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Which IT services provider?

Choosing the right IT service provider for your organisation isn't always easy, which is probably why you're reading this article! The IT services market is a highly competitive one and it seems every service provider claims that they provide lightening fast response times, excellent customer service and all at a relatively low cost. So how do you determine the right IT partner for you?

First, it helps to understand how your business will benefit from acquiring good quality IT support, from a reputable partner. To fully appreciate this, you will need to understand the consequences of IT systems failure.

The cost of failure

A fairly generic, but reasonable way of measuring the ‘cost’ of system failures is to look at the number of people that will be affected in the event that your IT infrastructure fails.

In many businesses, the failure of a core server has a dramatic effect. Employees are being paid a salary to earn their organisation revenues, but its unlikely revenues can be generated without access to systems, files and emails. While we can’t calculate the lost revenue to your organisation, we can calculate the wasted expenditure on staff salaries alone.

There are numerous ways of calculating the actual cost, attempting to take account of overheads, tax etc, but to keep things simple, just jot down the potential consequences of your IT partner being unable to get your core server operating after a failure to put lost revenues into perspective.

Here is a quick calculator we've included to help you calculate this figure easily:

Cost calculator

Number of users      

Number of servers   

Calculate Totals

[please enter your specifics]

The cheaper the better?

The next hurdle is to understand the implications of going with the ‘cheapest' provider. While costs for reputable providers are roughly the same, the cheapest provider may not provide you with a better return on your investment.

As with your own business, you are probably aware of competitors that offer a cheaper service or product and some that offer a higher quality service or product? The situation is no different when looking at IT services. There are often valid reasons for having different qualities of service or product – ultimately it depends on the buyers needs. Your IT systems support your business, so in the long run, opting for the cheapest option doesn't always mean the ‘lowest' cost if your provider can't meet your needs and you find out too late!

It will nearly always work out less costly for your business to invest in quality over cost. But why is that?

During an outage you have staff unable to work - this costs your business. It is likely that these hourly loses are greater than the hourly rate of an engineer - which means a reduction in the duration of the outage will save you more than a reduction in the hourly rate.

Hourly rates range from about £30/hour to £120/hour. There is a close association with these costs and the quality of the resource (as explained previously). Although you shouldn't pay over the odds - expect to pay in the region of £70-£100/hour for a good quality engineer.

A good quality engineer will often fix a problem quicker, and reduce the likelihood of the it happening again.

The below calculator helps demonstrate this:

Example for a single outage (you may change the values)

John (Engineer) is charged out at a rate of £ /hour

Average salary of staff in your company (inc. overheads) is £ /year

Total number of staff affected by an IT outage

Total duration of outage (minutes)

Calculate Cost

[please click calculate to see costs]

As you can see from the above example - if you reduce the outage time from 60 minutes to 30 minutes you save about £70 in costs - far more than you would had you opted for a cheaper provider who was unable to resolve the problem as quickly.

If you have four or five PCs in your organisation, you probably won't notice much difference between two differing IT service providers – simply because the skills required to support this environment are fairly basic. However, as soon as you add a server or even multiple servers to the mix, a network, internet connectivity, firewalls, a web site, etc you have now a relatively wide range of technologies to support. You may only have 10 people in your organisation, but you will still have many different technologies that need looking after.

Tick the various technologies that your businesses uses, this will show you what individual skills/qualifications are required to adequately support these technologies, all of which your service provider will need to be able to display with confidence:

Home workers
Multiple offices

Separate the wheat from the chaff.

Look around the IT services market place and you will find one company charging £30 an hour while another charges £120 an hour. This seems to be a huge difference, but once you apply some common sense, it becomes easier to understand the difference in what you get for your money.

Assume ‘Company A' charges just £40 per hour for its services versus Company B which charges £80 per hour. Clearly, both Company A & B are striving to make a profit. IT Services is a ‘people' business and as such, the vast majority of cost goes towards paying staff, not to mention recruitment and training. Given that both companies are seeking to make a profit, this implies that Company A is doing so by paying their engineers substantially less than the market rate.

A good IT engineer has a choice where he or she works in a dynamic market like IT services, where better people make a real difference. He or she can go to Company A and be paid £18,000 per year or to Company B and be paid £30,000 per year. Which one would you choose?

Technical skills are important when considering your provider, however, even a good IT engineer doesn't know everything. The more engineers an IT services provider employs, the more likely they will be to excel in the technical areas your organisation requires.

Like all industries, the higher the skills, the higher the salary paid. IT Salaries are growing every year in line with a greater demand for IT services. An engineer on a basic salary may have a reasonable understanding of a number of technologies, but specialists are continuing to push the boundaries of salaries paid. To give you an idea of salaries and typical returns in the marketplace, try the calculator below for a reasonable approximation:

IT Provider Costs Example (you may change the values)

John (Engineer) is on an annual salary of £ /year

Company overhead costs (rent, admin staff) £ /year

Total number of engineers in company

Calculate Revenues

Assuming 50% recovery of engineers time (i.e. 5 hours a day), working for 5 days/week, 48 weeks a year = (5 * 5 * 48) = 1200 hours/year.

[please click calculate to see revenues]

Example salaries in London (sample taken May 2006)

Network administration £45,000 - £55,000
Database admin £35,000 - £50,000
PC / Technical support £30,000 - £40,000
System developer £50,000 - £65,000

Remember that hiring a single full time PC / Technical support person is equivalent to paying about £20/hour (excluding overheads) to be available 8 hours per day, assuming your organisation even requires someone full time. Paying for ‘high quality' service which is able to cover all the technologies your organisation needs now and in the future can make far more sense than hiring someone internally. Don't forget the less tangible savings of having access to more resource only when required, sickness and holiday cover all year round and a far greater skill set when you need it.

You can look at these salary averages here

So, it isn't rocket science. But which companies should you consider?

26 points to help you beat the odds.

If you only have a few PCs and no server, the choice of IT service providers is very broad. You probably don't need the additional expertise offered by a more substantial IT services company, hence the cost differential is probably not worth paying. So go for a provider that is located as close to your offices as possible (see below distance calculator).

If you have a server then you will have a network – and the consequences of poor support are very much more serious.

1) Consider support providers with a reasonable number of engineers.
Some IT providers ‘exaggerate' the number of engineers they employ, but visiting their offices should give you a real sense of their resources. We strongly suggest that you do this!
2) Website.
Is their website professional? Do you understand it? If it doesn't look too professional, it's worth asking yourself why? They are IT professionals after all!
3) Honesty.
Honesty has to be one of the most important qualities of an outsourced partner. If they advertise 10 offices, visit a couple of them. If they say they have 50 engineers, check to see they do. If a company is prepared to be dishonest to get your business - they are likely to be dishonest to keep it.
4) Ask to see the companies professional qualifications.
Are they a Microsoft partner? Ideally they will be a Gold Partner as they will only be able to achieve this status if they have a large number of qualified engineers, a proven track record of ability as judged by Microsoft, not themselves! Do they have Cisco or Juniper accreditations which demonstrate their understanding of firewalls, network security and networking?
5) Comparing apples with oranges.
Every provider has their own pricing model. Some are honest and upfront, others sound amazing but often have hidden costs. It’s impossible to make a choice when comparing apples with oranges. So create a template request form (similar to the one at the bottom of this article) and ask a selection of IT providers to answer your questions. Then you can compare apples with apples!
6) Negotiate.
Don’t be afraid to negotiate. Obviously the larger the potential contract the more leverage you will have – if they really want your business then why not let them work for it.
7) Purchasing equipment.
Many IT providers make a significant amount of money out of selling ‘kit'. If you are going to listen to a partner's purchasing advice, you need to be confident they don't have their own agenda. You need to be certain that the advice is solely to benefit you and your business. Always ask if you can purchase your own hardware and software, even if this is something you don't particularly have the skills or want to do. If it's compulsory to purchase through them, this should ring warning bells.
8) Pay them a visit.
If possible, go to their offices for a meeting and ask to look around. Remember, you are looking for someone to look after one of your most important assets – if they don’t look after their own, will they look after yours?
9) Location location location?
Many companies can perform a number of IT related activities remotely – so they could be based on the other side of the world. But there is always a need, no matter how occasional, to have an on-site engineer present. You may even warrant a permanent on-site engineer, although that is only really necessary if you have 50 or more users, or have very demanding users. TIP: Use the postcode distance calculator below.
10) How will you know they are performing well?
Some companies will happily provide you statistics about their performance; they only do this because they are confident in the quality of their services. You may choose to never look at any statistics, but the very fact they are being offered is a reassuring point. If they don’t offer you this information, is it because they don’t want to or they can’t? If it’s the latter then how do they measure their own performance?
11) Get references.
Ask every potential partner for references so you can speak to their current customers. Generally providers will give you references for sites they believe will sing their praises (wouldn't you). So, the more the better. Ask the contact you are provided with if you can also speak to one of their colleagues to get a feel for how another user experiences their services.
12) Does the SLA hold water?
Even though it is good to have an SLA (service level agreement) many IT companies infrequently honour this – because they know the simple fact that you will find it almost impossible to prove a breach in contract, or can’t be bothered to follow up a breach. So ask them for actual performance data. If they don’t have any, it begs the question how well they actually understand their business.
13) Try before you buy!
Many providers have a minimum contract period; see if you can have a “break clause” after the first 3 months – so if it doesn't work out it's easy for you to go elsewhere. Some companies offer a “contract free” service – but remember a service level agreement is just as much for your protection as it is for theirs.
14) Case studies
Ask for case studies and review them in detail with the provider. You will get a good understanding of their approach to work that way.
15) One stop shop.
Find out what other services they offer. You don’t want to find yourself in a situation where you need to call one company for IT support, another to look at your security, another to manage backups, or to help with an office move. If you have a good relationship then ideally you trust them to assist you in other areas. Although remember the provider may be simply acting as a reseller to another company – which means you will probably pay a little more and the provider is likely to have less control over the service levels.
16) Smiley happy people.
Try to avoid making a “personal” decision. There are many nice people out there, some work for good companies, some work for bad ones. Rely on the facts.
17) Boom or bust?
Find out how long they have been trading for and that they will be around for the foreseeable future. Strong finances are a sign of a solid organisation. It is not uncommon to ask for financial information such as audited accounts or management accounts.
18) Vertical specifics.
Do they have other customers in the same vertical as your business? This may give you more confidence but also, if your vertical has specific technology, will show they are capable of supporting it. Even better – ask if you can talk to the other company about the quality of services.
19) What happens when it goes wrong?
No matter how good the partner, there will be the occasional problem. Hopefully these will be infrequent, but when problems occur – what processes has the partner put in place to deal with them. Who do you speak to? Can you speak to a manager? Do they have specific client service individuals whose sole purpose is to keep you, the client, happy?
20) Keeping the boss happy, but what about everyone else?
The provider is likely to bend over backwards to keep you and the senior members of your team happy – as they should. Make sure that level of service is provided to all of your colleagues. How can you measure that this is the case?
21) Keeping up with technology?
Does the provider train their staff? This demonstrates real commitment to their people – and ensures you are at the receiving end of good quality people. Ask what training plans are in place.
22) Estimate of costs?
Get an idea of cost but always consider quality. As I said before, the cheap providers nearly always cost your business more in the long-term. For a good quality provider you should be looking at a figure around £50-£80 per user/month.
23) USPs.
What do they believe are their Unique Selling Points.
24) What do the papers say?
It's all very well the provider waxing lyrical about their own abilities, but does anyone else think so? Do they have any published articles, press information, white papers?
25) Eye spy.
If you can easily and simply monitor things yourself, then why not keep a second eye on things? There is a free tool, MonX ™ which requires no IT experience to install which will email you with problems on your servers. (click here).
26) Open all hours.
What time do you need support? 9:30am -5:30pm or 24 hours/ 365 days a year or something in between? Be certain the provider can support you when you need it.
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The battle

Now armed with your probing questions and new insight into IT services, you should be much closer to choosing the right partner. Below is a quick questionnaire you can customise and send to any potential providers – not all will respond , but at least the ones that do respond are of a good quality.

Good luck!

About the author: Gavin Russell, CTO of Wavex Technology Limited, has written about a range of technology issues for publications including The Guardian, Growing business magazine, and Business XL magazine.

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