How Outsourcing Your Technical Service & Support Can Reduce Your TCO
You may think that your technical support and service costs will increase as your organization grows in size and scope. But this doesn’t have to be the case. Most small and mid-sized businesses no longer need to employ dedicated techs or pay for the benefits and management costs that come along with employing them. Today’s Technology Solution Providers (TSP) have the expertise and tools required to provide technical service and support on a 24/7 basis. But when looking for a TSP, search for one that will act as a partner when it comes to your technology planning. A true partner considers the benefit-to-cost ratio and TCO when choosing what you need.
Selecting the Right Technical Service, Support and Solutions Can Be a Balancing Act.
As your business relies more on technology for your daily operations, you can’t afford downtime that halts your productivity or the lost revenue that comes along with it. Because of this, you shouldn’t take shortcuts when it comes to choosing the quality and up-to-date technology solutions that you need to do your job. But just the same, you must consider your budgetary requirements when determining what to invest in. This is difficult to do on your own as technology is changing so rapidly. The answer is to find the right TSP –one who will get to know your business, help you decide what technology assets you require and determine if you will get a positive return from them.
This a fine balancing act. You must use the right solutions to handle your workload, but you must also stay within your budget. Only an experienced and knowledgeable Technology Solutions Provider can provide the strategic expertise required to find this balance. If they don’t know what you’re talking about when you recite TCO, then it’s time to find another provider. As you know, TCO refers to the total cost of ownership. A TSP who has experience in strategic planning can apply this principle when helping you select your IT assets and services.
TCO (Total Cost of Ownership)
Your IT environment is one of your most important business investments. It’s also one of the most expensive and unpredictable. This is where TCO for your technology becomes an important part of your budgetary planning. The total cost of ownership is a financial estimate that helps you determine the direct and indirect costs of a product or system.
TCO for your technology assets is calculated by dividing the cost avoidance and reduction that you realize over a specified period of time by the amount you invest over that same period of time. Total Cost of Ownership typically relates to four categories:
- Computing Costs
- Data Storage
- Business Administration
The Cost of Downtime
The cost of downtime is dependent on a number of areas. Monetary losses vary and are dependent on your revenue, industry, the actual duration of the outage, the number of people impacted, the time of day, and more. The cost of downtime is usually higher for businesses that rely on high-level data transactions, like banks and online retailers. And, if you experience an unplanned downtime during peak business hours, your costs will be higher. To keep it simple, calculate how much it costs your business when your employees can’t access the technology they need to do their jobs. This should include every dollar you’d lose to server downtime including hidden costs like clients leaving your business for another one, and the amount you have to pay employees when they can’t perform their duties due to downed technology.
This isn’t so difficult to calculate. It’s the price you pay for things like:
- Computers and servers,
- Applications and Software as a Service (SaaS) subscriptions,
- IT Maintenance,
- Employee training on hardware, software, and IT security awareness,
- Software and Hardware Upgrades,
- Cyber Security solutions like antivirus and antimalware or Security as a Service (SecaaS),
- Cloud Solutions,
- Contracted technical support and service and more–Anything that’s related to computing.
Data Storage Costs
This would include your costs for network and storage infrastructure, server configuration and deployment, power and cooling costs for data centers, and administrative costs for data backup and recovery capabilities.
Business Administrative Costs
This would be anything that impacts your daily business functions including labor, vendor contracts, procurement processes, accounting costs, and other overhead costs related to your IT operations.
Re-Evaluate Your Current Approach to Technical Service and Support.
Small and mid-sized businesses (SMBs) are typically understaffed when it comes to technical service and support. They don’t have the money to hire in-house techs, nor can they find the talent they need. Many SMBs operate in a reactionary way rather than the preferred proactive technical service and support model because they fear that contracting to a TSP will cost too much money. This is just the opposite. If you simply calculate your TCO for your technology as we explained above, you’ll realize that you have a lot to protect. Downtime alone can cost you your business if it lasts more than a few days.
With the ever-changing technology landscape and sophisticated cyber mafias cropping up, your business is at an increased risk of downtime, breaches and data loss without the right approach to technology. Unfortunately, your CFO or CIO might tell you that the only solution is to hire more IT staff. This just isn’t the way to go for a variety of reasons:
- IT talent is hard to find.
- If you do find them, you have to ensure they are continually trained and certified on new platforms, security solutions, software, and hardware.
- They cost more to hire and employ than outsourcing to a TSP.
- You have to manage them. If you don’t have a CIO who understands everything they do, how are you going to know if they are doing what they should?
- Turnover will be high because many techs use their employment at a small business as a stepping stone to a higher position.
- The recruitment search and costs, along with the time you must invest to find new techs is unsustainable for small businesses.
- If you don’t have the IT support you need, you’ll be dealing with increased downtime and IT failures.
Labor is the most expensive element when it comes to technical services and support. A break-fix model is labor intensive and increases your costs. This no longer is a factor when using a TSP who provides managed IT services. Your best move is to turn your IT management over to a TSP. By doing so, you can better gauge your technology needs while keeping costs down. Experienced Technology Service Professionals can help you use new tools that reduce costs by automating many labor-intensive tasks.
If you do some simple calculations, you’ll realize how much more expensive an in-house tech is than outsourcing to a TSP. An in-house network administrator can cost you upwards of $60,000 a year. Then you’ll have the added expense of employee benefits like Social Security contributions, workman’s compensation insurance, health insurance, vacation time and sick leave. In addition, there’s always the ongoing certifications you’ll have to pay for. Plus, you’ll have the costs associated with additional benefits like health insurance, social security contributions, vacation days and sick leave. Now, this one network administrator costs you more than $100,000 a year. Then there’s the required 3.5% raises that they’ll demand each year and the ever-increasing healthcare insurance costs. One network administrator can cost you more than $100k a year.
Here’s something else to add into your calculations. Recent studies have shown that close to 40% of all IT failures are caused by errors made by in-house IT staff and that they will spend up to 50% of their time detecting and remediating these errors. Once again, you’re looking at a reactive rather than proactive approach to technical service and support when you use onsite technicians. You can see how relying on them increases your TCO.
If your CFO suggests you use an outside tech service on an as-needed basis, you’re also looking at a poor TCO. The term for this is “break-fix,” and it can be an expensive proposition. Plus, it can take anywhere from 24 to 48 hours for one of these techs to visit your site. You won’t be high on their priority list because they’ll be serving their Managed Service clients first. Imagine going more than two days without your technology. This can set some businesses back for weeks, not to mention the angry customers they must deal with.
The Way to Lower Your TCO is to Outsource Your IT Management to a TSP.
The right Technology Solution Provider will put considerable effort into understanding your operational and
business needs. With this knowledge, they will develop and deliver a set of specific cost-effective services that align technology with your goals. This will increase your system reliability, your organization’s business continuity, staff productivity and, ultimately customer satisfaction.
The right TSP will align your technology with your organizational goals. They will ensure your technology provides a greater ROI (Return on Investment) and decreased TCO. They do this by streamlining costs, increasing your productivity and revenue, and avoiding expensive onsite IT fees for replacement or repairs.
When you outsource your technical service and support to a Technology Solutions Provider you’ll have:
- Immediate access to a team of IT professionals who have a depth and breadth of knowledge and experience in the latest technology solutions. You could never afford this amount of expertise with in-house techs.
- Around-the-clock technical support with remote monitoring of your network, so you can get your IT system up and running if there’s an issue. With remote monitoring, issues can be averted before they cause downtime.
- A team of certified professionals with the knowledge that can save you time when implementing new projects.
- Cyber Security experts who can mitigate security risks and compliance problems that result in penalties, liability and your credibility with customers. Plus, they have the expertise to conduct security awareness training for your employees, and they will know about the newest exploits to beware of.
TSPs offer an IT management model that saves you in labor costs and downtime. They do this with:
- Remote Desktop Management and Support
- Monitoring of Network/Operating System and Alerts
- Updates for Anti-Virus Software
- Backup and Disaster-Recovery Solutions
- Application of critical Patches and Software Updates
- Resource Availability of Best-In-Class IT Solutions scaled to your needs.
- Audits of Computer/Network/Software
- Enforcement of Network Cyber Security Policies
- Mobile Data Management and Monitoring
One of the biggest advantages of outsourcing your IT services to a TSP is that they remove the unplanned costs that many small businesses deal with. Instead, they offer a fixed monthly fee for the services they provide. Plus, you and your staff can focus on your core responsibilities– You won’t be distracted by IT issues.
The technology nonprofit CompTIA surveyed 400 businesses that outsourced their IT needs to a Technology Services Provider. Of these businesses, 96% reported saving a substantial amount annually — 184 realized cost reductions of 25% or more, and 58 over 50% reduced costs.
Your TSP Can Save You Money and Increase Productivity and Security with Virtualization and Cloud Computing.
Be sure to ask your TSP for today’s “new” managed IT services–Virtualization and Cloud Computing. Other SMBs have found that new technology innovations like virtualization and the Cloud is the way to lower their TCO and save money.
With virtualization, your TSP creates virtual resources such as servers, operating systems, workstations, storage systems or networks. Virtualization is more cost-effective than using traditional methods. It also allows you to scale your services up or down as your company grows or decreases in size. Many seasonal businesses benefit from this as they don’t have to continue paying for services they don’t use.
Cloud computing provides services, such as software platforms, storage, and servers over the Internet. It provides SMBs storage and business processes that were previously only available to large enterprises. Information is available via a central web-based data center to anyone with a computing device and the proper login credentials. And, with cloud computing, you can sync your business data to your users’ connected devices in real time for enhanced productivity, collaboration and mobility.
Virtualization and cloud computing provide a lower TCO and a more cost-effective way of using technology. They also provide business continuity with increased data security, recoverability and the ability to access your IT environment from anywhere you have an Internet connection.
According to studies by VMWare (a cloud and virtualization software and services company), businesses that implement virtualization have reduced their total cost of ownership for IT operations by
up to 67%. The right Technology Service Provider can show you how to maximize your server resources, improve your overall IT performance, enhance your cyber security, do more with less, and, ultimately, save you money.
The following are some of the benefits of virtualization:
Virtualization will save you money. Virtualization lowers your technology and energy costs. You’ll need fewer servers, networking gear, racks, and hardware. Your maintenance, heating, cooling, and energy costs are all reduced. Plus, instead of purchasing new equipment, you simply add a new virtual server when you need more storage space for your data and IT solutions.
You’ll have more storage and faster application deployment. Server virtualization isolates applications, so you no longer need to worry about incompatibilities. You’ll realize improved application performance, with much faster provisioning. Virtualization also allows you to fully utilize your physical servers and set up virtual machines with the precise amount of memory and storage you require.
Your business continuity and disaster recovery will be improved. With virtualization, your data can be migrated to another server when you need to perform repairs or specific tasks. This way you don’t need to shut down servers, so downtime is no longer an issue. Your data is always available, even if a server is shut down — so business continuity is greatly enhanced. Virtualization’s single-system image also makes recovery painless.
You can easily transition to the Cloud. If you’re considering moving data to the cloud, the process is a lot less complex with virtualization. The data stored on virtualized servers is already free of hardware, so making the transition to a public or private cloud is simple.
You can do more with less. Virtualization allows you to virtualize your entire network or just specific aspects of it, so you can simplify business operations and promote efficiencies. You can do more with less because virtualization allows you to accomplish more with fewer servers.
Your cybersecurity will be improved. Virtualization can combine features with security functions to streamline your security operations. With automated provisioning and sharing across both virtual and physical security platforms, virtualization can enhance your cyber security without sacrificing performance.
As business owners and managers realize the cost-saving factors associated with cloud computing and virtualization, they are re-evaluating their IT strategy when allocating money for technical services and support. They’re now seeing that outsourcing to a TSP provides a greater return on investment and a reduced total cost of ownership.
Your Technology Solutions Provider can be a valued business partner who can offer the expertise you need to grow your business with the right IT solutions. However, no matter what approach you use for IT management, it’s important to conduct a cost-benefit review to make sure you’re getting the best ROI and lowest TCO from your technology investments.