What Your IT Services Provider Likely Isn’t Telling You
(As published in Small Business Today Magazine.)
If your business is ready to evolve beyond your own handling of its IT needs (or perhaps you’ve assigned the role to a trusted employee or relative), you know it’s a lot for one person to manage. But more importantly, what happens when you’re on vacation, sick, or in an important meeting? For many small businesses, the temptation exists to hire an IT shop.
One of the biggest benefits of hiring an IT services firm is getting the benefits of many hands and many minds. No one can possibly know everything IT; and no one can be awake and available 24/7. There are a lot of one-person shows out there. And, many of them are very intelligent, capable technicians. But to enjoy the full benefits of a service provider, do yourself a favor and filter out of consideration any companies with fewer than five full-time technicians.
Within the U.S., roughly two-thirds of all small- and medium-sized businesses (SMBs) hired an IT services provider (also known as a managed service provider or MSP) at some time during 2016 (according to a survey by Clutch). Yet there remains an imbalance of power when hiring and engaging for IT services. Dealing with some MSPs can feel like a visit to an auto mechanic who tells you “a $1,000 valve job is necessary” while you say, “a ‘valve’ what?” An exceptional mechanic will take the time to explain ‘how’ and ‘why’.
So will an exceptional IT firm.
But recent industry customer satisfaction survey results (by SWC Technology Partners) suggest that exceptional is hard to come by. In measuring the widely used ‘Net Promoter Score’ (NPS), when asked, “How likely is it that you would recommend your IT services provider to a friend or colleague?”, respondents were two times more likely to answer negatively or neutrally, than positively.
What’s a business owner or leader to do? How do you tilt the scales more in your favor—with the goal of finding that exceptional IT firm to engage in a win-win partnership? Here’s a sneak peek behind the curtain of IT services providers from someone who has learned the lessons that are usually only taught through hard-fought experience.
24/7 Doesn’t Always Mean 24/7
Hand-in-hand with the benefit of many hands, many minds: the concept of 24 x 7 x 365 can sometimes be misleading. Any IT firm worth its weight is going to have software tools to remotely monitor your IT devices around-the-clock (i.e., servers, workstations, network equipment, etc.). But calling that “24 x 7 support” is a tenuous claim at best. To be worthy of the 24 x 7 x 365 title, a service provider should have a capable technical resource available at all times. Scheduling a system administrator for on-call after-hours support is the industry standard for 24 x 7 availability—although rare, true 24 x 7 active operations is even better. Almost inevitably, one day, you will need after-hours support; be sure you understand what the service provider is committing to.
You Will Be Assimilated
When the industry was young, IT companies had very few standards to guide their operations. Technicians were more than happy to install anything you wanted—and even some you didn’t—in order to play with all the new toys. Custom solutions was the name of the game; back then, everything IT was custom. Then came the growth, competition, acquisitions, and consolidations—and, inevitably, the industry went from customized solutions to cookie-cutter ones. Efficiencies were to be gained by forcing customers to conform to the standard package (vendor, model, architecture, and process)—one size fits all. But one size doesn’t fit all. Each industry is unique, and each business within it is unique. We’re overdue for the pendulum to swing back toward greater customization. Find an IT services provider that treats your business as a unique organization with a structure, product or service, and culture that is distinct from anyone else—and don’t hesitate to ask for what you need.
ROI: All the Cool Kids Are Doing It
Beware the boast: “We use the latest technology.” As mentioned, true technologists love to play with technology’s newest toys. It’s human nature to want the latest, greatest, fastest, and shiniest thing. But that isn’t always what’s best for your business. You need to be concerned with your return on investment as well as your tolerance for risk (the newest products also tend to have the most bugs). During the sales pitch, and throughout any associated marketing literature, ensure that the provider maintains a focus on your business and its goals, not technology for technology’s sake. You should hear such questions as, “What are a few of the biggest frustrations in your business today?” and “How do you want technology to positively impact your business within two-to-three years?” If you don’t hear that “you” focus, move on. Moreover, select an IT services provider that offers a fractional or virtual chief information officer (or vCIO). Although beyond the scope of this piece, in short, a vCIO compliments a provider’s offering by giving you access to a C-level resource to help you set a path and strategy for achieving your business goals—with and without technology.
There is No ‘Perfect’ Pricing Model
While poring over IT service proposals, you may come across any number of pricing models: by the hour, flat-fee, per person, per device, etc.—or some combination thereof. They are all reasonable options, but they each have their pros-and-cons. At a very high level, hourly billing is good for clients that only want to pay for exactly what they get, already have stable IT systems, and are okay paying variable amounts month-to-month as issues arise. The biggest downside of this structure: the IT company makes more money the more problems you have.
Flat-fee billing is like it sounds, you pay a regular (typically monthly) fee, and your IT company agrees to support your systems. IT services providers following this model are called managed service providers (MSPs) because they agree to manage your IT systems for one consistent price. Some months you’ll use more than you’ve paid for, others less. It’s assumed by both parties that it will balance out in the long-run. But, before you agree to an MSP type agreement, make sure you understand what’s included, and what’s not. The biggest benefit of a flat-fee engagement is that the service provider is highly motivated to get it right the first time. Efficiency is key. The biggest issue with a flat-fee engagement is that the provider is not monetarily motivated to go above-and-beyond. The more time they spend with you, the smaller their profit margin. Not every IT company operates with this one-sided perspective, so be sure you ask “what if” questions to understand what to expect.
There is no one right pricing model. It’s about what’s right for you. This is another area where the decision may simply come down to your tolerance for variable monthly invoices and your overall budget.
Hardware Has Very Nearly Become a Commodity
Don't choose an IT services provider based on the brands they carry; that is, whether they sell Dell vs. HP vs. Lenovo vs. Cisco workstations, servers, and network equipment. Though there are small pros-and-cons for one manufacturer over another, a year or two from now, those will leapfrog and be shuffled differently than they are today. All of them offer such a wide-range of products, tailored to all types of buyers, you’re likely to be happy with any of them. Choose your next IT services provider based upon their service, not on the hardware they resell. One further note: generally, you are not obligated to purchase your computer equipment from your IT company; you are free to shop around. But, if you do go through them, you are likely to get better service on that equipment (especially with warranty repairs and returns)–even if you pay a bit more upfront.
Hope for the Best, Plan for the Worst
Computers aren’t appliances. There are many days we wish they were. An appliance will simply turn on with the press of a button. It functions the same today as it did yesterday—and, barring some catastrophic failure, it will tomorrow. But computers aren’t like that, especially the software that runs on them. You will have technical issues; they are unavoidable. Factor into your calculations and decisions the fact that each and every device on your network will require regular maintenance (e.g., weekly or monthly), and the complexity of IT systems dictates that into the foreseeable future, problems will occur whether or not anyone has done anything wrong.
It’s More Expensive, But It’s Not Better
The IT services industry has seen growth and consolidation, so too has it witnessed the rise of industry-experts telling IT company leaders how to best operate within the changing landscape. Some of the recommendations are entirely positive: promoting efficiencies and greater transparency. But much like the car salesperson who says, “Let me show you under the hood,” to distract you from your questions about price, a few prominent experts are coaching service providers to add prestige by overcharging. While there are psychological studies that support this technique (human nature being what it is), don’t be fooled. Read the service agreement, understand the service agreement, and weigh your options on their merits, not price alone.
The vast majority of established IT services providers are led and staffed by qualified, well-intentioned, and trustworthy people. But sales pitches being what that are, you will hear a lot about a firm’s strengths, and nearly nothing about its weaknesses. Meet with the provider at least twice: first at your office, then at theirs. Meet not only the account manager, but also with some of the staff you’ll be interacting with when problems arise. Rapport is important. Win-win partnerships are possible. Ask questions. Balance the scales.