What are Managed Services?
Before we look at how Managed Services are paid for, we need to be clear on exactly what is meant by the term Managed Services.
Managed Services refers to a range of IT functions that are provided to a customer by a third-party IT specialist. The third-party is known as a Managed Services Provider (MSP).
Increasingly, companies are using a Managed Service Provider to manage parts or all of their IT. What you choose to outsource will probably depend on your budget, your in-house resource and your business objectives. For some organisations, it makes sense to outsource a lot of their IT while others want to keep control and choose to keep their IT in-house. You can find out more about Managed Services here.
Whatever you choose to outsource, whether it’s a lot or a little, using Managed Services is usually a very cost-effective way of benefitting from a high-quality IT service, especially compared to the traditional way of accessing and paying for IT services.
What is the traditional pricing model?
Traditionally, IT support has been provided on a break/fix basis. So, the customer doesn’t pay anything until something breaks, at which point their IT support company will fix it and charge them.
The problem with this model is that the goals of the customer and the provider aren’t aligned. The customer, understandably, wants an IT system that works efficiently and causes them minimal downtime. In contrast, the provider has a vested interest in something going wrong with the customer’s network, because they will be paid to fix it…
The break/fix model can also cause conflict between the provider and the customer further down the line. Because the customer is billed for the fix after the event, they may dispute what happened and also question why the problem could happen in the first place.
On top of this, if something has broken or the network is down, there is usually a delay between a network error occurring, and an employee reporting it to their support provider.
For example, imagine an employee has a problem accessing their network. An error message appears on their screen when they try to log in. They might try to solve the problem themselves for a few minutes. They might turn the computer off and on again. If this doesn’t work, they might ask a colleague for help (which then takes that person away from their job, too). Eventually – after who knows how long – the employee contacts their IT support provider. This whole scenario has stopped two (or maybe even more) people from doing their job for a long period of time, unnecessarily.
It seems like there must be a better way…
Managed Services is more cost-effective
In contrast to the scenario above, using Managed Services is very cost-effective and can save you time.
Round-the-clock support can be provided for a fixed monthly fee, so problems are spotted and sorted before they can progress. This means little or no downtime can be achieved as part of the ongoing monthly fee; both the customer and the provider are happy with that arrangement.
Using Managed Services also means your staff can be more productive compared to the break/fix IT support model. An employee whose IT network is managed by an MSP might spend a few minutes trying to fix a network problem, like the one described above. When they realise they can’t fix it themselves, they call their MSP. They know that the issue will be resolved at no additional cost than the fee they pay each month. They also know that, because the MSP is bound by response times outlined in the Service Level Agreement, the problem will be fixed quickly.
The MSP can log in remotely and solve the issue from a different location, with minimal downtime for the user. The customer has saved money and time, and staff can get back to work more quickly.
For more info on why Managed Services are cost-effective for business, read this blog.
How do you pay for Managed Services?
So, we’ve established why Managed Services are cost-effective and efficient, but how are they charged? How do you pay for them?
Most of the time, Managed Services are charged on a subscription basis, which makes it an operational expense rather than a capital expense. This is preferable for lots of companies because it offers a predictable IT spend without hidden costs cropping up, and with minimal initial outlay.
The cost of your subscription will vary depending on the services you use and the number of users. The higher the level of service, support or users, the higher the cost. The good thing about Managed Services though, is because it is charged on a per user basis you don’t overspend or pay for services that you don’t use.
A longer contract can often mean a lower price for the services received, but any prospective MSP should be able to provide you with a quote based on services received and number of users.
In general, there are three pricing models for Managed Services. They are:
- Per user
- Per device
Per device – As the name suggests, per device is when you are charged per device that is supported. Many MSPs use a per device charging model because it’s fairly simple. It is easy to quote, which is beneficial for both the provider and the customer. It’s also flexible and easy to modify as devices are added or removed.
Per user – The per user cost model is similar to per device but a flat fee is billed at the end of the month based on the number of users. This covers support for all devices used by each user, which could mean a smartphone, laptop and office PC are all covered for one individual.
Tiered – Tiered pricing offers different bundled packages, with prices increasing through the tiers as a more complete service is provided.
How does Core charge for Managed Services?
As with any provider, the cost of our Managed Services depends on what aspects of your IT you would like us to manage.
Our Desktop as a Service comes in three different per user/per month packages. Each package offers a different level of service which is reflected in the price. Desktop as a Service provides you with a full-featured Windows 10 desktop on any device, in any location, simply by logging into your unique account.
Other costs depend on your exact requirements. We can provide managed networks, security, IT support and identity and access management solutions, with costs depending on the number of users you have and the level of service you need.
To read our FREE white paper on Managed Services Visualised, click here.