When it comes to selling managed hosting, managed service providers have traditionally focused on large enterprises with big budgets and Cloud plans. However, an increasing number of smaller businesses are recognizing the value of managed services and turning to outside providers for IT support. A recent CompTIA study found 56% of businesses with 100 or more employees and 47% with less than 100 workers felt “improving the efficiency and reliability of IT operations” was the main reason to switch to MSP services. MSPs can achieve marketplace gains by differentiating themselves as a valid alternative to IT support.
These SMBs are a key market that managed service providers can tap into. However, with service costs of crucial importance to these smaller businesses, they may require some convincing. Just one third of organizations expect their IT budgets to increase this year, and sixty-eight percent say they do not expect to hire additional staff, according to a recent survey.
With cost at the forefront of these budget-minded SMBs’ concerns, MSPs selling managed hosting should make cost savings the driving force behind their pitch, promoting the benefits of acting as an IT team to smaller businesses with tighter budgets.
How Do MSP Costs Compare with Those of In-House IT Support?
IT professionals have a great deal of knowledge and ability – and these skills can come with a high price tag. Research suggests that companies need at least one IT support desk worker for every 70 network users, just to operate their systems at a basic standard.
- Average salary for a network engineer – $63,477
- Average salary for a software developer – $70,171
- Average salary for a senior software engineer – $97,348
These numbers don’t even include any additional day-to-day computer support that a company might need. Keeping the IT team to a bare minimum might cut costs, but it will also cut their availability for tasks. Instead of proactively improving and monitoring networks and systems, a reduced IT staff gets tied up with support tickets and tech troubleshooting. To allow an IT team to carry out a wider range of functions, more staff need to be brought in – and this increases costs for the business.
When selling managed hosting, remember that cost is often the main deciding factor for these budget-minded SMBs. Smaller operations can make big savings by cutting back on expensive IT salaries. Managed services are usually priced by user or by device – and for smaller businesses where IT support is stretched thin or entirely lacking, this can be a budgeting lifeline. In an MSP pricing model where each PC costs $50 and each server costs $250, those 70 network users above can be supported for around $42,500 per year – saving approximately $20,977 on each in-house salary.
A More Efficient IT Team and Less Wasted Hours
Is that in-house IT team truly productive and cost-efficient, or are they just wading through support tickets and stemming the inevitable tide of problems? Always remember that ‘busy’ and ‘productive’ are not the same thing. SMBs may feel that their current IT arrangement works well. Their IT staff are never left idle: there is always work to be done, and the team is usually found toiling on a fix or a solution around the office. But is keeping the team busy with troubleshooting really the most cost-effective way to operate an IT network?
Businesses can find themselves spending money on retaining an IT team where managed services could prevent the problems those staff get caught up resolving. Instead of in-house engineers fighting fires, IT support could simply be a matter of monitoring systems through managed services and addressing trouble before it occurs – for a much reduced cost! SMBs are discovering that cost reduction and efficiency are the key reasons to switch to outsourced hosting and IT support – it seems that selling managed hosting should be easier than ever with such high demand from online businesses.
How In-House IT Repair Costs Can Quickly Mount Up
If a serious fault occurs with an IT system, it can leave a business seriously out of pocket. Downtime on a commercial network not only holds up customer access and prevent sales, but it leaves workers unable to do their jobs and harms productivity across an entire company. When a large company like Amazon loses service, it costs them $66,240 in missed sales, repair costs, and downtime. SMBs might not lose comparable amounts when downtime strikes, but the proportionate loss is just as great. Worse, smaller businesses can take a serious hit to reputation as a result of technical problems – and this can take years to recover from.
On the other hand, businesses that rely on managed services:
- Can count on MSPs to provide consistent hosting and IT support to clients
- Greatly reduce the odds of their clients experiencing downtime
- Lower ongoing in-house IT staff costs – whether a problem occurs or not
- Aren’t reliant on support desks that spend most of their time on tickets and queries
- Have more resources for network improvements and monitoring
- Mitigate the chances of experiencing an expensive disaster
- Avoid repair costs entirely through proactive network management
Marketing to Budget-Minded SMBs: How MSPs Can Replace In-House IT
Whether SMBs hope to replace in-house IT or just want a way to free up their time so they can focus on development and improvement tasks, managed services could be the right way forward. In terms of simple cost, the average monthly package fee works out well under the typical salary of retained in-house tech engineers.
When you consider the potential savings through reduced repairs and eliminated downtime, selling managed hosting to SMBs makes perfect sense. These frugal and cautious smaller businesses will appreciate the security of regular network monitoring and the greater flexibility it brings to their IT hiring requirements.
If you’d like to learn more about how to market your Cloud or IT services to businesses of any size, Total Product Marketing is here to help. For more information on TPM’s extensive range of marketing packages for managed services, get in touch with our team today.