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Using managed services to get a handle on IT costs

For businesses looking to make or save money, there’s no shortage of technologies ready to help. Just as important as the technologies themselves however, is how they’re delivered. 

If your business wants to get a handle on costs while keeping its IT team small (perhaps having none at all) one of the most effective mechanisms available is managed services.

Managed services allow you to ‘offload’ specific IT systems or functions to a service provider, who then becomes responsible for implementing, managing and monitoring those systems on your behalf. It’s a popular approach, and from network management to telephony systems to entire infrastructures, the number of technologies available as managed services continues to grow.

How much can you save?

For small businesses, the biggest benefits of managed services are lower costs, higher reliability and better business focus. These stem from the fact that, wherever managed services are used, you don’t have to hire IT staff. This eliminates not only wage costs but training expenses and also what might be called ‘entertainment costs’ – the tendency internal staff have to invest in new technologies in order to expand their own experience, whether or not it’s right for the business.

Of course, exact cost savings will vary. As a rough guide, a typical 100-seat business is likely to find that the cost of a managed service and that of an internally provisioned solution is comparable (though they’re still likely to save on indirect costs, including management overheads).

For those with less than 100 staff however, the savings are far greater. Assuming that your business employs two full-time technology heads on typical salaries, you’ll save in the order of 50 percent.

Popular uses

The most popular use of managed services is server management, deployed by businesses that can’t justify hiring experts in everything from Microsoft Exchange to SQL.

Second is network management – from firewall and intrusion detection, to WAN performance and virus and spam protections. These require skill sets that are becoming more and more specialised, meaning that a managed services approach is a very efficient way to access the necessary expertise.

Third is help desk services and first-level support (usually bundled with server management). Solving user problems can be hard work. The attraction of managed support services is the high rate of ‘first call fix’ that can flow from having high-quality support staff on the end of the line.

Who does it suit?

One of the most important benefits of managed services is that they allow your business to concentrate on exactly that – your business. In this sense, managed services will suit any organisation that feels its time is better focused on its own services and customers, rather than managing IT systems. Managed services will be a particularly good fit, however, for professional and financial services firms and retailers, as well as businesses that are heavily reliant on IT and have mature business models.

One company we work with that has successfully made the switch to managed services is Enstruct Structural & Civil Engineers. Enstruct decided to move away from internally managed systems in order to focus solely on their business, which was fast expanding. The company now has a single point of responsibility for all their systems, and says that, with new desktops provisioned in a single day, they are confident in their ability to grow.

Another business making use of managed services is industrial battery supplier Enersys. With 30 staff and offices in Sydney and Melbourne, Enersys use us to manage their servers, network and support. General Manager Debbie Vivian points to system reliability as one of the biggest benefits, as well as the expert advice Enersys receives.

The dangers

It’s important to realise, however, that managed services aren’t necessarily a cure-all for IT services. The biggest danger is choosing the wrong provider. Managed services are usually delivered on a two or three-year contract. Partner with the wrong people and it’s guaranteed to feel like 10.

If you’re going to use a managed service be sure to select a partner with the same ethos about priority and urgency as your business. That’s as much about work ethic as it is choosing someone to whom your business will matter.

Secondly, don’t think of managed services as a ‘set and forget’ solution. While a managed service will be orders of magnitude easier than deploying your own systems, it’s still important to devote some resources to it.

At minimum, have a monthly meeting to provide feedback and seek solutions where issues arise. So much of the business value of technology stems from using it strategically, and it’s important to draw upon your provider’s expertise in this regard. Focus on business goals, rather than specific technologies.

When managing a managed service:

  • Examine the details of your agreement. Make sure that it’s comprehensive and meets your business goals. Remember that you can negotiate.
  • Examines your Service Level Agreements (SLAs). Your SLA will describe how well your managed service is expected to perform. Ensure that yours is strict, preferably with meaningful penalties.
  • Make sure that you receive detailed reporting. Managed services should be accompanied by as much reporting as possible – everything from uptime to usage.

A bright future

At the moment, the popularity of managed services is growing quickly. I’d estimate that around 50 percent of mid-sized businesses in Australia use managed services for their server and help desk needs. For smaller businesses, adoption has been even higher – up to 70 percent.

In the end, delivering reliable IT services is not rocket science. What it does require is discipline, process and the right tools. For those who can find a suitable provider, rapid deployment, predictable budgeting and lower costs are all strong incentives to pursue managed options. Many businesses have realised that they receive better value (and often better solutions) by making the switch.

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David Stevens

David Stevens

David Stevens is managing director of managed IT services business, Brennan IT.

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