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Managed Services: An Insurance Plan for Your IT Environment

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It’s probably safe to say that your organization’s IT environment — networks, hardware, software and everything in between — is a large investment. In addition, its optimal performance every day is critical to both short-term operations and long-term success.

The IT Management Nightmare

However, with so many intricacies in IT infrastructure today, keeping a handle on the strength and performance of all assets on an ongoing basis can be a daunting task. In fact, doing so manually, on top of all other daily tasks IT professionals are responsible for, is likely impossible.

Because of this — and due to both technology and human errors — problems occur and systems fail. No matter how infrequent, issues from minor complications to complete outages can cause business disruption, losses in production and sales, and panic among the IT department and company executives.

A report by IBM Global Services found that in 2008, unplanned application outages cost an average of $2.8 million dollars in revenue per hour.

IT Managed Services Benefits

Though it is impossible to completely remove the chance of outages or other errors, by outsourcing the daily management of your IT environment through an IT managed services program, you can greatly reduce the risk. With managed services, your organization can efficiently monitor systems to identify performance changes, and put processes in place in to:

• Automate IT environment management and oversight
• Identify and troubleshoot minor issues before they become major ones
• Rapidly respond to problems, thus reducing outage time if they do occur
• Increase security with increased data- and server-access intelligence
• Ensure compliance with regular OS upgrades
• Identify and invest in your most valuable, mission-critical assets

In addition to the benefits above, studies have shown that there are significant financial benefits to managed services. For example, Cisco’s Business Case for Managed Services in Small and Medium-sized Businesses stated: “The result of purchasing managed IP services is an extraordinary cost savings — in some cases, 60 percent or more.” (Source: Cisco Analysis, 2004)

Finding the Right Fit

To determine if managed services are a good fit for your organization, ask yourself the following questions:

• Is your IT team struggling to keep up with daily maintenance tasks?
• Are senior IT executives spending time on tactics, rather than strategic initiatives?
• Do errors occur that you didn’t expect or anticipate?
• Are you missing a strong overview of your daily network performance?

If you agree with the above, then managed services would likely improve some operational aspects of your IT environment. The only element left to determine, then, is whether managed services makes financial sense.

To get an idea, click below to view a sample managed IT services financial analysis, filled out for a fictitious company (call them Company X):

In the Inputs, we insert data about Company X such as its number of users, servers and hours spent on IT services, as well as costs including revenue, salaries and outsourced IT support.

In Outputs, we crunch the numbers to determine total annual IT support costs at Company X.

Then, in the Analysis, we can do some simple math and see that Company X can save $564,663 — or 90% — on its annual IT support costs by implementing a $62,740 Network Monitoring Managed Service program.

A thorough understanding of the finances, together with a consideration of the benefits above, are great first steps towards deciding whether your organization can benefit from a managed IT services program.

Your Turn

Does you organization have a managed services program? What benefits have you seen?

Jim Burnett is the Managing Director of Service at MCPc and is responsible for all service related functions for MCPc customers. Connect with Jim on LinkedIn.