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Published on:

16 June 2022

Author:

Rachael Adams

Managed IT Costs: Why is Pricing so Different Between Providers?

Typically, if you’re planning an IT investment, you’ll browse a few suppliers to get an early idea of cost. If you’ve ever tried comparing prices of managed services, though, you’ll have noticed a vast range exists, and that can make budget planning rather tricky. But why is there such an apparent gulf between different providers?

A recent discussion might offer some clues. I took a call from a company that looked like a good fit. They had a small number of locations, 20 to 30 users, and they wanted to improve their IT situation. When I visited, they talked about their disappointing experience with the current provider. Their calls were seldom returned promptly, they never saw the provider in person, and account management was non-existent. They had been waiting for six months for a quote on a key IT investment. Eventually, they got the manager in to discuss the problems, promises were made, but two months later, nothing.

The business owner now had to deal with IT because his staff had given up. In terms of pure cost, his time was the most expensive of anyone in the company, but he was troubleshooting servers when he would have rather spent the time planning growth. There was no strategic guidance, and the business was very server based – which meant that the business was missing the benefits of cloud. Little wonder he was annoyed. The reason, though, that the business had stuck with the situation, was that the service was “cheap”. 

Comparing Apples and Oranges

What that business now understands is because managed services is a term coined by IT providers, who each design their own version, there is no consistency. Not all offerings are the same. One may be a reactive service, there to step in where there are issues, while others may take a far more proactive approach, preventing those problems from emerging. Some include a comprehensive IT plan, aligned to the business, and updated regularly. There may be more frequent meetings, extra training, and any amount of value adds.

Another big difference is the level of skill and maturity on offer. There’s a huge difference between an IT generalist and a larger team with multiple specialities. That IT generalist may find themselves overwhelmed at busy times, and that can affect service: there is only so much they can do in a day. On the other hand, if you’re a small to mid-sized business, a global provider may make you feel like a low priority.

Ticket Volume

Usually, a managed service will be priced after considering a number of factors. These might include the maturity of your business, your industry, number of staff, and the age and type of your IT equipment. If you’re heavily dependent on servers, it is likely to involve more upkeep than the cloud-based alternative, and this will affect the price of the managed service. An environment with both cloud and servers may take more time. The information is used to calculate an expected ticket volume per month. A good provider should be meeting with you and sharing ticket data, then working in partnership to reduce ticket numbers – whether by recommending upgrades, pinpointing which staff training will help, or identifying better applications to suit your growing business.

Inclusions

The specific services included may vary widely. Some, like ours, include on-site service, some don’t. Some include all project work. They may guarantee a level of service, and a quality of support. Staff may have certifications for key technologies that are important to your business. Very often, poor support stems from lack of experience or training, so this is worth noting.

It is worth talking to your staff about the current situation, getting some honest answers about what they don’t like, and a wish list of how they would like IT to look. Then, create a shortlist of potential providers, and compare line for line exactly what is, or isn’t, included. Some of the inclusions will be important to you, some won’t – and if there is something you are confident you won’t need, it is worth asking if there is flexibility to remove that from the agreement.

Maturity

Armed with your shortlist, and a comparison that factor in the varying inclusions, you will be ready to look beyond the dollars. Maturity of systems and tools, level of automation, reporting, account management, and documentation are all relevant. When a managed service provider has been doing this for some years, they will have established structure and systems that make everything work more smoothly – and the staff to match. Every managed service provider has to start somewhere, but are you ready to be their guinea-pig?

Before making the change, it might be a good time to conduct a full technology review – ours is called TechAlign, and it reviews all your systems, and how the staff interact with them, against the direction and aspirations of your business. As part of the process, we measure against seven key areas of IT, and create a business maturity score. For managed services customers, we repeat the process annually, in addition to smaller quarterly reviews, so you can track how well the business is performing against its technology aims, and how well technology is supporting business direction.

Finally, there’s the less tangible element of the managed service: no matter how well everything seems to match on paper, your managed service provider plays a key role in your business future, so you need trust and a strong relationship to get the best from the investment. You need to feel that your success matters to them, and that picking up the phone is never a chore. Don’t be afraid to take your time, get to know them, and ask for references from other customers. Even visit their office – this can give you a great sense for who they really are.

With IT running smoothly, and a happy workforce, your business is in a position to thrive. Sometimes, like the customer who’d endured “cheap” managed IT, a small increase pays significant dividends.

Want to learn more about the TechPath Managed IT difference, with zero lock-in contracts and skilled, friendly specialists? Contact us today.