Turn Down the NOISE! (Part 2)

Dan Bremner

In my last post, I introduced the concept of the Two Costs of IT Support, which are the Hidden Cost and the Direct Cost. (If you missed it, you may want to click here to read Part 1 before you go on.) We also introduced the definition of Noise, which is the continual recurrence of IT issues and problems that take time and productivity away from your team members, and usually require an IT professional to resolve. Today, by way of an analogy, I’ll illustrate why paying a higher direct cost can reduce the Noise and bring down your hidden cost of IT support.

A Tale of Two Hotels

Imagine you’re out of town for a week-long business conference. Being the frugal business owner that you are, you’ve booked a hotel a few blocks from the conference for half the price of the rooms at the conference hotel. The rooms are clean, they have a free continental breakfast, the 2-block walk will be good exercise, and you’re saving a BUNDLE!  The first night, you get back to your room, check your email, and turn out the lights. Around midnight you awaken to a loud conversation next door, but with a call to the front desk, the clerk apologizes and quickly takes care of the issue. Back to sleep. Around 2 a.m. you realize the bars must have just closed because of commotion in the hallway and a group that is hitting the mini-bar in the room across the hall trying to keep the party going. Again, one call to the front desk breaks up the party and you’re back to sleep. At 5:00, you hear the blaring clock radio in the room next door, wonder what thickness of paper the walls are made of, and decide, “Oh well, gotta get up soon anyway.” You drink a little more coffee than usual that morning at the conference.

Long story short, the next two nights are more of the same, you can barely stay awake during the afternoon sessions at your conference, and your sleep-deprived anger is starting to boil over when you call the polite and helpful front-desk clerk. Your colleagues at the conference hotel tell you how they’re sleeping like babies, and by the fourth night, even though the conference rate isn’t available any more, you check out of the hotel down the street and gladly pay triple the nightly rate at the conference hotel to get a good night’s sleep.

A Tale of Two IT Support Business Models

Much like the well-intentioned break-fix IT consultant, the budget hotel down the street with the friendly and helpful night clerk, just doesn’t have the resources to invest to keep the noise down, whether by hiring security people to walk the halls, or by building thicker walls, or however they need to do it. What’s worse is that for the break-fix, bill-by-the-hour IT support company, “Noise” (IT problems) is how they make money. It’s why they exist. If you don’t have Noise, you won’t call them and they’ll go out of business. That also means that even though we were assuming the best-case scenario of excellent responsiveness, the economic reality is if they don’t bill, they don’t eat, so if they’re not doing work for you, they’re not sitting around waiting for you to call. (Would you, if it was your business?) They’re usually going to be onsite with another customer doing billable work for them, so your call has to wait until that job is done.

Castema’s Managed IT service is like the quiet hotel that costs more to stay in, but gives you a good night’s rest, a satisfying stay, and most importantly, keeps the Noise level down. How do we do that? Well, first of all, we charge more. (Wait, are we allowed to say that?) We have a flat monthly fee, and yes, it may be higher than what you’re paying your current IT vendor. Why? Because it’s the only way to keep the Noise level down.

Charging our customers the right amount allows us to invest in the three pillars of our business: People, Process, and Technology. Technology investments help us automate our support process so we can deliver service to you as efficiently as possible. Our systems constantly tell us the state of your network, from patch levels, to virus updates, to backups, to hard drives filling up, and we track every support request and alert so nothing falls through the cracks. All of our Processes, the very core of our business, are built around putting best practices into place at every company we manage, because doing things the right way is what keeps the Noise down. And charging the right amount lets us invest in our People, bringing highly qualified techs with a wide range of skill-sets to work for you, so we have someone available to respond to your call, so we have people dedicated to monitoring systems, and people doing proactive support work that heads off problems before they happen.

Remember the Hidden costs of Noise that we talked about? In the Managed IT business model, Noise costs us money just like it costs you money. We don’t make our money from Noise like the break-fix IT companies. Just the opposite, we become more profitable the less Noisy we can make your network. We measure Noise with a metric called Tickets per Managed Endpoint per Month. Our goal is to move that metric lower and lower for every company we bring onboard with Managed IT. And our business model gives us both the resources and the incentive to do that.

The Balance: Hidden Costs go UP when Direct Costs go DOWN

You know that bargain price you got from your IT vendor? Well, it might not be such a bargain. Why? There is a more-or-less fixed cost to support an IT infrastructure of a given size. That fixed cost is divided up between the direct cost and the hidden cost. Reducing the direct cost by charging a lower price doesn't lower the overall cost, it just shifts more of it to the hidden side of the balance. It “sweeps it under the rug” so to speak. Without direct investment in the right resources and the right business model to reduce Noise, the level of Noise will inevitably start to rise. It has to, according to Chaos Theory (or maybe it’s the Second Law of Thermodynamics, or maybe it’s just true of every computer network I've seen and there’s no governing theory on it. But Chaos Theory sounds good, doesn't it?). Just like the budget hotel down the street, you’ll appear to be saving money, but you won’t get a good night’s sleep. That’s because no IT vendor can reduce the true cost to support your IT infrastructure just by lowering their price. Sure, they can lower your direct cost, but you already know that’s just going to push up the hidden costs. A price that's too low means they have to take on twice as many clients and they can't afford to hire additional staff. Service levels suffer and there's no time or resources available to invest in keeping noise down when techs are in fire-fighting mode all the time.

So finally, who is a good fit for Managed IT? It all comes down to how much those hidden costs are hurting your business. If your company is one that can get by without too much trouble for a day or two without your server, or without email, it’s probably going to be difficult to justify paying to keep things running smoothly. (Companies like that are the “sound sleepers” who really don’t mind noise that would drive others up a wall.) But if you are highly technology-dependent, and loss of PCs, servers, or email for even a short time would be crippling to your company, then you’re probably already losing more than you think when you add up all the “hard” hidden costs (i.e. ones you can calculate like payroll costs times lost productivity, non-billable time due to IT issues for a billable associate, etc.) and the “soft” hidden costs (i.e. hard-to-quantify costs like employee frustration, job dissatisfaction, customers upset because you were unable to respond, etc.) of supporting your IT infrastructure. For Technology Dependent companies, Managed IT is well worth the additional (direct) cost to Keep the Noise Down.

 

Dan Bremner is the founder and president of Castema Technology Services, which has been serving the small business community in Chicago and its suburbs since 2002, making businesses successful by keeping networks running and employees productive.