What is the True Cost of IT Support?
Prices for the support of business computer networks vary across different industries and markets. It is important to know what you get when you pay for the different available flavors of support. Is one type of support really better than another – and why?
This is a very important question – and one that is not asked often enough by business owners. At the end of each fiscal year business owners look at their financials and see an amount that they have spent over the past 12 months for their IT Support. Unfortunately, this is only part of the cost of supporting the computer network … possibly the biggest real cost of supporting your computer network is downtime.
What is the cost of downtime?
It is amazing how many small and mid-sized businesses do not have a solid plan for preventing “bad things” from happening on their computer networks. Some of these “bad things” (server/desktop crashes, firewall crashes, router/switch malfunctions) can take down an entire network for many, many hours. Hopefully, these major issues don’t happen frequently, and most business owners do not think that they will happen to them at all. They categorize these rare instances as downtime, but downtime has another hidden component that is possibly even more costly than when the server crashes.
Does “downtime” occur only when you are down?
Not really, in fact, this is only a small part of downtime. When talking about your computer network, downtime is anytime when your employees’ performance is negatively affected by your technology. When your employees wait for applications to load on their desktops … this is downtime. When employees wait for slow web pages to load on their workstations … this is downtime. When employees wait for pages to print on the printer … this is downtime. When employees recreate deleted and missing documents … this is downtime.
When businesses actually start to track how much of this “hidden downtime” actually occurs in a week/month/year … they begin to truly understand the real costs of downtime.
So, what is the cost of this “hidden downtime”? Let’s begin with an average employee wage of $35,000 / year. Assuming this employee takes two weeks of vacation in a year, they make $17.50 per hour. If during a typical hour at work their workstation is a little slow (causing them to “wait” a couple of minutes) this translates to 16 minutes each day or 1 hour and 20 minutes over the course of the week. The weekly cost of these little minutes would be $23.28 and over the course of a year this would be $1,210.56.
The costs of employee downtime
A company of 10 employees could lose over $12,000
or more due to these little “wasted” minutes each year – OUCH!
Obviously, this does not include those times when there is actually down-and-out time when the server or other network resources have actually crashed and are not usable.
3 employees @ $20,000 / yr = $ 60,000
4 employees @ $35,000 / yr = $140,000
2 employees @ $50,000 / yr = $100,000
1 owner @ $80,000 / yr = $ 80,000
** Total payroll of $380,000 / year.
This breaks down to nearly $183 / hr. When the server goes down for a couple of hours and none of the employees can access network resources, this costs $366 plus the cost of the computer guys scrambling to fix the issue. If the business is down for an entire day, the cost is over $1,460 plus, plus, plus. If there is even one of these short outages each month, the business loses another $4,400 over the course of a year plus all of the added fees.
There are certainly additional fees and concerns with these “downtime” problems, but if you take just these two specific instances, the company will lose over $16,000 – which is likely twice what they would have paid an IT Support company to help them with the network over the course of the year.
What about hiring a full-time IT person?
Some small and mid sized businesses hire an IT technician as a full time employee of the company. These techs usually make between $40,000 – $60,000 with benefits, bonuses and vacation on top of the salary. Compared to the $8,000 – $15,000 that companies will pay to outsource their IT Support … this is a very, very expensive way to support a small and mid-sized business network. In some cases where a business grows to 100 employees or greater it might start to make sense to look at hiring a full time IT guy, but until then it is very expensive.
If you do pay your computer guys an hourly rate,
what are the going rates in Minneapolis and St Paul?
Business networks that are still supported by companies who use a break-fix methodology will generally pay the following hourly rates for services provided by these types/sizes of companies:
• Individual (maybe part-time) tech: $60-$100 per hour
• 1-2 person IT firm: $75-$125 per hour
• Mid-sized IT Support Company (5-10 techs): $90-$150 per hour and some may offer a flat monthly fee for services (see below)
• Larger IT Support Company (10+ techs): $100-$225 per hour and may offer a flat monthly fee for services (see below)
In the past, some firms allowed their customers to purchase blocks of time. Basically, the customer would pre-pay for 30-40 hours of time at a slightly discounted rate. Although this method of billing was easy for the IT Company, most customers did not feel that this method of paying for services was in their best interest. Few businesses use this method of paying for their IT Services.
The Last Thing You Want Is A Flat Monthly Fee – Right?
There are quite a few companies who are offering flat monthly fees for their services. Most of these companies are referred to as Managed Service Providers and offer some sort of monitoring along with remote and on-site visits as part of the monthly fee.
Of course the main disadvantage of the flat monthly fee is the fact that it is a flat monthly fee. If your computer network is completely healthy and does not need any maintenance or support, then you still pay the flat monthly fee – and this is not well-received by most business owners. I mean really, why pay for service and maintenance when there was none … it fundamentally does not make sense.
In fact, it doesn’t make any sense if the IT Support company is charging a flat monthly fee and is still operating in a break-fix mode. This means that they literally are doing nothing until the computer network breaks – and once this happens the employees are very inefficient until the issue is resolved. If nothing breaks, the company actually does no work for the business, but expects to be paid the monthly fee anyway … not good.
Fortunately, real managed services providers do not operate using this model. What this means is that a true managed service provider is continually monitoring your business network to prevent downtime issues from occurring. If there are no problems with your network during a month, or over the course of several months – that is awesome. This is the ultimate goal, right? You want to walk into your office and have your technology available to help you meet your business goals. You want your employees to do the same thing. Your computer network and surrounding technology should be like lights, water and heat – they should just work when you turn them on. Of course this is a little over-simplified, but this is the ultimate goal.
Simply, There Will Be A Cost For IT Support, But At What Cost?
Whether these funds are divided into consistent, predictable monthly fees that you can count on to budget monthly expenses – or whether you pay nothing for a few months and then pay thousands the next month … you will end up paying for your IT Support. It is simply an expense of doing business.
The real concern is that you don’t want to pay too much for the support and maintenance of your technology … and as described above, you really don’t want your employee’s time to be stifled because they are constantly dealing with computer or networking issues – small or large. All of these instances of productivity not being 100% because of computer or network issues are like money falling out of the business’s pockets – they are costly and preventable. Saving a penny while a dollar runs out the back door is a poor way to manage your IT expenses.
What can you expect to pay for Managed Services Support?
As you might imagine, the flat monthly costs for managed services range from one company to the next. Most of these companies charge per device and include 24/7 remote monitoring, remote maintenance when applicable and on-site maintenance and support when necessary.
In Salt Lake City, Utah County and the surrounding suburbs you can expect the per device costs to fall within these ranges (these are not our prices):
• Network Management = $299 / month per company
• Server Management = $249 / month per server
• Desktop Management = $49/ month per desktop
So annual costs might look something like this:
• Company 1 – 1 server, 5 workstations = $793 / month or $9,500 annually
• Company 2 – 2 servers, 12 workstations = $1,385 / month or $16,620 annually
• Company 3 – 4 servers, 25 workstations = $2,520 / month or $30,240
Typically managed services companies will give small discounts in the monthly fees for larger organizations. These discounts range from 5% – 15%.