IT departments are getting to be too much for smaller businesses to handle. Larry Velez of Sinu has an idea: Outsource it all to a managed service provider. It can save smaller businesses money and give them peace of mind
Smaller businesses can't usually afford to staff a large IT department but, as IT gets more sophisticated and more complex, the need for tech expertise in a host of different areas grows. It's practically impossible for smaller businesses to go it alone these days, but outsourcing bits and pieces of an IT department can get complicated, not to mention costly. This is where managed service providers come in. MSPs allow companies to outsource the entire IT department, from soup to nuts, in exchange for a fixed monthly cost. Larry Velez of Sinu calls it "holistic outsourcing" and he sat down with bMighty to explain why smaller businesses need to start thinking about MSPs, how the concept can save them money, and what they should look for in a provider.
bMighty: Why isn't in-house IT a good or viable alternative for smaller businesses?
Larry Velez: The main reason is size. The percentage of business revenue that goes to IT becomes too large. The salary is between $50,000 to $100,000 and [smaller businesses] are competing with large-size companies for the same people, and they're trying to have a one- or two-person team who can do everything. The larger companies have the ability to pay better salaries and give better benefits, so it's really hard to staff.
Also, the IT person is [often] the only person not directly related to the bottom line. Many times this creates a difficult situation, when a tech person is not in a tech company. It's not the best place for a tech person to be. Outsource IT companies are a better haven for tech people. They are no longer the lowest person in the company. Small and midsize businesses are driven by the founders and the tech people don't become related to the business, and that causes turnover. When you're not in the tech space, how do you hire? Outsource IT companies are better at staffing, and they're where tech people are happy.
There is also a trend towards leaner companies. For example, companies used to have a payroll person, but these days everyone gets their checks from a payroll company. The trend in business is to have a laser focus on what the company does. Everyone on the payroll is related to the bottom line.
bMighty: What about using IT consultants?
Velez: Small and midsize businesses are choosing to outsource their entire IT departments. It's more holistic outsourcing. The financial industry is calling it managed service providers, where outsourcing is not focused on individual pieces but on the productivity of the staff. They are use technology to gain productivity, there are less support headaches, and they get rewarded for that.
Companies want peace of mind. They want to know their information is safe, and small and midsize businesses don't have time to worry about it. They're willing to give it to an expert to reduce the risk. It's already happened in payroll and banking. We think it'll happen in IT -- they got over the fear in payroll, they'll do that for IT. This is the evolution of IT, not in bits and pieces but offered as a service.
bMighty: What are some of the other benefits of managed service providers?
Velez: It's more predictable. If you're a nonprofit organization and you get funded once a year and you're not getting another check and your server fails, the money doesn't exist and no amount of crying will get it. For small to midsize businesses, this is important for their cash flow. No matter what, it's a monthly payment. They don't want big financial surprises. Big businesses have ways of getting money, but for small and midsize businesses, financial surprises could take them out of business. It's hard when buying your own servers to predict how long they'll last. Most companies see it as a gamble.
Next Page: Remote Access is OK -- Some of the Time
