How much do managed IT services cost?

If you’re reading this article, chances are you’ve decided that managed IT services might be a good fit for your company, but you want to know how much it’s going to cost before you’re inundated by options and different answers.

I wanted to provide my observations on what managed technology services will cost – but specifically aimed at businesses between 10 and 100 employees that have no other IT support on staff.  If you find that you’re a larger business, or that you have one or more staff members who can support your users or your systems, don’t worry, I’ll provide you with some additional information and options at the end of the article.

One other caveat is that this pricing tends to be most appropriate for clients in Midwest cities such as Milwaukee, Madison, suburban Chicago, and other similar areas. We’ve found that pricing on either the east or west coast, as well as more dense urban areas like downtown Chicago, tend to be higher due to a range of factors.

So how much do managed IT services cost?   

The short answer is a range between $90 to $140 per user per month for flat-rate managed services with all-inclusive hardware, software, and support. Of course there are always exceptions and ala carte options, but this gives you a good range for flat-rate coverage.

Why the range?  And how do you determine where your company fits?

Well there are different factors that are involved in the monthly price, but the primary two involve the complexity of your company’s technology and what the provider is including with your service.

Technology Complexity

While it may seem that supporting an end-user at one company might be the same as another, think for a moment of how unique your company is in how you operate, the products you produce, the clients you serve, your office locations, how your sales team works, what line of business application you use … and you’ll start to get an idea of why technology complexity influences the price.

For example, if you’re a 50-person manufacturing firm with two offices, five remote salespeople, and a 24×7 production operation, you probably have 3-4 core business applications including your CRM, ERP and accounting applications.  To support your company and users you need 24×7 support, nearly instant failover for your production ERP system, and secure remote access for your traveling salespeople.

On the other hand, if you’re a 30-person distributor, chances are you may only have one location, a couple of core applications, and generally need support during normal business hours.

See the difference?  Just like every company is different, so are their technology support needs.  In general, we’ve found that complexity is primarily driven by the following factors:

Core Business Applications

There tends to be a direct correlation between the number of core business applications that you use and the complexity of your IT systems.  These applications are those you need to run your business. Things like QuickBooks or other accounting systems, CRM applications like Salesforce, ERP applications like Made-to-Manage, or one of the many industry-specific business applications that many small and mid-sized businesses use.

If you have a simple operation with a single shared business application (typically an accounting system) then you often just have a single server without a lot of data … so a less complex environment.

On the other hand, if your business leverages multiple core applications, either local or cloud-based, you’ll likely have a much more complex environment with multiple servers, more data and greater security needs.

What about cloud applications?  While this could be an entire article by itself, the short answer is that it will depend on the application and how/where it’s hosted.  Hosted applications like Salesforce or QuickBooks that are provided as-a-service typically include the system support and can reduce complexity … while moving your own application to a cloud-hosting service like AWS or Azure will actually increase the complexity as those servers still need to be managed, secured, and protected.

Number of users

By users, we’re specifically referring to employees who have a desktop or laptop and are going to access your technology systems.  So that may or may not include all your employees as it will depend on your business.

There’s an interesting relationship between the number of technology users in a company and what the pricing might be.

 Smaller number of users: While you think this might reduce the price per user, it can often increase it.  Because the support should include centrally shared resources like servers, networks and other key infrastructure, having fewer users to share the support costs for these often means a higher price per user.

Larger number of users: Does it follow that as your business grows and you have more users your price per user should be lower?  Typically this is not the case, as often times the larger number of users go hand in hand with more applications, additional locations, and other factors.

Number of locations – offices and remote workers

This one might be more obvious, but the more offices and remote workers your company has, the greater the complexity.  This includes ensuring that all locations work together smoothly and that everyone gets access to the resources they need – while making sure that outside parties are kept out.

Total amount of data

This one isn’t quite so obvious but can often have a big impact on pricing as it typically affects the amount of storage that needs to be managed, protected and potentially recovered.  Because of the variable nature of this between companies, this item may not be included in the typical per-user pricing.

What is included in managed IT services?

The other major factor in where your company might fit in the per-user pricing range is really driven by what the service provider is including with their monthly price.  This varies quite a bit, so it’s important to verify what is being provided – or not – and why.

While different providers have different offerings, we believe that every company, regardless of their size, needs to have the following items included in their basic IT support services:

 User Help Desk and Support 

While this seems obvious, it’s important to understand what is included in terms of hours of coverage (e.g. 8×5, 12×5, 24×7), remote and/or on-site support, unlimited support vs. limited hours per month, contact methods (e.g. phone, email, portal), access to a ticketing system, and other variants.

 Proactive Maintenance 

 This includes regular software updates for servers, desktops, firewalls and other critical systems to maintain stability, reliability and increased security.

Proactive Monitoring 

Beyond simple up/down status monitoring that tells you when something failed, proactive monitoring looks for errors and warnings before they become critical so failures can be averted.  This should be applied to all your systems including servers, firewalls, network equipment, power backup systems and anything else that is required to keep your business running.

Network & Endpoint Security

Your infrastructure is full of hardware and software that provides active security for your networks, servers, and workstations.  These components should include real-time updates on the latest security threats and provide the ability to enforce business policies and follow best practices.

Email Security

This used to be considered an optional service, but in the current threat environment and the increased sophistication of phishing attacks and malware delivery through email, it should now be considered a requirement for businesses at all levels.

Data Protection and Recovery Services

This service is probably the most critical as it provides the recovery needed for your files and servers when things go wrong, thus keeping your business running and able to recover from both accidental and intentional threats.  The system should provide both local and off-site copies with very quick recovery times. 

The caveat with this service is that it often is provided separately and is not normally included in the per user per month price.  The reason is that the pricing is typically based on the total amount of data your business has, which can vary dramatically regardless of the number of users, and often grows at very different rates between businesses.

Do you have to buy all of these services together?  That depends on your provider, as well as your specific situation.  Some technology service providers will offer these services ala-carte … so you pick and choose from the list.  While this does lower your monthly costs unless you have other IT staff resources on-site this typically means you’ll have large service and support gaps that will affect either your security, your reliability, or your protection.

What is not included with Managed Services?

Knowing before signing any contract exactly what isn’t included in a managed service offering is extremely important. You need to know before you engage with a managed service provider that isn’t covered in the per-user cost.

Projects 

Most flat-rate managed IT support contracts only cover existing users, systems and applications. So as you add new employees, refresh equipment, add major applications or make other major changes, these will typically be handled as new projects and billed separately.

Why?  Again, it’s due to the wide range of differences between each company’s needs and the difficulty in estimating how much time will be required during the course of a year.  If one business is growing fast and adding new employees and workstations every month, those needs will be very different than another company that is relatively stable but needs to refresh its aging servers this year.

Subscriptions. 

Another item typically not included are subscription services such as Microsoft’s Office 365 and Google’s G-Suite products.  Like new projects, these subscriptions can vary greatly so they are billed separately.

What if I have IT support staff or other internal resources?

In these cases, most IT service providers will offer a la carte service options that compliment your current staffing resources or other needs – often referred to as co-managed IT services.

For example, we often work with clients that have one or more employees who can provide basic desktop and application support but need someone to manage and maintain their servers, network and security.

Conversely, we also have clients that have internal IT administration and support staff but want to off-load key systems like network security and data protection.  Outsourcing specialized functions like these can be a great way to supplement your current staff vs. adding new staff or taking on critical technology your team may not be comfortable with.

Determining the cost of IT services for your business

One option would be to look at the complexity of your business from the description above based on the system you have, then estimate where you’re at on the pricing range. And that might get you a rough estimate.

A more accurate estimate will require that you engage with a provider to do a more in-depth discovery and review.  Most of the time this doesn’t need to be a huge project but will require a few hours of your time in order to be done properly.  The goal is to get enough information about your business and goals, along with a review of your current technology, so that a proper scope of services can be identified. Still unsure or need more information for your specific situation?  Feel free to reach out and we’ll be happy to fill in the blanks.