations have internal IT teams, some don’t. Now, let’s say your company does. Even in that case, you can benefit from MSPs by offloading a large chunk of your tasks to them, so that your internal teams can focus on other essential tasks that directly impact your growth.
Hiring a suitable provider provides businesses with access to the newest technology in your industry without worry. Also, evaluating the risks, you’re more likely to benefit from having a managed IT service provider take care of their IT on a long-term basis than going about searching for a suitable company in the case of a business outage or emergency.
How do Managed IT Service Providers (MSPs) help in reducing your operating costs?
Businesses are obligated to keep their income and expenditures balanced.
Keeping in mind the costs involved in hiring, managing, maintaining, supporting, growing, and developing employees, it becomes a viable option to make use of managed IT service providers for your IT processes, especially if yours isn’t a software development or support company.
MSPs significantly reduce your operating costs in a number of ways, including the following:
1. Reducing Onsite Hardware Requirement
With Managed Service Providers (MSPs) offering cloud-based services, your business can run efficiently with less hardware on site, such as servers, storage devices, and others. Additionally, as MSPs handle the updating and maintenance of these devices, you won’t have to worry about those responsibilities either. For more on this, read our post on Cloud Computing.
2. Lowering overhead costs
Thanks to their partnerships with various vendors, MSPs can help you save significant sums on necessary devices and technologies, including cloud service platforms. It’s more like a subscription service you’re paying for. Instead of spending scores of money on incident and risk management and business process quality issues, you’re paying an MSP to take care of it regularly for you.
3. Improving budget forecasts
Hiring an MSP is like hiring a handpicked, qualified force of professionals for your tasks. Owing to their knowledge and expertise, they can help you improve your budget forecasts by comparing them with the optimal spend for businesses of your size and kind. For this, they’ll inventory your current infrastructure, consider your future requirements, and make recommendations keeping in mind your plans for digital transformation.
4. Preventing costs due to data breaches
A 2020 report from the Ponemon Institute and IBM Security revealed that the average total cost of a data breach, up to that point, had been $3.86 million. Would you be willing to pay this sum should an untoward business incident happen at your company? You’ll have no choice but to do that, right? Luckily, there are MSPs that can offer to create contracts and service level agreements that help recover the whole/part of the cost involved. Much like insurance. Meaning, you’ll have a chance to share this cost between you and the MSP.
5. Lowering downtime costs
With proactive security, your business stands to lose way less on productivity.
According to a Gartner study, the average cost for a downtime hour is roughly $300,000. Now, even if the costs were lower for your business, your business would still lose money on downtimes if there need be any. Considering how MSPs monitor your security 24/7 without even needing your direct involvement, you can thwart security threats in a fraction of the time it would take you if you were to do it alone.
6. Lowering employee productivity costs
Mundane work can bring employee productivity down significantly. By hiring an MSP, your staff will be able to spend more time fixing the more pressing issues rather than investing in strategic implementations. This way, your business gets more time to focus on its growth drivers.
If you ever feel like calculating your productivity cost in exact numbers, here are the formulae:
Productivity cost = E * % * C * H
- E = number of affected employees affected
- % = percentage of people affected
- C = employee cost / hour
- H = number of downtime hours
Revenue loss = (GR/TH) * I * H
- GR = gross annual revenue value
- TH = total annual business hours
- % = impact percentage
- H = number of downtime hours