Although most small and mid-sized businesses have moved away from the traditional “break-fix” I.T. service model in favor of the newer “managed I.T.” service model, there are some businesses that still think the pay-as-you-go approach to I.T. support is more cost-effective. The common objection from business owners is: “I don’t have many computer problems. Why do I need to pay monthly for support?” But, it’s no coincidence that we often have these conversations with business owners because they are upset with their current break-fix service provider. Ironically, the root cause of their dissatisfaction usually isn’t due to their service provider, but rather the break-fix service model the provider follows.
Break-Fix versus Managed I.T.
From a high level, the differences between break-fix I.T. and managed I.T. are quite simple to distinguish. Under a break-fix service model, you pay your service provider an hourly labor rate to take care of your I.T. needs as you request. If a computer has an issue, you call your service provider, they fix the problem, and then they bill you for however long it took them to fix it.
Under a managed I.T. service model, you pay the service provider a flat monthly fee for unlimited support. Whether you engage the service provider for 1 hour or 100 hours in a given month, you pay the same amount. To avoid those 100-hour months, a managed I.T. service provider (“MSP”) focuses on providing preventative maintenance, proactive monitoring, and other forward-thinking tasks.
Explained in these simple terms, it seems quite obvious which approach is best. Under the managed I.T. model, the MSP is incentivized to keep your technology running reliably and efficiently since they can’t charge you extra if something breaks. This also means that the MSP is focused on your technology around the clock, steering you towards best practices, important cybersecurity measures, and other enhancements that help your business succeed. On the other hand, service providers operating under the break-fix service model have no such incentives. In fact, the more you must call them for support, the more successful they will be. For this reason, it’s not unusual for break-fix service providers to focus on temporary fixes and workarounds since it provides a short-term solution while still requiring future support.
As we mentioned earlier, oftentimes the root cause of a business’s dissatisfaction with their break-fix I.T. service provider has more to do with the business model than the service provider themselves. Here are just a few common complaints we hear from business owners:
Complaint: We get nickeled and dimed every time we need support.
Reason: Break-fix service providers rely on billable labor hours as their sole source of income. They must bill for all the time spent servicing your business.
Complaint: They can’t seem to fix our problem the first time. They’re always coming back out to fix things over and over again.
Reason: They have no incentive to fix it right the first time. Also, since you’re not paying monthly for any sort of remote management software, they don’t have all the tools and visibility needed to identify the true cause of problems.
Complaint: (Some major unexpected event happened) and it took them days to get us back up and operational.
Reason: They aren’t providing you with any sort of proactive support or management of your technology. Without that, they can’t plan for or prevent major events like that.
Complaint: It takes them days or sometimes weeks to respond to our support requests.
Reason: Without a predictable stream of income, they can’t afford to staff extra engineers to respond quickly to your needs. They are also incentivized to prioritize customers who use them more since those relationships yield them more revenue.
Complaint: They charge us an arm and a leg for new computers and other equipment.
Reason: Since their sole revenue stream is billable labor hours, most break-fix providers try to generate additional revenue by charging higher markups on computer equipment. Also, some break-fix providers don’t have wholesale purchasing relationships, forcing them to buy equipment at retail prices and then mark it up further from there.
Break-Fix Is Not Less Expensive
With all these complaints ultimately being caused by the break-fix service model, why do business owners still insist on this approach to I.T. support? Simple: They believe it is less expensive. Ironically, when we ask business owners to calculate their total I.T. spend on billable labor hours for the past 12 months, 9 times out of 10 they spent more than what a managed I.T. services plan would have cost. But, because it’s not a consistent or recurring cost, it’s easy to lose perspective of how much the business is actually spending.
Beyond the labor costs, there are several other areas where managed services reduce your overall I.T. overhead:
- Downtime, interruption, and even slow computer systems impede your productivity. There is a real cost to this, and it has a significant impact on your business over time. MSPs are financially incentivized to reduce these interruptions, benefiting your company.
- Effective cybersecurity cannot be achieved with a “set it and forget it” approach. It requires 24/7 management, monitoring, and support. Under a monthly service agreement, these functions are performed by your MSP around the clock, ensuring your business is as safe as possible.
- An I.T. service provider offers your business more value than just fixing problems and keeping things running. They can help steer you towards new technologies that will help enhance your operations and give you a competitive advantage. This sort of business relationship is only possible with an MSP that works with your company on a monthly basis, understands your operations, and is aware of your business objectives.
Seek Out a Mature MSP
Not all MSPs are created equal. Many I.T. service providers began as break-fix companies and then converted their model into managed services. As a result, businesses pay a monthly fee for semi-inclusive services but still pay hourly for many other functions. This approach simply doesn’t work because it fails to incentivize the service provider in ways that align it with their customers’ best interests. Mature MSPs, such as Digital Boardwalk, built their businesses day-1 on the managed I.T. services model, and have these proactive principles hard-coded into their company culture and service delivery.