The context
Welcome to part 4 of our series! To recap, the intent of this topic is to outline the considerations for businesses assessing their IT spending. Rather than asking about specific costs, we will focus more on a series of questions such as “How should I think about my IT budgeting?”, “What level of cybersecurity investment should I pursue?”, “How do managed service providers price their services?”, and “What are the items I have not yet considered?”. Let’s dive in!
Often overlooked impacts to IT budgets
When businesses consider their IT budgets, there are several items that are often overlooked, including:
Software licenses: Many businesses forget to budget for the ongoing costs of software licenses, including renewals and upgrades. These costs can add up quickly, especially if the business is using multiple software applications. These licenses are often critical to your business operations and need to be reviewed on a consistent basis.
Training and development: Businesses often overlook the cost of training and development for their employees, especially when it comes to IT skills. Training and development are essential to ensure that employees have the skills necessary to use new technologies and software effectively. This is doubly true if you have an internal IT member or team.
Cybersecurity: Many businesses underestimate the cost of cybersecurity and the potential consequences of a cyber attack. Investing in robust cybersecurity measures is essential to protect the business from potential threats, including data breaches and ransomware attacks. It is hard to overstate the impact and cost of a significant cybersecurity incident. Refer to blog #2 in this series for additional information or take a look at our managed cybersecurity page.
Cloud storage and services: Cloud storage and services have become increasingly popular in recent years, but many businesses fail to account for the ongoing costs of these services. This can include subscription fees, data transfer costs, and additional features. For our case study on cloud optimization click here.
Disaster recovery and business continuity: Businesses need to plan for the unexpected, including natural disasters, cyber attacks, and other disruptions. Investing in disaster recovery and business continuity measures can help ensure that the business can continue to operate even in the event of a major disruption.
IT Projects for infrastructure and operational enhancement: There are periodic times where projects will be necessary for infrastructure refreshes, changes to core systems to improve operations, addition of new locations, etc. Essentially, any situation that points to implementing a new technology solution or the improvement of an existing one will require the need for an IT project.
Fully burdened cost of internal IT members: The cost of internal staff can vary widely based on several items. In fact, if you hire internally to meet your IT need, the fully burdened cost of an IT professional can range from 1.25 to 2 times their base salary. Contributing factors are items such as payroll taxes, benefits, training and development, non-specific expertise (wasted time trying to solution areas outside their experience), etc.
Internal IT limitations: Internal IT may not have the expertise to manage all aspects of IT effectively. IT is a complex field that requires specialized knowledge in areas such as networking, cybersecurity, cloud computing, and more. Limitations to your team’s expertise can lead to gaps in your IT infrastructure that could put your business at risk. If it is a small internal team of one or two members, it can also be a single point of failure, with no real coverage during vacation or sick times. From a strategic perspective this individual may not have the perspective or expertise to make informed decisions about the technologies and processes that will best support your business goals. As a result, you may miss out on opportunities to innovate, improve efficiency, or reduce costs.
By contrast, working with a managed services provider (MSP) can provide you with a team of experts who can manage all aspects of your IT infrastructure effectively. An MSP can also provide you with more flexibility, scalability, and cost savings than an in-house IT person. And, because MSPs work with multiple businesses, they have a broader perspective on the latest technologies and best practices, enabling them to provide strategic guidance that can help you achieve your business goals.
What are the hidden costs of not working with an MSP?
There are several hidden costs associated with not working with a managed services provider (MSP) that businesses may not always consider. Here are some examples:
Downtime costs: When your IT systems are down, your employees can’t work, and your business can lose money. The longer your systems are down, the more money you lose. Without an MSP to proactively monitor and maintain your systems, downtime is more likely to occur, and the cost of downtime can quickly add up.
Cybersecurity costs: Cybersecurity breaches can be costly to remediate, but they can also lead to lost revenue and damage to your brand reputation. Without the expertise of an MSP to help you proactively protect your business against cyber threats, the risk of a breach increases.
IT staffing costs: If you don’t work with an MSP, you’ll need to hire your own IT staff to manage your systems. This can be costly, as IT salaries are typically high, and you’ll need to hire multiple staff members to cover different areas of IT expertise. In addition, you’ll need to provide benefits, training, and ongoing professional development to keep your staff up to date with the latest technologies and best practices.
Hardware and software costs: If you’re managing your IT systems in-house, you’ll need to purchase and maintain your own hardware and software. This can be expensive, as you’ll need to purchase licenses, renew maintenance agreements, and purchase new equipment as needed. An MSP can help you reduce these costs by providing access to their own hardware and software, as well as offering advice on which technologies to use and how to manage them more efficiently.
Compliance costs: If your business operates in a regulated industry, you’ll need to comply with various regulations and standards. Compliance can be costly, as you’ll need to invest in technologies and processes to meet these requirements, as well as undergo audits and assessments to ensure compliance. An MSP can help you meet these requirements by providing expertise and support in areas such as data privacy, security, and governance.
Bonus: Misconceptions about working with an MSP:
There are several common misconceptions that businesses may have about working with an MSP, including:
- MSPs are only for large businesses: Many small and medium-sized businesses may think that MSPs are only for larger enterprises. However, MSPs can benefit businesses of all sizes, as they provide customized solutions based on a business’s specific needs and budget.
- MSPs are too expensive: Some businesses may believe that outsourcing their IT needs to an MSP is too expensive. However, working with an MSP can actually save businesses money in the long run by reducing IT downtime, increasing productivity, and preventing costly cybersecurity incidents.
- MSPs will replace my in-house IT team: Some businesses may think that outsourcing their IT needs to an MSP means that their in-house IT team will no longer be needed. However, MSPs can work alongside an existing IT team, providing additional expertise and support.
- MSPs don’t provide personalized service: Some businesses may believe that MSPs offer a one-size-fits-all approach to IT support. However, reputable MSPs will work closely with their clients to understand their unique business needs and provide customized solutions.
- MSPs only provide basic IT services: Some businesses may think that MSPs only provide basic IT services, such as help desk support and server maintenance. However, MSPs can provide a wide range of IT services, including cybersecurity, cloud computing, and strategic IT planning.
To overcome these misconceptions, businesses can research and choose a reputable MSP that offers tailored solutions and transparent pricing. They can also communicate openly with their MSP about their specific needs and expectations to ensure a personalized level of service. By working with the right MSP, businesses can gain access to a wide range of IT services and expertise, all while saving time and money.
The Takeaway
It’s easy to overlook portions of what may be required for your IT budget and planning. At EC Managed IT, we have experienced IT consultants who can help guide you through a predictable IT roadmap in support of your business goals. Contact us today to get started!
