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Pros and Cons of Internal IT versus Outsourced IT

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When you’re presented with the opportunity to hire a new IT resource or to outsource to a Managed IT Service Provider, which direction should you head? Do you interview, hire and train a new staff member or pay a little more per hour (but possibly less overall across the course of a year) to recruit a company that has expertise across all areas of IT and can solve multiple issues simultaneously?

Here’s a list of the pros and cons of hiring a new resource versus outsourcing your service desk and network administration.

Pros of recruiting a new IT staff member

  1. They’re cheap during regular hours. The new guy or girl is a relatively cheap resource that can be deployed to help your users all day long
  2. They’re cheap outside regular hours. Out-of-hours access to the resource tends to come with the territory, without costing excess fees – maybe just time off in lieu
  3. Your users can usually see someone quickly. The fact that he/she is on-site means users can usually get faster attention and problem resolution when they need it. He or she can run (if necessary) to the user with a problem and set about fixing it – assuming they’re available – that’s going to be much faster than an external provider can get to your desk
  4. They’ll become experts in your network and standard operating environment. They’ll develop a deeper understanding of your systems and the way that your staff use them, so they’ll get faster at fixing issues.
  5. Back-up resource. He or she gives you a back-up that doesn’t require a ramp-up when your primary IT resource (IT Manager or Senior Sysadmin) goes on holiday
  6. Upwardly flexible. You can add new staff without having to pay extra to your on-site resource
  7. Trusted access. Someone trusted can come back on-site after hours to work on your infrastructure, without having to be accompanied by other staff
  8. Short ramp-up period. The new resource can learn the details of your ERP or practice management system in a few weeks.

Cons of recruiting a new IT staff member

  1. Risk of network exposure. You’re left exposed far more often than you think. Public holidays, vacations, sickness and injuries all present an opportunity for a gap in the management of your network and you can bet that’s when an outage will strike. A Managed Services Provider (MSP) has multiple staff assigned to check-in on your network across all hours of the day, every day of the year on top of an automated system continually monitoring and alerting to outages
  2. It’s slower when multiple issues occur at the same time. One person can only work effectively on one problem at a time. A managed services team can respond to multiple issues at once which means that your team can get back to work faster.
  3. Lack of Downward Flexibility. Although you can add new staff without paying extra, you cannot downsize without suffering a consequence. You either continue to pay for an IT resource that is underutilized or you have to make that resource redundant and lose access to the intellectual property in his or her head. A Managed Services contract flexes downwards automatically when fewer staff are part of the network, without the loss of system knowledge.
  4. Learning stalls. Unless your company has a measured and managed professional development programme, the individual learning process tends to stall when confronted with the endless support issues requiring attention from your users. Managed Service providers must stay current across a constantly-updated range of network elements. Hardware and software vendors demand that MSP staff complete new training when available as part of their license accreditations.
  5. Short-term HR cycle. The stifled learning and lack of challenge for your on-site resource implied in the previous point is the key contributor to short-termism in your IT staff. Sysadmin staff tend to stay in one position for as little as 24-36 months, on average according to Glenn Chaffey, co-founder of Exclaim IT. Then you need to recruit again. A Managed Service Provider has systems in place so that no matter which staff member addresses a help ticket, he or she is the beneficiary of all the knowledge that has been recorded prior.  Someone leaving a managed services team won’t affect the quality of the service delivery to your staff.
  6. System documentation becomes outdated. The familiarity of the position plus the “always available” mindset of someone on-site means that system documentation inevitably falls behind and becomes less helpful in the event that you need to receive outside assistance or hire a new IT resource. This introduces the risk of delays and increased expense, especially when “something” in your network fails and it takes longer to isolate and remediate the issue.
  7. Mismatch between employee expertise and the work. If you recruit a senior resource, you will pay a premium for the knowledge, whether he or she is working on complex or simple issues. An MSP contract is weighted towards the resolution of simple issues but factors in the need for Level 2 and 3 engineers to assist periodically as well, so your expense is more closely matched to actual demands on IT’s time.
  8. Are you creating “unsackable” people? The more time an IT resource has spent on site, the higher the consequence of them leaving and taking critical, unwritten, intellectual property with them. If the key to job retention is network knowledge, the IT resource is disincentivised to write that knowledge down. On the other hand, an MSP is judged by your CIO or CFO on the basis of meeting agreed Service Level Agreements. The key to retention for an MSP is to manage efficiently and transparently. You will retain an MSP because of how transparent they are, not because you feel they are too important to let them go.
  9. You’re only getting a generalist. The breadth of expertise required in general Windows® and peripherals management, let alone ERP / Practice management software, means that one person would struggle to be an expert across all that plus network management, infrastructure maintenance, data leakage prevention, back-ups etc. Working with an MSP means you get access to an expert in each of those areas.

Pros of Outsourcing Your IT

  1. You get more monitoring than one new resource can provide. When you contract out your managed services, you get an automated monitoring suite installed on all your servers and desktops, not just a single person. More than one MSP employee monitors it. So you tap into extra service infrastructure that you typically don’t have access to when you keep your IT function 100% in-house
  2. Fast ramp-up leads to Multiple Experts. Your Managed Services Provider can learn the workings of your ERP or Practice Management System in a few weeks and share that knowledge with every team member on a dedicated ‘wiki’ that is shared with you and constantly updated. Suddenly, there are numerous staff who can assist users with basic administration and troubleshoot more complex issues; many more than you could make available on-site.
  3. Access all flavours of expertise. You get access to all levels of expertise for one monthly cost. From basic service desk functionality through to Level 3 system engineers when required and at no extra expense.
  4. Constantly-updated system documentation. You get copies and updates of standardised system documentation. The documentation is used at least monthly in the regular course of network support, so it is always up-to-the-minute.
  5. On-site visitation is not a problem. As long as the appropriate considerations are given to how after-hours access is to occur, your MSP can show up on site quickly in an emergency.
  6. Holistic view helps prevent problems. When you take on an MSP, you get access to a world-class ticketing and information system. This enables you to see what tickets have been raised and which remain open or have been resolved. Importantly, your business will get clear information on which parts of its infrastructure (desktops, servers, operating systems, applications, peripherals etc.) cause the most problems. Proactive maintenance can then solve the root causes of issues. This is something you don’t get with reactive maintenance where your Sysadmin or IT Manager spends their time putting out fires.
  7. Best Practice and Better governance procedures. The ticketing system and standardised documentation go hand-in-hand with better governance processes around your company’s standard operating environment, new deployments, software additions, internal moves and departing employees whose access needs to be terminated.
  8. Fundamentally different value drivers mean an MSP resolves the causes of issues. The fundamental goal of a new IT resource is to add value by resolving the apparent issues and freeing up senior IT management. He or she only has a position because your company wants to address and resolve problems in a speedier fashion. The goal of an MSP, however, is to progressively eliminate the root causes of issues in the first place. An MSP is incentivised to create a situation where fewer tickets are raised so that the contract becomes profitable. An on-site staff member is not incentivised to do the same because being less busy means brings the chance of redundancy.
  9. Your IP stays with your company. Computer One’s average length of service for Managed Services clients is 7+ years. That’s more than twice the length that your new hire is likely, on average, to stay in the job. The system documentation is yours for life so even if you want to leave us, you won’t lose any of the Intellectual Property.
  10. You get multiple “go-to” contacts. Just because we’re not on-site doesn’t mean we don’t have a personal relationship. You are introduced to multiple staff members who are assigned to your account to become your personal go-to team. They will each learn your network features in detail and be able to provide immediate assistance when required.
  11. It’s much easier to fire an MSP than an employee. No industrial relations watchdog involvement and no redundancy payout means that the MSP is incentivised to continue to deliver better and better system performance. There’s no room for slacking off.
  12. Free up important internal resources. This is the single biggest reason to engage an MSP. When you outsource your IT, you free key engineers and managers from dealing with problems that inhibit their ability to deliver value equal to their pay grade. Suddenly, your company can make real progress in gaining a competitive edge, because your key development resources can focus their time and energy on delivering new value.

So what should you do?

If you want to hire a new person because you feel better about having someone on-site, we would ask you to reconsider what it is about having that person that makes you feel better?

If it’s speed of problem resolution, or speed of acquiring system knowledge or constant monitoring or high personal availability then those are all features that you get in a Managed Service relationship.

If it’s cost then make sure that you are looking at the whole picture. Recruiting a generalist means you don’t get the same breadth of expertise as you get in a Managed Services company. You may still need to bring in expensive experts to solve specific problems. You also get just one person for the price and that one person can only solve one problem at a time. An MSP can solve all kinds of network issues and work with multiple users in your company at once. And it can flex downwards to reduce the cost if your company’s fortunes slide.

If it’s to free up important internal resources by handling fires that you’re currently paying senior staff members to address, you need to understand the value equation. An MSP derives value out of the relationship by proactively reducing the root cause of issues. An on-site staff member demonstrates value by swiftly putting out fires before they require a senior resource’s attention. Only one of us is incentivised to fully eliminate issues.

If it’s longevity of relationship, history shows that you are likely to have a longer term relationship with a competent managed service provider than with a single employee.

We cannot avoid the impression of bias, of course, as we are an MSP ourselves. But we can point to the multitude of clients who wouldn’t go back to recruiting new on-site IT staff now that they enjoy all the benefits and cost-efficiencies of having an MSP manage their network and service desk.

Just ask us and we’ll introduce you to some of them.


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