It was one of those conversations that changes my perception of my business and an industry in minutes.
A client who owns an IT company was discussing his strategic model. “I can’t continue to serve the SMB market like we have for much longer. Qualified, certified technicians require compensation packages that cost me six-figures. Small businesses won’t be able to afford what it costs to send them out to an office just to fix common PC and server problems.”
Computers- Can’t live with ’em…
The small business IT world is changing again. Twenty years ago we began using computers for specific tasks- writing a letter or bookkeeping. Fifteen years ago we began seriously communicating via email. By 1999, everyone in the office had to have a PC or access to one just for company communications.
Ten years ago we began expanding our usage to include scheduling, shared files, calendars and contacts. Five years ago we started pushing that content to our smart phones and added instant messaging. Now, for most of us, even minutes without our electronic tether is enough to start your heart racing with anxiety.
Office technology is more expensive, but at the same time has shrunk in terms of its real cost. The expense of buying or repairing a computer is nothing compared to the expense of an idle 
employee. For the fully loaded cost of a $35,000 worker, buying a new PC every year is cheaper than 2 days of total downtime.
Like many business owners, I have been resistant to the subscription/service model of computing. While we don’t have an “IT guy” per se, we have sufficient computer skills in our office to handle backup, routine maintenance, upgrades and troubleshooting.
So far I’d looked at the various service models with a gimlet eye. Managed services, terminal services, remote monitoring, and virtual desktops all require that I change my thinking from a capital asset model (buy a PC and use it until it fries) to paying monthly for updated and current software that I don’t really “need.”
Many of my smaller clients are still on XP and Office 2003. Most use Office 2007. Only a few, as of mid 2011, have converted to Office 2010. In a subscription/service model you would presumably have to update constantly. I hate the idea of the Big Brother from Redmond locking me in to every change he wants to force down my throat.
Subscription IT Services
The issue that is coming isn’t whether you can afford to stay current, it is whether you can afford not to. It isn’t about having the latest stuff, whether you need it or not. It’s about bringing your company to a halt.
An employee downloads a virus. The latest service pack locks up your accounting package. The server crashes, the backup is corrupt. For many small service companies, that is essentially being out of business. You call your local IT company and scream -“Get out here and get me running as soon as possible!”
But he doesn’t know what caused the problem, or how long it will take to fix. He hasn’t seen your system in months. He may have to trace your previous changes, or unload things you did while he wasn’t looking.
In the meantime, his technicians are committed to those customers who pay to keep their systems current. He reaches into their systems nightly to take care of routine issues. They represent his recurring revenue, and have far fewer problems. They’ve paid for the right to be prioritized.
His technicians are too expensive to just have hanging around, as in a firehouse. They aren’t the Maytag repairmen. They are fully booked, and it is difficult to commit one to an occasional customer for an indefinite length of time.
What would you do if the answer was “Sorry, we can’t get there today. Maybe tomorrow, or the next day at the latest?”
I know the answer. You would call another vendor. Someone you don’t know, and have no experience with. Presumably, someone who wasn’t as busy, and had technicians sitting around waiting for a call.
I’m not sure that’s the best answer. Like it or not, we are going to be choosing IT providers like we do phone companies. They will be long term relationships, tied into our businesses directly, and it will be a pain to move from one to another.
John,
Excellent read this morning…it is a fine balancing act, I agree. As a business owner who manages the costs of experienced techs…and very savy customer base…the days of having a bench are over. As cloudy the field of providers gets, it comes down to who you trust and who locally can fix the problems or the business falters!
Then there’s “The Cloud” and SA’s own Rackspace.
May I probably repost that to one of my websites on this subject matter? I’d link back to the unique, needless to say. Let me know by mail what you think.
Well stated. Our company has been in an ‘outsourced’ network administration relationship for 3 years. We pay outsource network administration, patching, backup, disaster recovery, desktop and email support for 25 workstations and 7 servers. Compared to the cost of a full time skilled position including benefits we have a IT budget savings and the added benefit of a ‘resource team’ to turn to for insight on latest and greatest.
Yo I really like your site. I linked to your articles on my site about the PSP 3000 so my readers will go to your articles hopefully.
As you have pointed out timely(or immediate) access to accurate information has become critical to successfully operating our businesses. The break and fix model for maintaining our computer systems is not feasible. If there are any companies in industries that don’t have the need they will very soon. The question is not if a business needs someone to be constantly be monitoring their systems who knows immediately what to do if the is a disruption, but who will it be. It is highly likely that businesses will soon have a combination of internal resources, contracted services and services provided from the cloud (now that 3rd and 4th generation access is constantly at our finger tips.
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