SEPTEMBER Reasons Why You May Be Spending Too Much on IT Support

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1 SEPTEMBER Reasons Why You May Be Spending Too Much on IT Support Decision Maker s Guide to Information Technology Investment

2 Research shows that today s business goals are centred on reducing costs, strengthening customer relationships and improving financial management. The biggest challenges to achieving these goals are lack of skills and investment funds, and inadequate linkages between the IT environment and how business processes are managed. - International Data Corporation (IDC) In today s modern business landscape technology is the cornerstone of business process and customer relations. Managing Information Technology (IT) is now synonymous with managing business growth. Small or medium-sized businesses may be limiting their growth and potential with outdated technology and obsolete methods of support. Under these antiquated systems businesses are relinquishing competitive advantage and are often caught spinning their wheels in break/fix-mode as opposed to planning for the future. In-house IT departments and hourly contractors limit profit margins, expertise, scalability, mobility and many other functions of an elite IT operation. According to a report conducted by the American Digital Corporation, 61 percent of IT leaders plan to invest in outsourced Managed Services over the next two years. Managed Services will continue to trend upward in the next few years. This is fuelled primarily by smaller companies looking to compete with slow moving giants, because most small businesses can't afford to match the in-house support services that larger companies maintain. Outsourcing can help small companies act big by giving them access to the similar technology and expertise that large companies enjoy. An independent, third party managed-cost structure and economy of scale can give your company a competitive advantage. The value created by Managed Services is huge - beyond dollars and cents - including lowered risk, proactive network management, C-level technology strategy and higher functionality. The following is a quick look at 6 Reasons you may be spending too much money on IT support:

3 By leveraging economies of scale, the Managed Services model allows access to affordable, state-of-the-art technologies previously only available to large enterprises. Essentially, outsourcing IT increases small- and mid-sized businesses IT departments from a few to many. Having a team of qualified professionals expands the toolsets available to the company, the speed of access, and lowering liability by spreading a company s knowledge control from a few (or one) to a stable group of technicians. Organizations that try to do all IT Services in-house themselves can have much higher research, development, and implementation time, all of which increase costs that are ultimately passed on to customers. According to a 2013 case study, businesses switching from inhouse IT to Managed Services experienced a three-year Return on Investment (ROI) of 224%. Associated with that ROI is the speed and efficiency of using a team with years of experience and a proven track record in implementing and maintaining tech essentials. Perhaps the most significant advantage is the dispersion of company tech information from a single contractor or staffer to a team. Often contractors become entrenched in an organization. They obtain information and control system functions upon which the organization is dependent. With no service commitment contractors can develop a sense of superiority and hold organizations hostage, continuing the necessity of their involvement.

4 Many businesses IT departments and solutions can be described as playing whack-a-mole or operating in a break/fix cycle. This cyclical method of tech maintenance is a time and money drain. It results in damaging downtime and significant costs. According to estimates from studies and surveys performed by IT industry analyst firms businesses lose between $84,000 and $108,000 (US) for every hour of IT system downtime. Waiting to react to tech problems or having to wait for outside consulting beyond the depth of the in-house IT department can cripple a business. According to the IDC versatile remote management capabilities have demonstrated as much as a 92% decrease in labor costs for managing devices in distributed environments, and a 66- percent decrease in the actual time for fixing a problem once it s occurred. These capabilities are due to the size of an outsourced IT department s qualified personnel and the continuous network monitoring by a dedicated Network Operations Center (NOC). The result of an increase in downtime is a series of destructive costs, both tangible and intangible: lost revenue, lost sales, remedial labor costs, marketing costs, failed contractual obligations, business opportunities, lost potential sales, lost productivity, loss of client favor, damaged brand image, driving business to competitors and even bad publicity/press. Whether you pay outside consultants or rely on an in-house IT department projects and unanticipated break/fix issues will result in unexpected operational costs. The Flat Rate IT option is an allinclusive management program designed to provide a stable and consistent computing experience for your business. The major

5 advantages of using an outsourced IT company with a Flat Rate business model is the consistency in costs, budget-friendly expenses, dependability of services, and unlimited help for end users. According to a 2013 Stanford Business study regarding the adoption of Business-to-Business (B2B) Managed Services 47-percent of the participants mentioned a significant reduction in costs. While 74- percent of the participating companies strongly agreed or agreed that the ability to replace capital expenditure with an ongoing monthly subscription fee was a value to them. The same report found that the most important drivers behind the companies original decision to start using B2B managed services were improved customer experience, improved business proficiency, and reduction in IT costs for almost all companies, B2B managed services increased the value of their B2B integration program, usually reducing costs or keeping them unchanged. According to a 2013 IT Salary Survey report the base salary for a Chief Information Officer (CIO) in the Mountain Region was $214,460. Technology development in the past few years has evolved at a blistering pace. The biggest advantage any business owner or C- level executive can have is an expert guiding them through new advances in technology. In the Managed Services business model the traditional CIO is replaced by a virtual CIO (vcio). A vcio is far from a recent concept, but the position is becoming vital for a competitive organization. The typical executive may view IT as a necessary evil due to IT sapping valuable time away from themselves and their staff.

6 The role of the vcio is to work directly with company executives, doing everything from Strategic Business Reviews to effectively introducing new developments that will lead to new proficiencies. Their knowledge of your business will keep the ship aligned and on course. All functions are to meet current needs, plan for future needs, and minimize disruptions to your business. The Managed Services business model adheres to a set monthly price. This incentivizes the provider to resolve client issues, streamline processes and eliminate complex and sub-standard practices. The amount of time and effort it takes to hire and train IT personnel, solve outages and everything in between is on the service provider. If the provider is at your site for 10 or 100 hours the payment is a flat monthly fee, but the provider is spending costly man hours. This win-win approach to tech maintenance creates a valuable trust and peace of mind. Peace of mind - in this instance - is the sense of confidence associated with having IT hassles in the hands of trained and vetted professionals. As a result company staff and management are open to focus on core operations. With an internal IT staff or a traditional hourly contractor some managers may have to split their energies between engaging prospective customers and concerns with IT operations outside of the core business objectives. According to 2014 Cyber Security study companies are attacked an average of 16,856 times a year, and that many of those attacks result in a quantifiable data breach. Relying on outsourcing to handle the many headaches associated with protecting a system - along with security updates, data backup procedures, and low-level user support, all from a remote site- frees up working hours and office space.

7 The advancement of software and hardware continues to be the key to effective communication and business functionality. As companies demand increasingly more sophisticated technology, the cost to create these applications will increase. Customized programs that meet the specific needs of a business are already becoming commonplace as companies seek out the most efficient ways to help their business grow. The cost of these developments will be directly related to the party doing the implementation. If the company is dependent on in-house IT entirely the tendency will be for the incumbent to stick with processes that they are comfortable with and that are within their limited wheelhouse. Conversely, outside consultants who make a living selling hardware and software will often push unnecessary changes to further their bottom line. The advantage of having an outsourced IT department (whose business model is not based around hardware/software sales) is receiving an honest opinion on what tech options are suited for the company. The decisions will be made based on what integrations create efficiencies and promote standardization.

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