How Much Should Managed IT Services Cost Your AEC Firm?
A lot of architecture and engineering firms we talk to want to know how much they should expect to pay for managed IT services. One size never fits all, so it’s a difficult question to answer. But today we’re explaining the general cost of services and sharing some examples that should help you budget. In California, you can expect to pay between $99 and $300 per user every month. That’s the short answer, and of course, there are dozens of variables and factors to consider.
PRICING FACTOR 1: RISK
The first thing to consider is the amount of risk your IT partner takes on for your business. As soon as your contract is signed, shared liability is present, and risk is assumed. Managed IT services have a flat monthly fee, so your IT firm is just as invested in your company’s IT environment as you and your employees. Every project and plan need to be proactive and preventative, not reactive or in response to some emergency.
You might be more familiar with other IT models, where support people charge by the hour or where you hire and train an IT person to be on staff full time. This creates different motivators because more work equals more money. There’s no incentive for an efficient, risk-free IT environment. With a managed IT provider, you will need a true partnership with an equal investment on each side.
Risk Factors in Your IT Environment
- Lack of good or inconsistent backup of your critical data
- Lack of Antivirus program or up to date virus protection on every endpoint
- Lack of Anti-Spam filter for your email
- Aged Hardware no longer supported
- Aged Software no longer supported
- Lack of consistent server, application, and workstation patching
Any of these risk factors contribute to a significant downtime or a critical data loss event, which will cost your company and your IT partner significant time and money to fully recover. In extreme cases, recovery may be impossible. (LINK TO RISK POST). This is a major reason why managed services providers often offer managed AV, managed Anti-spam, server and workstation patching, and managed backup solutions as part of their base package.
Additionally, managed service providers may require that you remediate any end of life/not supported hardware and software issues as part of your onboarding process. This is a good sign that the provider knows what they are doing and will be proactive in preventing bad things from happening in your IT environment. Your infrastructure will become more stable, reliable and secure, and your employees will be happier and more productive, increasing your firm’s bottom line profits.
PRICING FACTOR 2: RESPONSE TIME / SLA
Response times and SLA (Service Level Agreement) also contributes to pricing levels. Here, the pricing is not always directly proportional. The providers with established SLAs do not always charge more, and neither do the companies with shorter versus longer guaranteed response times. Below are a few best practices to make your decision easier:
- Ask about whether your current or prospective provider has established Service Level Agreements. You should only work with a provider that does.
- Look for providers with guaranteed response times of ONE hour and guaranteed resolution time of 72 hours or less. With a one hour guarantee, 98% of all issues, not influenced by outside factors (power outages, internet outages, or other local disasters) are resolved within 1-4 hours.
- After-hours response times should be FOUR hours or less. If your plan does not include unlimited after-hours support, you should get a CALL within four hours of the issue occurring to approve further action for problem resolution.
PRICING FACTOR 3: SCOPE OF MANAGEMENT
To understand the scope, let’s look at the definition of managed IT services.
Managed Services is the proactive management of an IT (Information Technology) asset or object, by a trusted IT partner, typically known as an MSP, on your behalf. The operative distinction that sets apart an MSP is the proactive delivery of their service, as compared to reactive IT services, which have been around for decades (MSPAlliance)
Based on the definition above there are two models of management that exist:
FULLY MANAGED SERVICES
In this model, your IT services partner manages every aspect of your IT environment from the endpoint to the server, local or cloud. Your IT partner becomes your internal IT department and is involved in every decision from beginning to the end. You get everything from collaborating with leadership on the strategic IT business plan to helping install the latest patches on laptops and desktops.
PARTIALLY MANAGED SERVICES
In this model, your managed services provider works closely with your existing IT resources to manage specific sections of the IT solutions matrix. Their role may be limited to providing support for only the most complex of IT issues, or it could include all of the daily maintenance tasks, such as backup administration.
Both of these models are valid and are used with equally great frequency today. However, the FULLY managed model is more successful and creates better value for your firm. The PARTIALLY managed model has some potential problems:
- The managed services vendor reports to your IT resource (non-C Level) and not directly to you. This is probably the biggest reason why partially managed services relationships don’t last very long, and the two items below are closely related if not directly caused by this one. On the surface, this makes perfect sense. You trust your IT department to manage your IT provider/vendor. But you put your provider at a disadvantage. You may have noticed I used “vendor” and not “partner”, it’s because this creates a CLIENT / VENDOR relationship and not a true PARTNERSHIP, which decreases the value you get from the relationship. In this scenario all communications between yourself and the provider, in both directions, are filtered through the IT resource, and become subjective to THEIR Most system admins and engineers are TACTICAL and not STRATEGIC, and therefore will only understand the tactical aspects (WHAT?) of the request and not the (WHY?).
- The vCIO does not get involved in a decision until it’s too late. The vCIO is a strategic advisor you usually get with every MSP account. These resources look at the business as a whole and provide IT recommendations based on many factors relating to your firm’s goals. They can point out factors to be considered when the decision has been made. They can bring in additional resources, like Subject Matter Experts, to increase the likelihood of a proper decision being made. Unfortunately, when the relationship is set up with your IT guy in the middle, you rarely get this benefit. Ninety-eight percent of the time, your vendor does not get involved in the decision process, they get involved after. They are told what to do and asked how much it will cost. At that point the question of “Why are we doing this?” no longer applies, it’s only “what are we doing and when?”
- There is always a conflict of interest. As a smart business owner and leader, you understand that not everyone who works for you has your firm’s best interests in mind. People have their personal ambitions and large egos, which often get in the way of making the best decision for your business. As time goes by, your IT guy may become threatened by your managed services provider. Their team works faster, is more efficient, and costs much less every month than his salary. Job security becomes his primary concern. Finger pointing begins after every small issue, and the relationship is doomed.
In order to get the full value from your relationship with your managed services partner and to eliminate the issues above, you should make your MSP report directly to you and be a fully functional member of your IT team. This means being on the same level as your other IT resources, and contributing equally in the decision-making process. You will need full “buy-in” from your existing IT resources before you start. This is the time when you may discover who is truly a team player and puts the interests of your firm above their own. In some cases, this would mean making a pivot to a FULLY MANAGED model.
PRICING FACTOR 4: ENVIRONMENT COMPLEXITY
Pricing will depend on whether your environment is perceived to be more complex than the “standard” or “baseline” environments. There is no definition for what that baseline environment looks like, and many managed service providers can’t really explain it. The following can be taken into consideration when evaluating the environment complexity, but the exercise is really more of an art than a science.
- How many workstations and servers are there?
- How many laptops, tablets, and smartphones?
- Is WiFi configured for guests and internal users?
- What services are provided onsite and in the data centers?
- Is support for personal/home computers required?
- How many cloud applications are used?
- What are business line applications used?
- What is the remote site connectivity solution?
- How many additional sites need to be supported?
- How many network devices, switches, routers, and firewalls are there?
- What is the current backup system in use?
A well-designed and maintained IT environment, no matter how complex, does not increase the RISK all that much, and therefore should not affect pricing that much either. Listen to the recommendations your managed services partners are making. They have your best interests in mind, and it could lower your monthly IT support costs, providing a bigger return on your IT services investment.
I hope that this post will help you understand how managed services pricing really works. Remember that each provider will differ and the only thing more important than comparing prices is comparing services. Asking the right questions, in the beginning, should greatly increase your chances of finding the right partner.
Questions to Ask Potential Managed IT Service Providers:
- What services are included by default with my agreement?
- Do you have a defined Service Level Agreement (SLA)?
- Do you include onsite support and vCIO services as part of the agreement?
- Do you include 24 x 7 support in your agreement?
- How do you ensure proactive management of my systems?
- Is patch management included all the way to the endpoint?
- How do you ensure everyone on your team knows and understands our environment?
- Are there any systems in my environment you are unable to support?
- How often do you meet with me to review my business needs, and ensure it’s in alignment with IT?
We’d love to answer these questions about our own services.
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