Are managed services really worth the cost? Do they offer a reasonable return on investment? The short answer is yes—usually. The long answer, however, is it can depend on a number of factors that we are here to help you nail down.
Whether managed services benefits outweigh the risks will come down to your company’s needs and your provider’s offerings. To have a successful managed services relationship, you need an accurate understanding of your organizational needs and budget, and you must clearly communicate these needs to your managed service provider (MSP).
To help you decide if hiring a managed service provider is the right choice for your business, let’s compare the costs, benefits, and risks of maintaining an internal IT team versus outsourcing essential tasks.
The Cost of Having an Internal IT Team vs. Outsourcing IT
Working with an MSP is widely used as an alternative to hiring internally, so it is important to first understand the cost to hire and maintain IT staff. According to Robert Half Technologies, a system administrator’s 2021 midpoint salary is $98,000 in Denver, CO ($124,000 in New York, NY).
That is only your system administrator’s salary, which does not include the costs of training, benefits, bonuses, and other employee-related expenses. These other costs can add an additional 30% on top of salary. For our Denver example, one system admin will cost over $10,000 per month.
What kinds of managed services benefits can $10,000 per month get you? Well, that depends on your needs, but it is quite likely that you can find an MSP to deliver the same service at a fraction of the price. Most MSPs price their plans between $110/user and $180/user per month. Say your MSP charges $140/month, you could service 75 users per month for the same price as one system administrator in Denver.
This is only the human cost of IT, there are a number of business factors that will impact the cost of working with an MSP. When it comes to managed services, what you pay is what you get. Pricing depends on what you expect from your MSP in order to meet your business’s needs.
The Risks and Benefits of Handling IT Internally
Internal IT Benefits
- Engineers are typically on site to assist during business hours, which is helpful when you need physical repairs.
- You have control over the employee, including their work hours and their processes for supporting your staff and systems.
- Engineers are immersed in your corporate culture.
- End users know who they are reaching out to.
Internal IT Risks
- You are limited to the engineers you can afford, which might mean a limited skill set.
- You will likely need more than just one System Admin. to meet all your IT needs, which means another salary. (Remember, that $10,000/month? That just doubled to $20,000/month.)
- Vacation, after-hours support, and high IT turnover can be difficult to work around.
Managed Services Benefits and Risks
Managed Services Benefits
- For smaller businesses (under 100 users), the cost of an MSP will be considerably lower than a full-time employee.
- Your monthly contract covers the cost for managing and supporting your environment, so you get access to your MSP’s tools and resources without paying retail prices.
- MSPs have a large IT team with an extensive range of skills across different technologies, and this will be the team supporting your business.
- Many MSPs offer high-level CIO consulting to help drive your business and make strategic IT decisions.
- Most MSPs have a 24/7/365 coverage model so you won’t need to worry about coverage.
- Some MSPs are implementation partners that will be able to help with projects, and they already have a deep understanding of your business. For example, PEI is a Microsoft Gold Partner and can create demos so your team can trial ideas before purchasing.
Managed Services Risks
- You give up some control of your environment to your MSP who is likely to move your business onto their platform and toolsets.
- MSPs are not physically located in your office which means waiting for a resource to come on-site for and hands-on troubleshooting.
- The lack of in-office presence can lead to a lack of relationship between an MSP and your internal employees, though a good MSP will work to bridge this gap.
So, back to our initial question: Are managed services worth it? That is for you to decide. Consider the benefits and drawbacks of both IT models before making a decision about what is best for your business. If you want increased control of your organization, a physical presence in the office, and you are willing to pay for it, then hiring internally is the best option for you. However, if you are willing to give up some control of your environment to gain a deeper bench of IT talent and support that comes with a smaller price tag, and you want to work with a remote support team, then managed services is the best pick for you!
What Does Outsourcing IT Mean for My Internal IT Team?
A common misconception about managed services is that an MSP replaces your IT team. We are here to tell you this is not the case. Your IT team is a valuable tool that can support and boost your business; however, it’s difficult for them to do this when they are constantly bogged down by endless user queries and administrative tasks.
An MSP does not need to replace your IT Team. Rather, managed services can uplift your IT team by absorbing routine responsibilities. Instead of spending hours working on patching, backups, and security monitoring, your IT team can turn their attention to strategic projects that will ultimately drive your business forward. Let your IT team become an innovative piece of your business structure by removing the weight of general tasks. You’ll be able to see the difference and reap managed services benefits in the process.
Making Your Decision on Managed Services
If you find yourself asking whether a managed services provider would be worth the investment for your business, it is important to compare the pros and cons of each IT model with your business needs.
Every business is different and requires different levels of support from its MSP. Before meeting with potential managed services providers, have a clear understanding of your needs and budget so both sides can clearly communicate and plan.
And remember, hiring an MSP does not mean you have to let your Internal IT Team go.
