‘Deflation’ and Managed Services
A major theme of our discussions with IT Leadership and EA teams is to understand the ongoing changes in, and potential impact of, the continuing price/performance improvements in processing, networks, storage and services. (See our materials on ‘Tech-tonics’ – the long-term implications of the changes in technology economics).
I was reminded of the importance of monitoring these trends when working with a client this week. The client is a small/mid-sized IT shop with approximately 70 staff (including contractors). We have been encouraging this client for some time to look at selective outsourcing to improve service as well as lower cost.
I reviewed with the client this week a proposal to manage and monitor their approximately 100 Windows servers. The client was planning to hire two additional staff to meet the demands of applying updates and patches, and to extend support coverage into evenings.
I like to think I am ‘on top’ of everything but I was positively surprised by the proposal they received from a mid-sized, good quality services provider using on-shore resources whose business remains strong.
The proposal includes 7x24x365 support at a cost of just around $100.00 USD per physical server per month. Said differently, the cost of the managed service is significantly less than the cost of the two hires (e.g. salaries, benefits, office space, PCs, travel) and the client’s organization receives significantly extended service coverage.
This experience just reinforces our view at EAdirections that focused outsourcing can provide significant benefits in both cost and service.