Make vs. Buy

If you’ve taken a class or read a book on business strategy, you’ve likely come across the “outsourcing decision”. In this decision, a business compares the costs and benefits of producing a part or service internally versus the costs and benefits of paying someone externally to do it. For this decision to be accurate, all the associated costs and benefits need to be factored in. One of the hardest variables is the opportunity cost – what new product or service can my business not develop because it’s busy working on something else?

Implementing IT is a critical strategic decision for every business, and a perfect example of the make vs. buy decision. Every business requires IT services, but few specialize in IT. A business could choose to invest in building up their own IT expertise, but at what cost? How many business resources would need to be redirected away from the primary business to build up an IT team with all the necessary expertise? Would that diversion of resources help or hinder the primary business focus?

The advent of IT managed services gives businesses a flexible, customizable option for the IT make vs. buy decision. Some businesses may wish to offload all their IT functions. Others may wish to outsource routine functions while maintaining key IT roles in-house for strategic projects. Managed service providers give businesses the freedom to choose the right level of IT outsourcing to meet their needs. Let’s take a look at a few of the key areas where managed services can significantly improve results.

Buying the Right Technology

We’ve all felt it. We need to make a new purchase, whether it’s a car, a computer, or new flooring for a house. The new products are amazing, but there are so many options. How do we know we’re picking the right configuration for our needs? Search engines make finding the lowest price easy, but how do we find the best value, the right combination of features and price, for our specific needs? That requires either expertise and experience, or a lot of time searching the internet and doing research.

A managed service provider (MSP) manages the IT environments for hundreds of companies. Day in and day out, they have first-hand experience with which configurations work best for each type of user, which suppliers have the best quality and support, and how frequently technology should be replaced to avoid problems while still maximizing the return on the original investment. An in-house IT department doesn’t get exposed to as many combinations and configurations. When you partner with a managed service provider, you have a world-class consultant that can assess your current environment and recommend where to strategically invest moving forward, track existing equipment lifecycles and recommend optimal refresh rates, and when it is time to purchase new hardware, the MSP can help configure the right combination of features to ensure your business is getting the technology it needs without paying for bells-and-whistles that won’t help move your business forward. Once the new technology has been purchased, the MSP can help with the initial configuration and deployment to ensure the new technology you paid for is actually put to use.

Keeping the Technology Running

Humans can be irrational at times, even when it comes to IT. While we spend a lot of time and energy focusing on the purchase price of new technology, studies have shown that purchase price is only 20% of the total cost of ownership. The ongoing maintenance and support will cost up to 4X the purchase price, but does that get 4 times the attention as the purchase decision? Usually not.

The revenue model for managed service providers is based on a monthly fee to keep things running smoothly. Under the older break-fix model, more problems mean more revenue. Under the MSP model, more problems mean less profit, so an MSP has a financial incentive to keep your IT environment running as efficiently as possible. As employees join the company, move to different roles, or leave, the MSP can administer the user account additions, changes, and deletions to ensure each user’s profile is configured properly for monitoring, security, and updating. As part of your monthly service fee, the MSP will manage firmware, OS, software, and driver updates for the devices within your environment. If your contract includes security services, the MSP will also manage anti-virus, anti-spam, and other security updates to ensure you have up-to-date security defenses. With the increase in ransomware attacks in 2020, the need for cutting-edge security protection and remediation is more important than ever. The end result is a day-to-day IT process that is designed to minimize problems and keep you focused on your primary business.

When Problems Arise

Despite our best efforts, occasionally problems occur and the MSP needs to get your environment back in order quickly. MSPs offer several tiers of support, from 24×7 remote support to onsite support during work hours and even after hours if necessary. As mentioned earlier, MSPs support hundreds of companies, so in that rare case when you do have a problem, chances are the MSP has already seen it with another customer and already knows how to quickly remediate it. Additionally, because the MSPs support so many companies, they also have special relationships with the technology suppliers, allowing the MSP to bypass first-level technical support and immediately engage with second-level support to quickly resolve the issue. And MSPs can shift engineers from other projects to quickly resolve a problem at your company. Compare that to an in-house IT department that will see a certain problem infrequently, won’t have the clout with the supplier to get prioritized support, and has limited ability to shift resources during a crisis. An IT infrastructure managed by an MSP has the support resources in place to respond quickly to problems and keep your IT operations running smoothly.

The Virtual CIO

Strategic planning is critical for long term success. Do you have the in-house expertise for strategic IT planning? Are you thinking about investing in hybrid cloud infrastructure or leveraging Artificial Intelligence (AI)? How valuable would it be to have someone at the planning table who had already completed a dozen or more hybrid cloud deployments or integrated AI into business operations? Imagine the knowledge that could be gained.

With an MSP that’s already running your existing infrastructure, you have the ability to hire a “virtual CIO” that is familiar with your business, knows from experience which technologies have proven effective, and how to successfully deploy and integrate those technologies to benefit your business. Your MSP can help with decisions such as how to prioritize investments, how to handle technology transitions with minimal disruption, and where to avoid investing because the ROI isn’t there yet.  The MSP can help align your business processes and policies with the capabilities of the new technology to truly transform your business.

Putting It All Together

Your business is unique. Just as your products and services are different than those of other companies, so are your IT needs. Whether you want to outsource all IT responsibilities and use the MSP as your virtual CIO, or just offload maintenance and support to allow your internal IT team to focus on strategic projects, the managed services model gives you the ability to customize a solution that meets your unique IT requirements. This combination of expertise and customization is driving more companies like yours to shift to the Managed Services model. Are you ready to make the switch?