Why “One Price IT” is the Wrong Choice For Your Managed Services Needs
If you’ve shopped around for Managed Services for your company, you have undoubtedly come across the “One Price IT” model. This is something that many MSPs (managed service providers) are offering, and on the surface it may seem like a great option for your company. The reality, however, is that the “One Price IT” approach is bad for your business. In fact, the way that “One Price IT” really works is by providing less support to your company, not more.
The False Economy of “One Price IT”
The attraction to the “One Price IT” model is simple to understand - you pay a single price and get all the support services you need. You never have to worry about overage charges or additional invoices because your company experienced some kind of problem.
Once again, on the surface this concept sounds awesome. Being able to control your IT spend with this model seems like a winning idea, but if you dig into how “One Price IT” actually works (which we will do momentarily), you begin to see why it will actually fail your company and your users. Additionally, there are better ways to help control your IT spend, which we will also address in this article.
The Truth Behind How “One Price IT” Works
Let’s consider this as a simple math problem. Let’s say your company’s "One Price IT" Managed Services contract is for 100 devices at $64/each device. Compare this with a contract that does include unlmited help desk support, but does not wrap additional engineering hours under this "One Price IT" banner. The cost for that contract is 100 devices at $40 per device. If you do the math, you will discover that the difference between these two contracts is $2400 per month.
- 100 devices at $64 each per month = $6400
- 100 devices at $40 each per month = $4000
- Difference = $2400 extra per month for "One Price IT"
Now, how did that MSP come up with this contract amount? Simple, that $2400 equates to a specific number of hours that they assume you will use per month. Say that their hourly rate is $160. That means that the $2400 covers 15 hours of services. This is where the false economy of this model rears its head, because the only way for this MSP to realize a better margin on your business is to NOT spend those 15 hours with you. If that company provides you with more than 15 hours of support in any given month, they are eating into their profits.
Taking this even further, if this "One Price IT" MSP can find a way to provide you with fewer hours of support, they can significantly increase their profit margins. Either way, they have a financial incentive not to work with your company. This can sometimes manifest itself as poor, rushed support for your users, but it always means that your Managed Services provider will not be doing proactive management for your account, since that proactive work would cut into their pool of available hours and their bottom line profits.
The Real Cost for “One Price IT”
With “One Price IT” you do not have to worry about additional invoices for the duration of your contract, but what is the ultimate cost of that benefit? The reality is that you will have more downtime-causing issues because simple proactive management is not being done on a regular basis.
Consider this scenario - when a “One Price IT” provider uncovers an issue that may cause a problem down the road, especially one that would require an engineer to go on-site to proactively address the problem, how do you think they will respond? Will they spend the hours (and profits) to send their engineer out, or will they wait and see if the issue ever does become a problem and address it then? After having spoken with many organizations that have tried using “One Price IT” providers, I can tell you that they all take the later approach. They will not address an issue until it becomes an actual problem. Ultimately, this means more downtime for your business and more frustration for your employees – both of which could’ve been avoided had your provider not had a financial incentive to do as little work for your company as possible.
There is a Better Way
There is nothing wrong with having a flat monthly rate for some aspects of your Managed Services. There are a number of services that are predictable and can easily be provided for a flat rate - like remote monitoring and management of your endpoints, managed firewalls, and backup services. At Envision, we even provide unlimited Tier 1 Remote Helpdesk services for a fixed monthly cost. What we do not provide as part of that flat rate is when more serious issues need to be escalated to our engineering team, including when engineers need to go on-site at a business to resolve an issue or provide proactive services. Because those services are not included in a flat rate fee, we do not have any financial incentive to avoid working with you when we believe there is a need for some proactive management. When that work is needed, we will do what we have to do to keep your business running and we will charge you for that work.
Now, the idea of engineer doing extra work and your company being billed for it may give you pause. After all, that is why you liked the idea of “One Price IT” in the first place, the lack of extra invoices. The reality, however, is that this is not as bad as it sounds. In fact, it is not bad at all.
In addition to their unlimited Tier 1 Remote Helpdesk support services, Envision’s Ground Control clients each have a monthly block of hours that are part of their service agreement. These are the hours that are used by our engineers to perform the proactive tasks that will help your company avoid downtime and will ultimately limit support calls from your users. Everyone wins under that model, and since any unused engineering hours roll over from month to month, you never lose them. This means that we do not have any incentive not to use the hours we need to keep your business running smoothly! If we use fewer hours in a given month, we don’t make more profits since we roll those hours into the following month. Once again, our focus and our incentive is to minimize your organization’s downtime and keep your business running, not to provide fewer services so we can increase profit margins.
Which Model Would You Prefer?
So it comes down to a simple comparison between two approaches. Do you want to go with a “One Price IT” provider in order to get that fixed monthly cost? If you do this, you now know that you are working with a team whose profitability is driven by how little they work with your company and whose approach is actually going to cause your company to have more downtime causing incidents.
On the other hand, you can work with a company like Envision. With our Ground Control solution and a strategic approach to your IT planning, you can still get a reliable monthly cost for your Managed Services (which is really why you were lured to the “One Price IT” model anyway). You can achieve this reliability while also knowing that the team you have partnered with has the flexibility and the incentive to do the work necessary to support your business in the best way possible.
Ultimately, it seems like a pretty obvious choice which approach is the superior one. If you’re ready to make the better choice and would like more information on Envision’s Ground Control and how we are changing the way Managed Services are delivered, contact us today.