Every business, regardless of its size or industry, relies on technology to operate efficiently and stay competitive. Managed IT services have emerged as a strategic tool for companies to ensure their technology infrastructure is robust, secure, and agile. But how can we quantify the return on investment (ROI) of managed IT services? By understanding the tangible and intangible benefits, and how they translate into measurable ROI, you’ll be able to get a better idea of how managed IT services can continuously support your business for the better.
What are Managed IT Services?
Managed IT services involve the proactive outsourcing of IT responsibilities to a third-party organisation, commonly referred to as a Managed Service Provider (MSP). These services encompass a vast array of offerings:
- Network Management: This ensures seamless communication between devices, efficient data transfer, and optimum server utilisation. With businesses increasingly operating in a global arena, the importance of robust network management cannot be overstated.
- Cyber Security: Beyond just deploying firewalls and anti-malware tools, cyber security under managed services includes employee training, regular security assessments, and penetration testing. In an era of advancing cyber threats, a proactive stance on security is not just beneficial - it's essential.
- Data Backup and Recovery: Regular backups of mission-critical and sensitive company data are maintained, ensuring that in the face of hardware failures, cyberattacks, or other types of data loss, business operations can continue without a hitch.
- Cloud Services: From helping businesses make the transition to the cloud, to managing cloud resources and optimising cloud-based workflows, MSPs offer end-to-end solutions.
- 24/7 Monitoring: By continuously checking the health and performance of IT systems, potential issues can be pre-empted and addressed, often before they become apparent to the end-users.
Leveraging an MSP allows businesses to tap into expert knowledge without the overheads of an in-house team, often translating to cost savings and efficiency gains.
The Cost-Benefit Analysis
a) Reduction in Downtime:
Every minute a business’s systems are down, they’re potentially losing revenue, customer trust, and employee productivity. Regular IT glitches can also erode employee morale over time. With 24/7 monitoring and rapid response times, MSPs can drastically reduce these downtimes.
Quantifying the Benefit: Consider the revenue generated by a business in an hour. If managed IT services prevent even a few hours of downtime annually, the cumulative savings can be significant. For instance, if an hour of downtime costs a business $10,000, and managed IT services curtail downtime by 10 hours a year, that results in direct savings of $100,000.
b) Enhanced Cyber Security:
In the modern age, data is gold. Protecting this data from threats like ransomware, phishing, and DDoS attacks is a necessity. Beyond the immediate financial implications of a cyberattack, businesses may face legal repercussions, a tarnished reputation, and the long-term loss of customer trust.
Quantifying the Benefit: Drawing from industry statistics, the average cost of a data breach in 2022 was pegged at $4.35 million. If an MSP’s cyber security measures reduce the likelihood of such a breach by just 10%, that equates to a potential saving of $435,000.
c) Scalability:
As businesses grow, so do their IT needs. MSPs allow businesses to scale their IT resources in tandem with their growth, ensuring efficient operations without exorbitant upfront costs.
Quantifying the Benefit: Rather than incurring a $500,000 expense on new infrastructure for expansion, a company might spend only $100,000 through an MSP’s scalable solutions, netting a saving of $400,000.
Intangible Benefits
a) Peace of Mind:
This invaluable benefit ensures that leadership can focus on strategic initiatives, innovation, and growth without the constant shadow of potential IT disasters.
b) Access to Expertise:
MSPs boast diverse teams with specialists spanning various IT domains. This reservoir of knowledge is particularly invaluable for small to medium-sized businesses that may not have the resources to maintain a full-fledged IT department.
c) Agility:
The ability for businesses to pivot quickly is a competitive advantage. Managed IT services ensure that a company’s IT infrastructure is a catalyst, not a bottleneck, for such change.
Calculating the ROI of Managed IT Services
The ROI encapsulates both tangible and intangible benefits against the service costs:
ROI = (Net Benefit of Managed IT Services−Cost of Managed IT Services Cost of Managed IT Services) x 100
Using this calculation, if the combined savings and earnings from managed IT services in a year amount to $1 million and the services cost $300,000:
ROI = (1,000,000−300,000 300,000) × 100 = 233.33%
This implies that for every dollar invested in managed IT services, the company sees a return of $2.33.
The Main Takeaway…
The ROI of managed IT services isn’t just a figure; it’s a testament to the strategic importance of these services in today’s world. While the direct financial metrics are compelling, the broader benefits, from operational agility to unparalleled peace of mind, underscore the holistic value of managed IT services. In a world where technology is increasingly vital for business success, partnering with the right MSP can be the difference between just surviving and thriving.
Ready to unlock these benefits for your business? Platform 24 offers industry-leading managed IT services tailored to your unique needs. With a track record of excellence and a commitment to proactive solutions, Platform 24 ensures your technology drives your success, not hinders it. Contact Platform 24 today and elevate your IT game.
