Thought Leadership.

The Cost Considerations of Managed Services

  • Charles Edge
  • Oct 30, 2013

With the economic, social, and technology trends pushing IT outsourcing concepts into the spotlight for businesses, it has become increasingly important for CFOs to take a serious look at managed services. For companies, managed services has been a boon in reducing or avoiding cost, helping businesses shift from a capex to an opex model, and or reducing complexity and risk, and for accessing new IT expertise without taking on additional employee headcount.

For many CFOs, eliminating or reducing upfront hardware or monthly employee cost is usually seen as the most important factor when choosing to go towards a managed service or IT outsourcing model, however, we at 318 recommend that you take in a thorough analysis of all the cost involved in your current in-house model and see how it compares to outsourcing.

Below are some typical cost that should be taken into consideration:

Labor

  • Salaries and wages
  • Overtime/Benefits
  • Payroll Taxes
  • Travel

Hardware/Software

  • Purchases & Upgrades
  • Sales Tax (Local/State)
  • Shipping
  • Installation
  • Write Offs
  • Disposal Cost
  • Licensing
  • Implementation

Maintenance

  • Hardware and Software
  • Other products/services
  • Staffing

Access Control/Security

  • Infrastructure
  • Administration
  • Monitoring

Recovery/Disaster Recovery

  • Staffing
  • Hardware/Software
  • Testing
  • Insurance/Compliance

Technical Expertise

  • Internal/External Resources
  • Training
  • Staffing

Facilities

  • Building and Floor Space
  • Property Taxes
  • Utilities and Security
  • Furniture/Equipment

Ongoing support

  • Insurance
  • Audits
  • Legal
  • Service levels

These are just some of the issues that CFOs need to consider. So when all is said, done, and analyzed, is it worth it? From a financial perspective, it may be. One thing is for sure, the trends are definitely moving in the direction where soon rather than later it will not only be a financially smart move to outsource your IT needs and focus on your expertise but it will be an expected business practice.

Let us know what you think, we would love to receive your feedback. You can reach us at sales@318.com.

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