Saving Money with Managed Services

In last month's article I mentioned that the competitive landscape is getting crowded for managed services providers. This month I wanted to take a quick look at why this is the case. The benefits of the MSP model are easy to see - with product margins slipping and spending on IT projects down, a recurring revenue model that still has good margin potential is an obvious choice. But why would customers want to consider managed services? I recently did a presentation on this topic where I covered eight reasons why customers need managed services. I am only going to talk about one reason here - controlling costs. In the past 30 days, we have seen customers across the country reducing their costs - many doing so through lay-offs. Interestingly enough, none of the companies that reduced their workforces cancelled their support contracts. In fact we even saw one customer remove their IT Director and onsite staff, leaving only our ongoing service support plan intact.

While we certainly do not like to see existing customers reduce their staff, this does raise an opportunity for us when it comes to talking with prospects. As you can see, while spending on IT may be going down, there will always remain a need for support.

Let's take a look at how Help Desk services can reduce costs for your customers and prospects. A typical 50 employee company might have two IT people - a desktop technician and a more senior tech or IT manager. The help desk service can generally replace the desktop technician for just $2500 per month. Considering a typical annual salary of $60,000 this is a $30,000 per year savings.

If we include NOC services for this customer we are able to support their entire environment for $4000 per month. This would still result in a $12,000 per year saving and (more importantly) would free up their senior technician / IT Manager to focus on strategic work that differentiates the business and (most importantly) grows revenue.

This is just one example but I think the message is clear. Managed services can help your customers reduce their IT costs and allow them to focus on their business to grow revenue.