By Brian Prince  |  Posted 2007-03-22 Print this article Print

Jeff Kaplan, managing director of Thinkstrategies, in Wellesley, Mass., is optimistic about the managed services market in 2007. However, that doesnt mean he agrees that SMBs are embracing managed services as widely as many think. "Ive known for a while theres a certain myth about their receptivity," Kaplan said. In September, Thinkstrategies partnered with Business Communications Review magazine and the research department of media company CMP Technology, of Manhasset, N.Y., to study the issue.
Among other things, the survey of 550 businesses found that one-third of companies making less than $50 million outsourced some aspect of their IT operations but that half were not considering any managed services. By contrast, midsize and larger companies use managed services more and are more open to using them in the future, the study showed. In many small companies, the IT people in charge of operations that would be handled by MSPs are wary of outsiders treading on their turf, Kaplan said.
"The issue here is in many SMB organizations, the IT professionals … look at these managed services as being a threat to their jobs," he said. Enterprise IT departments are more likely to be able to offer employees jobs that are of equal value to what outsiders are managing, Kaplan said. The Thinkstrategies survey also found that while the majority of respondents were pleased with the level of service they receive, among those not pleased, 53 percent of companies earning less than $50 million not outsourcing IT activities stated it would be cheaper to handle the responsibilities on their own. In addition, most businesses that reported being satisfied with the services they receive stated they were only "somewhat satisfied," Kaplan said. "They feel OK about it, but they are not enthusiastic about it," he said. However, Amy Luby, co-founder of Mobilize SMB Private Services Network, in Omaha, Neb., said a category of companies making less than $50 million is broad. "None of my clients generate $50 million per year in revenue," said Luby, who is also CEO of Omaha-based MSP Mobitech. "I would categorize by number of desktops. Small and midmarket would be under 250 desktops—small is under 50 desktops; midmarket is 50 to 250 desktops." At Parrish Services, Hood said the company each month pays about $400 per server and $75 per desktop for Evolves services. "When we need something, we e-mail support, and the help desk will respond within a half hour usually, and if they cannot help us, then the next person will respond right after that," she said. "They also run our off-site backups and our anti-virus software all remotely." The biggest cost savings for businesses that adopt managed services are in the areas of staffing and hardware. Emil Sayegh, director of product marketing at Rackspace Managed Hosting, in San Antonio, estimated that among infrastructure, backups, licensing and other costs, his company saves each customer hundreds of thousands of dollars. WorkRecords, which has offices in Dallas and in Indiana, contracted with Rackspace in 2006. "We had been using another hosting company for about a year and had enough service problems that switching to Rackspace was a pretty easy decision," said WorkRecords Chief Technology Officer Tony Harvey, adding that Rackspace handles his companys e-mail needs with Rackspace Managed Microsoft Exchange. "[The] problems with previous providers were lack of response to ongoing issues and not really having an upward mobility path. They spent tons of money advertising but seemingly little in building infrastructure to support customers." Though Harvey would not disclose how much WorkRecords is paying for Rackspaces services, he said it is well worth it. "Really, a [service-level agreement] that promises a 100 percent refund of our monthly payment if they are down more than x percent is not helpful," he said. "We want everything to work—well. We want our customers to be able to access their information. We want e-mail to keep flowing. We want backups to happen and be retained properly. We arent looking to save money when someone screws up. We are paying a fair price, and we want it to work." To that end, David Sobel, president of Evolve, in Marina del Ray, Calif., has this philosophy: Think like you are working on your clients IT staff. However, the mantra for SMBs, some say, is slightly different: Know what you are getting into before signing up. Many MSPs, for example, will state they monitor client networks round-the-clock, Luby said. However, though their tools may be capable of 24/7 monitoring, the provider itself may not do that, she said. Businesses need to know whether, when a server goes down at 4 a.m., the MSP will know about it immediately or not until hours later when workers wake up in the morning, she said. Check out eWEEK.coms for the latest news, views and analysis on servers, switches and networking protocols for the enterprise and small businesses.


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