Managed IT services are IT services that an organization outsources to another organization, typically one that specializes in those services. These services primarily consist of daily operations, but they may also include lifecycle maintenance and production support. The organization that has direct oversight over the managed system is the client and the organization that provides the IT services is the service provider. The client typically retains accountability over the system, meaning that it is ultimately responsible for the system’s performance.
Enterprise-level companies have used routinely these services for years, but they are also becoming popular with smaller companies. Value-added typically must modify the enterprise model of managed IT services so they are effective for these companies. The primary justification for managed IT services is to reduce the client’s total IT costs.
IT’s Responsibilities to the Business
A managed IT service provider is generally responsible for providing a specified set of services. The client usually determines the services that it needs, although some models require the provider to determine the required services. Service providers typically charge an initial setup fee and a fixed fee at regular intervals, usually monthly. This allows the client to have predictable IT costs.
IT service providers may manage more than one set of services according to the client’s requirements. This allows the provider to offer the client a complete solution for its staffing needs by leveraging the staffing companies. The provider often uses a vendor management system to provide detailed information on the contract workforce for the client, keeping this process efficient and transparent. This model has proven effectiveness in the private sector, and it is becoming more popular in government.
Direct Costs of an IT Department
Hard costs are easy to quantify and generally have a specific monetary value. The hard costs of managing IT services in-house include the salaries, benefits and employee taxes for the IT staff. They also include the cost of training employees, especially those who require specific certifications to perform their duties. The time that managers spend overseeing the IT department is also a hard cost of managing in-house IT services.
Indirect costs of an IT Department
A soft cost is generally difficult to directly convert into a monetary value. The soft costs of managing IT services in-house can include the lost productivity and revenue of downed systems. Security breaches from poorly managed systems also cause revenue losses and damage the brand identity of an organization. Additional soft costs of in-house IT services include the productivity loss caused by assets that are configured incorrectly. These assets are primarily servers, but they may also include desktops, applications and backups.
Making a choice: Internal IT Services department or Managed IT Services
The cost of managed IT services is a hard cost that generally takes the form of a monthly recurring fee. IT managers must compare the costs of in-house IT services with the cost of using managed IT services. A managed IT service is cost-effective if this hard cost is less than the sum of the hard and soft costs of performing IT services in-house.