How invisible IT costs add up quickly and how to calculate them

When you hear Managed Service Providers (MSP) companies talk about saving you money, making things more efficient etc., etc., (insert more IT jargon here). What does this all mean?

Hiring an IT support provider costs companies money right? So how do they claim to solve world problems and save your business money?

Let’s start by defining what an MSP is, the promises that MSPs make, how they plan to save you money, and how to tell when you need to hire one!

So, what do Managed Service Providers actually do?

A managed service provider is a company that takes over the responsibility of managing your IT systems. They deal with day to day problems that you and your employees face, they manage your cloud storage, services such as Office 365, antivirus, your backups, and charge you a monthly fee for their services. Help Desk is also included in this, where remotely, most issues are resolved for the end user, a.k.a., your employees.

Most MSPs will promise that if your employee has a technical issue, they won’t be stuck wasting their day of productivity googling a solution to some error on their screen.

Great! So now we have established that MSPs charge money to manage your network, servers, cloud services, and fix day to day problems. But it’s still not clear how this translates into savings for the business.

Here is how that savings equation works…

Let”s take Sally for example… She makes $75,000  per year, this equates to $36 per hour that she is paid to perform her job. Sally generates the company $70 per hour with the work she performs in her day to day job. Now lets assume Sally has a minor issue such as her printer that suddenly stops working. It takes sally a few hours plus a 30 minute vent session about how crappy her printer is to the co-worker. Sally now just spent 2.5 hours of her work day fixing a printing issue. With her salary plus the loss in productivity this totaled a $265 loss to the business. When you start looking at these numbers in this way, you quickly realize that time is literarily money and anytime an employee spends several hours DIYing an IT issue, it’s costing your business hundreds of dollars. These costs are hard to keep track of and often times go unaccounted for making it seem as though they are non existent. However, quickly looking at these numbers, you start to realize that they add up rather quickly!

Ok, so you are thinking it’s okay, Sally doesn’t even fix her own printer, she calls me for IT help. This is actually even worse! Now, not only are you taking the time out of your day to help resolve Sally’s printer issue, but she is still down in the meantime unable to perform her job. So the invisible hourly costs skyrockets.


How to tell when you need an MSP…

Just do the math! Have your employees tally up the time they spend per month dealing with technical issues that could otherwise be solved by an MSP. You can then estimate how much in payroll expense this is costing you and how much in productivity it’s costing you. Now you can also extrapolate this further. Because most MSPs offer monitoring and proactive system management, Sally might not even have had the issue with the printer, had those drivers been updated! So the hidden cost savings of an MSP are also something to consider.

When you start adding up the time wasted by employees working around inefficient and slow systems and processes, time spent away from performing their daily jobs, and payroll expense, it’s pretty easy to match that number with the MSP quote you received. If those costs are equal to or greater than what an MSP quoted you to manage and monitor your system, then you need to higher outside help to improve old processes, increase efficiency, and reduce any down time or productivity lost by your employees.

What are some other instances for hiring an MSP?

-When managing day to day IT activity becomes above your paygrade!

-If you don’t know how to do proper migrations, how to maintain your servers properly

– If you don’t know how to update your firewall and network equipment

– If you don’t have the time to do those things.

MSP companies are a great, and inexpensive resource, compared to hiring a full time employee to handle those same tasks.