Who should use IT Managed Services?
It continues to surprise us when we see the numerous tasks that a single IT person is expected to achieve. When compared to America, it seems like Australians and Asians do it all! A person in IT support in Australia can often mean everything from the basic help desk to supporting legacy software to major infrastructure projects. Our view is that many companies with locations in Australia are either underfunding their IT or are not taking the most cost effective and strategic approach.
As an example, one of our clients had two full time and one part-time staff in IT to support around 40 people. They did everything from fixing telephones and PCs to writing and maintaining software for core of their business. They were acting as generalist and doing a mediocre job at best. Mediocre in that PC’s were running slow, printers would often stop working, data back-ups were not set-up properly and core business software was running poorly. So everything was running, but everyone was complaining. By bringing in specialist in a managed services arrangement, they were able to reduce their cost by 50% while getting improved results. No more wasted time waiting for IT functions to work.
Getting an external provider is an excellent way to control labour costs. This frees up resources to work on the business.
What is managed services? (below comes an association of Managed Service Providers, called MSP Alliance):
A managed service is a proactive management of an IT (Information Technology) asset or object, by a third party on behalf of a customer. This is different from the reactive service that has been around for decades. Typically, Managed Service Providers will have the following:
- Have some form of Network Operation Centre service
- Have some form of service or help desk service
- Be able to remotely monitor and manage all or a majority of the objects for the customer
- Proactively, compared to reactive, maintain the objects under management for the customer
- Delivery these solutions with some form of predictable billing model, where the customer knows with great accuracy what their regular IT management expense will be
Australian firms are expected to spend about $7.5 billion on IT outsourcing services this calendar year (according to Gartner). This includes:
- Outsourcing staff
- Outsourcing equipment, especially servers in the cloud (often called infrastructure-as-a-services – IAAS)
- Outsourcing software, especially those that can run in the cloud or software as a services (SAAS) such as e-mail or CRM
The fastest growing area of IT Outsourcing (in Australia) is cloud infrastructure services which is currently worth about $235 million per year.
Who should be using a managed service?
Typically, the need for managed services is beyond 20 staff. Once you get beyond 20 staff, a non-working PC or Server can stop your business, so smart businesses look at outsourcing IT to specialist. While most companies in Australia have no staff and a considerable chunk of business have less than 20 staff, there is still about 85,000 companies in Australia with more than 20 staff (according to Australia Bureau of Statistics).
Although it varies by industry, the cross industry average is that 5% of your employees perform IT support. Additionally, you have the on-going expense of hardware, software licensing and maintenance. This expense, along with IT staff costs is usually in the ballpark of $240,000 per year for companies employing 20 people. The best use of this money should be to outsource the common stuff, while keeping internal the critical, application specific aspect of your business. Common stuff includes IT help desk, infrastructure monitoring, data back-ups, maintenance and e-mail hosting.
The larger your company the more exponential the issue becomes. Of course, using managed services comes at a price, but it is often better value than trying to do things in-house. Call your local technology partner for advice on managed services.
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About the author: Dexter Duncan is a Manager at Empower IT Solutions. Contact Dexter at dd@EmpowerIT.com.au
- Gartner IT Metrics http://www.gartner.com/technology/metrics/
- Australia Bureau of Statistics. http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/8165.0Jun%202007%20to%20Jun%202011?OpenDocument
- MSP Alliance – International Association of Cloud and Managed Service Providers. http://www.mspalliance.com/2012/08/definition-of-managed-services/