All For One Monthly Payment: Beware of the All-You-Can-Eat Buffet of Managed IT Services

in Technology
Joe Balsarotti

A business called me last month, unhappy with their present information technology provider. The why of it isn’t important. What is important is that the business is contemplating a switch – its second such change in three years.

The present tech company signed them up for a “managed service” plan. We’ve discussed that buzzword before; it’s a laundry list of tech bundled together for a monthly fee. In many cases, it’s really a list of things that probably shouldn’t be bundled together. Security software, firewall, backup equipment and cloud storage tossed in with equipment maintenance, software updates and help desk services all in a neat bundle, tied up with a bow and “all for the low monthly price of $$.” It may be a great deal for the vendor, but absolutely not for this client…and probably not for you, either.

As we looked into the business’ setup we found that it doesn’t own its backup appliance and it doesn’t have control of its cloud-based backup data. The business also assumed its firewall was up-to-date. Not so; the vendor had only enabled the basics, not the data-filtering options available on the device that required a subscription to enable. It is relevant to note that even though the customer had been hacked a couple of months ago, it had not engaged the advanced firewall features. Even the endpoint software (formerly known as antivirus software) is billed monthly and the license isn’t in the customer’s name. In other words, the customer’s livelihood is dependent upon rented products and services from its current IT company.

How can a customer disengage from a vendor who isn’t to its liking? Unfortunately, the business customer has to throw money at the problem – unfortunately a lot of money in this case. In order not to get stuck like this again, the business will need to buy endpoint licenses a second time. The initial buy is more expensive than a renewal, but this vendor advised the business customer to cancel its existing licenses, assuring the client that the vendor would simply bundle in the cost with the client’s contract. This probably made for an easy initial sale, but like that old FRAM oil filer ad, “You can pay me now, or pay me later.” In this scenario, the later is a much bigger bill when the customer’s honeymoon with its tech vendor is over.

Because of the bundling, the customer had no idea that its firewall wasn’t being used to its capacity, nor did the client know how involved getting its backup data moved to a device it owns and a service it had control over would be. All of these issues are solvable, but it results in a sizable up-front cost. This story illustrates that the customer’s hands-off approach to the IT firm left it vulnerable because everything moved behind the scenes. Without those pesky old, internal discussions about replacing aged equipment or buying new versions of this or that, as the customer write a monthly check to the tech vendor thinking it was covered, the customer lost touch with the infrastructure its business depends upon.

All in all, we calculated more than $4,000 for this twenty-something-member company, just to undo the mess created by the “all for a low monthly fee” shtick. Beyond that lies the cost to audit the client’s IT network to see what other problems may exist with software licensing, security or network setup and to document and onboard these issues. If the business customer hadn’t been sold on the monthly contract, it would have been in a far better position when it chose to switch tech providers because the software licenses, services and equipment would have been in the customer’s name and it would have possessed keener insight as to what it was paying for.

I understand that managed service is all the rage in the IT world. At conference after conference, managed service is unabashedly sold as how to make money for not doing much. In theory, the vendor automates everything; once an IT vendor creates the defined set of services for its first customer, the pattern is copied for all the rest. If your business is basic, managed services may be a good fit as it does offer predictable costs and basic technology needs are well met. Unfortunately, it can also mean that customers with unique needs, custom software or equipment – or for whom time is more valuable than for an average business – aren’t going to get the level of response they require since those businesses don’t fit the cookie cutter approach.

The nightmare begins when the customer discovers that its vendor is not a good fit, or worse, doesn’t fulfill its obligations. What happens if the IT company goes out of business or is bought by an out-of-town firm and local support evaporates? Is easy budgeting for technical services more important than getting the best product or service for your company’s particular needs? Or, do you need to retain the keys to your own kingdom?

Is your business prepared to pay significant money to move on if something goes badly? Be wary of the all-you-can-eat buffet of managed IT services. Know what elements your business has control over and what you don’t. Know the costs involved beyond the monthly fee and how much a breakup could set your business back.

I welcome your questions or comments at businesstech@software-to-go.com.

Joe Balsarotti is President of Software To Go and is a 37-year veteran of the computer industry, reaching back to the days of the Apple II. Balsarotti served three terms as chairman of the National Federation of Independent Business’ (NFIB) Missouri Leadership Council, as chairman of the Clayton, Missouri Merchant Association for a dozen years, chaired Region VII of the Federal Small Business Regulatory Fairness Board and currently serves on the Advisory Panel of the ASCII Group, an organization of more than 1,000

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