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3 Metrics That Demonstrate the Value of IT Managed Services

/ by ShoreGroup

Individual clicking the Managed IT Services icon

A good managed service provider (MSP) can take a range of responsibilities off the plates of IT staff, including software support, network monitoring, and information security. As a result, many IT professionals already understand how valuable MSPs are to their organizations.Outside of IT, however, the value of MSPs isn’t always well understood. Instead of being seen as indispensable, they might be seen as just another recurring expense. In order to partner with a new MSP or preserve their relationship with an existing provider, IT leaders need to be able to illustrate the true value of IT managed services.

Let’s take a look at three metrics IT leaders can use to demonstrate this value:

1. Knowledge Value

Thinking about the cost of working with an MSP requires understanding the cost of NOT working with an MSP. Since businesses without managed service providers still need to support and maintain their information technology, the most likely alternative to partnering with an MSP is using in-house staff to fulfill the same functions.

Therefore, one of the best ways to measure the value of an MSP is to compare their costs to the salary and benefit costs of in-house support staff, and then compare and contrast the benefits of each.

When an organization hires an in-house employee, they’re purchasing access to that employee’s skills and knowledge. Because they are only one person, their skills and knowledge are always going to be limited. Even on a staff of five or ten support professionals, the expertise of these in-house employees could still be lacking, and their learning probably won’t keep up with the rapid pace of technological change.

When an organization chooses to allocate the same amount of resources toward a managed service provider, they are purchasing access to the experiences and knowledge of a large variety of people. This has specific advantages for IT because the larger the workforce of your MSP, the more skills and knowledge they are likely to possess.

In other words, while an in-house support team might be familiar with dozens of different technologies, a managed services team might be familiar with hundreds. It also behooves MSP’s to research useful new tools and technologies, something that in-house staff often don’t have time to do. In this way, the number of IT professionals an organization has access to through an MSP is a perfect metric to demonstrate value.

2. Convenience Value

Continuing along the same lines, we can compare the convenience of a full-time employee vs. a managed service provider. With a full-time salaried employee, an organization is essentially purchasing 40 hours per week of their labor. The trouble is that these 40 hours are, for the most part, restricted to a predetermined work schedule. Larger organizations might keep some staff on call, but what happens when the on-call employee isn’t the best person to solve the issue at hand?

The same 40 hours of labor coming from an MSP are much more flexible. Many providers offer 24/7 access to large support teams, which enables organizations to solve IT problems as they occur, rather than waiting for the next work day.

For example, if a contact center manager notices an issue with an application at 8 pm on a Friday, they can request help from their MSP to get the issue resolved as soon as possible. If their organization had opted for in-house staff over managed services, they would potentially have to wait until Monday to receive assistance.

How much is this convenience worth to an organization? One way to demonstrate its value is to estimate the potential revenue loss one could attribute to 12, 24, or 48 hours of critical system downtime. Another option is to estimate the overtime costs one would have to pay an in-house employee if they were required to fix an issue on a weekend or in the middle of the night.

[Are you a IT firefighter or a strategic manager? Read Forrester's report to learn more.]

3. ROI

Return on investment is the standard value metric for many service providers. For example, if an organization hires a marketing and sales enablement agency, they measure their value based on whether revenue from new business is greater than the cost of the marketing services.

The connection between IT MSPs and increased revenue is less intuitive. IT managed services are primarily support or monitoring-oriented, and therefore don’t contribute directly to the advancement of business goals. However, these services provide returns in two major ways.

  • First, MSPs provide value by preventing downtime. For many organizations, the potential costs of service interruptions are massive. Having a partner that is able to resolve issues, roll out updates, and monitor networks for threats creates significant ROI for these companies.
  • Second, MSPs enable in-house IT staff to focus on strategic initiatives. By handling large portions of the support, maintenance, and monitoring responsibilities of IT departments, MSPs free up internal resources to explore advanced technologies, implement new solutions, and increase the revenue of their organizations.

By estimating the revenue generated by uptime and strategic IT outcomes and comparing it to the cost of managed services, IT leaders can generate reasonable ROI metrics that can be used to make the case for MSPs. In light of research that suggests office workers only spend 45 percent of their day working on primary job duties, MSPs offer a higher ROI than in-house IT by offering support, maintenance, and monitoring only when needed.

Whether your goal is to prove the value of IT managed services to senior leadership, or simply to decide whether an MSP is worth it for your organization, these metrics can give you a solid understanding of what these providers can do for your IT department and your bottom line.

Are your ready to stop putting out IT fires and instead take a more proactive approach to your IT Ops? Read the Forrester Report to learn how.

Forrester report on proactive IT management 

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