Last Updated: May 19, 2017
Managed IT Services have come a long way since the 90s.
Once upon a time, if you had an IT issue, you would have to wait until the next scheduled on-site visit by an IT Support Technician to resolve it.
The technician (let’s call him David) would be on-site on a predetermined day, to visit each staff member and resolve their IT issues.
David would then go to the server room/closet and “check the logs” to make sure the servers were in good health.
Once David was done with his routine tasks, he would hang around (probably browsing the internet) since he was contracted to be on-site for the entire day.
Evolution of Managed IT Services
That was the 90s, the problem is that today there are still organizations that have the same arrangement with their Managed Services Provider (MSP), as they did 20 years ago.
But it's not the fault of the customer, but rather the MSPs who have not evolved in their service delivery model over the last two decades.
The world operates at the speed of business, and if nonprofits and associations want to keep pace with the business world, they must break away from these ancient service models.
It makes no sense to have your staff save their issues for a specific day when the IT provider is on-site.
Staff are the most important assets to an organization, and if they have a technical issue, then it should be addressed immediately.
This will ensure that staff can continue to perform their jobs, and ultimately help propel your organization on its mission.
Similarly, on the back-end server side, your MSP should be proactively monitoring your systems and addressing any issues as they occur.
This will ensure that your systems are continuously in good health, and therefore able to serve your end users with the data and tools they need to perform their functions.
The Modern Managed Services Provider
In today's on-demand world, the modern MSP is focused on proactively providing their customers with managed IT support and guidance.
This means on-demand support when needed, whether it is remotely or on-site.
With abundant bandwidth available to most organizations and sophisticated remote access tools, there is no reason why an issue can not be resolved within minutes, no matter where the end user is located in the world.
This type of technology service model directly translates into efficiency for the customer and the MSP, which results in cost savings.
The customer doesn’t lose valuable business hours while hindered with technical issues and waiting for the IT vendor to come on-site (not to mention paying for their travel time).
The modern MSP is able to address customer issues through the use of remote access technologies, and cut down on their overhead expenses, instead of sending an engineer on-site for a basic issue.
Therefore MSPs can take on higher volumes of support issues with less staff, making them more profitable, and in theory pass those cost savings on to their customers, making them more competitive.
Strategic IT Consulting
Beyond day to day support, the most common complaint we hear from organizations is that their MSP is not providing strategic IT consulting in the form of guidance on future technologies.
This goes back to the MSPs being stuck in these ancient service delivery models.
If they can’t be proactive in providing support to their clients, how can they be strategic in providing guidance on the future?
Because the two are not mutually exclusive, an MSP that is proactive, agile, and strategic is able to provide their clients with rapid response, proactive support/maintenance, and continuous strategic consultation.
A modern MSP should be leveraging the latest technologies themselves, and once thoroughly tested, providing cutting edge IT solutions for their clients.
If the MSPs entire business model does not fit with this philosophy, then they will not be capable of providing their clients with strategic technology guidance.
In fact, they will likely continue to recommend that you purchase expensive on premise equipment, as you always have.
Rollover IT Service Model
The same is true in how an MSP runs the business side of their operations.
For example, the majority of MSPs have a “use it or lose it” policy regarding contracted support hours or retainer funds.
It’s your money, shouldn’t you be able to use it when you really need it?
This concept is nothing new and radically changed the wireless telephone business, when customers got tired of losing their “minutes” at the end of the month.
AT&T developed the concept of “rollover” minutes, and soon after the competition followed.
Most recently this concept has been applied to rollover data plans.
So why do MSPs not allow their customers to also rollover funds/hours or apply them towards projects?
The End of Long-Term Contracts
The same philosophy of rollover hours/funds applies to the concept of locking your customers into long-term contracts.
T-Mobile was one of the first wireless providers to offer month to month plans, as consumers were driven by flexibility in their purchases.
So why are MSPs still requiring customers to sign 2, 3, or even 5 year contracts?
Furthermore, why would you want to be locked in to the same rates for such long period of time?
Modern MSPs should not require long-term commitments from their clients if they are 100% confident in their services.
A reasonable commitment for a managed services agreement is 12 months, to allow the MSP to obtain an understanding of your environment and implement a support model to meet your organization’s needs.
Any long term commitment to cloud solutions is unnecessary, a providers on boarding process should be sophisticated enough that there is no need to trap customers in order to recoup implementation costs.
Also, be aware of auto renewals built into your contract terms.
Many MSPs will slip a clause into their contracts requiring the customer to provide intent to terminate within a specified narrow window of time, e.g. 30 to 60 days prior to the contract end date.
If the customer does not provide this notice, the agreement will auto renew for another term, often one year.
Disruptive Innovation: Online Price Transparency
Finally, let’s talk about the buying process. It's amazing that procuring a new MSP or cloud services provider is like buying a used car.
At first the sales person won’t give you their pricing until they provide a proposal.
Then, if you ask them for a discount they may be willing to lower their price, but only if you sign by Friday.
Your organization should be suspicious of a vendor who is willing to negotiate on price.
If the vendor is truly confident in their products and services, and if they are smart business people who have priced their products and services to be competitive in the marketplace, then there is no reason for them to negotiate.
If the MSP is willing to negotiate on price, consider how and why it might be possible for them to do so.
A price reduction is an admission that the original quote for services is not backed by the value the vendor is able to deliver, or is not in line with the market, and was a quick way to try to pad margins.
It’s a safe bet to assume that future quotes from the vendor will be similarly inflated, requiring close scrutiny and cross shopping by your organization with all the time and headache that entails.
An example of modern market disruptors is Tesla Motors.
Besides the radically different engineering and technology in their electric cars, compared to traditional gasoline engine automobiles, Tesla's business model is disruptive in the auto industry in the way that they sell their cars.
If you want to buy a Tesla, all you need to do is go to teslamotors.com, configure your car with the exact specifications you want, and then click the button to place your order.
Their pricing is online for everyone to see, and you can be certain that you are paying the same price as every other consumer.
So why do MSPs not have the same transparency in their pricing?
If by the time you’ve finished reading this article, you feel that your MSP is stuck in the 90s, then it's time to move on. And if your vendor is one of the modern MSPs we described, then you'll want to hold on to that relationship.
5 Key Take-Aways:
Seek a managed services provider who has evolved by adapting their service models to meet the changing needs of nonprofits and associations.
Your managed IT services provider should be a strategic partner, providing consultation and guidance on future technologies, thereby empowering your organization to work towards furthering its mission.
Seek an IT provider who offers rollover hours in their service model. Your organization is entitled to the hours it has paid for, and should be given flexibility in how to allocate them.
Long-term contracts and termination fees are a thing of the past. Organizations should have flexibility in their purchases, and deserve to not feel "locked-in" if a vendor does not meet expectations.
Don't wait until a proposal is provided to review cost. Providers who are dedicated to your organization's future should be upfront and transparent about their price.