One of our clients (for the sake of privacy we’ll call them Acme Distribution) started with a “break-fix” IT strategy. Acme had computer equipment, a network and some knowledge about how to fix simple issues (resetting passwords, adding a user, etc.).
However, when more complex issues came up (e-mail not working, printers not printing, hardware failures, viruses and network issues), Acme paid service providers to fix those issues. Some months the cost was minimal. Some months the cost was tens of thousands of dollars.
One month a relatively new computer virus cost the company $28,000 because all but a few computers were infected, including their server. Their systems were down for 3 days and only partially working for 3 more days. The costs of system downtime, lost productivity and customer dissatisfaction was in addition to the $28,000 in fees paid to fix the problem. Acme estimated their total cost for this incident was more than $70,000.
There is a Better Way– But Beware!
Acme wanted to find a way for their IT expenses to be stable and predictable. They looked into managed services contracts. They interviewed three companies and entered into an agreement with a provider at what they thought was a reasonable price.
Unfortunately, what they found out was that managed services providers provide two levels of service. In the fine print of their agreement, they discovered they had entered into a network “monitoring” agreement.
Acme’s provider “monitored” their network and provided support up to five hours per month. In the third month of their agreement, after a problem that involved both hardware and a network problem, Acme received an invoice for $18,134 for support above and beyond their “fixed price” agreement.
Beware of the low-priced managed services “monitoring” agreement.
In the following few months, Acme considered hiring two IT employees because they believed it might be less expensive than paying an outside provider. However, they soon realized that their internal solution would be expensive and limited to the knowledge of their two IT employees.
Acme’s CFO attended a webinar about managed services agreements that were truly flat fee, no-surprises agreements. He asked for a proposal and experienced sticker shock when reviewing the proposal. The agreement included everything including hardware replacement for a flat monthly fee – guaranteed.
As he read the proposal, he was shocked to discover that the network assessment done on their IT systems by the professional level managed services provider showed:
• Out of date virus software
• a Trojan horse virus that had given hackers remote access to their accounting system.
• 4 viruses (not yet active) that got into the network by employees copying files from flash drives
• Three network hard drives that were sending alerts about their imminent failure (all at least five years old)
• a cloud-backup solution that had stopped working
If there was any good news, Acme was lucky their system had not (yet) been attacked by ransomware. Ransomware locks and encrypts the company’s data and then demands payment to unlock and decrypt the data.
In the end, after adding up all the costs, lost productivity, risks and likely future issues/costs, Acme found that an all-inclusive, flat fee professional level managed services agreement was far less expensive than any other solution. In addition, it’s a much better solution than relying on the current knowledge of two IT employees with limited knowledge.
Consider your options:
• With “break-fix” agreements, you get low cost, but you take all the risks
• With a “monitoring” agreement, it’s no different than the CHECK ENGINE light on your car’s dashboard
• When you consider:
o the risks, potential downtime, data loss and lost productivity
o along with the assurance that you IT system is always protected and up to date
o AND the peace of mind you’ll have instead of wondering what will go wrong next
a fixed price, no surprises managed services agreement is probably the most cost effective route to go.
If you’re interested in exploring your options, contact us. We would be happy to help.