There are two, fundamentally different approaches to outsourced I.T. services: Traditional I.T. Services (also referred to as “Break-Fix”) and Managed I.T. Services. Unfortunately, distinguishing service providers based on which approach they deliver isn’t as simple as asking them. The true classification depends both on the service provider’s billing model and strategy for proactivity. A perfect demonstration of this concept is how service providers handle Microsoft and Google’s mandatory enforcement of multi-factor authentication (“MFA”).
Traditional vs. Managed I.T. Services
Although the execution and delivery of services are vastly different between traditional and managed I.T. services, the differences can be summed up quite simply. Under a traditional I.T. services model, the customer pays the service provider based upon the number of hours the service provider spends servicing the customer. These labor hours can either be billed as they are provided, or they can be sold in advance as a “block” of time or retainer. If a business must pay for labor hours when they request help from their I.T. service provider, that service provider is following the traditional/break-fix I.T. services model.
Under a managed I.T. services model, the service provider delivers its customers unlimited labor hours for a flat monthly recurring fee. There may be some special exclusions, such as after-hours support or project labor, but most of the support is provided under this fixed-fee model.
For a traditional/break-fix I.T. service provider to be profitable, it must bill its customers for as many labor hours as possible. In contrast, for a managed I.T. services provider (“MSP”) to be profitable, it must deliver to its customers as few labor hours as possible. To accomplish this, MSPs must hyper-focus on proactivity, problem prevention, operational efficiency, and strategic planning on behalf of their customers.
Example: How Providers Approach MFA Enforcement
In recent months, both Microsoft and Google have committed to enforcing multi-factor authentication on all their platform users. MFA is an unbelievably effective cybersecurity defense tool, and the entire I.T. industry is in full support of mandating it. MFA, however, is foreign to many people, especially when one-time passcode apps are required instead of text-message (“SMS”) options. How I.T. service providers approach this challenging situation clearly demonstrates their different business models.
Traditional/Break-Fix I.T. Services Approach
Break-fix service providers see MFA enforcement as a gold mine. Major solution vendors such as Microsoft and Google are mandating these changes, and the service provider’s customers will inevitably have questions and need assistance with adoption. Therefore, it’s in the best interest of the service provider to allow these changes to happen with little or no advanced notice so they can jump to the rescue and accumulate as many labor hours as possible. The customers still hold the service provider in a positive light because they helped solve an urgent issue caused by actions outside the service provider’s control. Sadly, customers under this service model don’t know there’s a better approach.
Managed I.T. Services Approach
Unlike break-fix providers, MSPs don’t get to charge customers extra when a third party makes a change that causes extra work for the MSP. Therefore, mature MSPs such as Digital Boardwalk invest heavily in anticipating these sorts of events and proactively work with customers to strategically approach the change. Rather than wait for the changes to take place, mature MSPs communicate with all their customers about the upcoming change, provide them with helpful user guides and supporting documentation, and work with each customer individually to implement the change on a planned date. This approach eliminates all surprises, allows the customers to plan for the changes around their own schedules, and prevents unnecessary downtime or interruption to the business.
Cost Benefits of Proactivity
Many businesses assume the managed I.T. services model is more expensive. Although it may appear so on the surface, the cost benefits of the proactive approach far outweigh the surface-level price difference. More importantly, however, is distinguishing true MSPs from those that still operate in a break-fix capacity but bill customers on a monthly recurring basis. These “pseudo MSPs” deliver the worst of both models and deliver little value to customers versus mature MSPs. Asking the MSP how they approach situations like Microsoft and Google’s MFA enforcement can help businesses separate the pseudo MSPs from mature MSPs and allow them to partner with the best possible service provider.