There are two general types of IT support providers: Reactive and Proactive. So, what’s the difference?
Reactive: The client calls the Reactive IT provider (often referred to as a “Break-Fix” provider) when they perceive a need, usually when something is broken or when there is a change in the business (i.e. a new computer is added to the network for a new hire). The client is ultimately responsible for the network performance. These IT providers typically charge a variable rate and therefore, make more money when there is more work to do.
Managed Proactive: The Managed Service Provider (MSP) leads the relationship and generally determines what service the client needs. The MSP is ultimately responsible for the network performance. These IT providers normally charge a fixed monthly price and, therefore, have the incentive to reduce the amount of problems and reactive work required over the long run.
Smart Dolphins started as a “Break-Fix” provider and has evolved into a MSP.
What determines which model is best for a particular business? Of course, it depends on the business.
Start by deciding from a high level, what kind of relationship is more valuable to the business?
A Reactive Service Provider is very simply a provider of IT support and is generally available when there is a perceived need by the business owner/manager. This leaves the business responsible for leading their own IT needs. Given the general lack of expertise, the intangible nature of the impact of their IT and the natural cost aversion of business owners, the business often starves themselves of optimizing technical investment. This often leads to excessive insidious costs or even more obvious, disastrous results.
An MSP ultimately offers a strategic business relationship. MSPs provide short and long-term IT planning and consulting. On the surface, most MSPs will appear to be more expensive than a “break fix” provider, but if they are doing their job properly, they are going to be doing more to reduce the risk and the waste that necessarily exists in the reactive model.
The easiest way to look at this is to ask what it would truly cost a company if they had to go a day without their IT infrastructure. If you consider the cost of payroll and the opportunity costs of downtime and compare that to the added costs of an MSP, does it make sense? There are other factors that need to be considered as well, like network security and employee retention (employee retention will suffer if you’re always battling IT problems), for example.
So, if the business is a small business and the company’s operations do not rely heavily on the computer network, a Reactive offering might be the most cost effective model. A good example of this might be a small retail shop (assuming the point of sale system is not run on the computer network). However, if a business has a strong dependency on their computer network, then they will very likely save on their overall IT-related costs by using a Managed Service Provider. Professional service firms, such as lawyers, engineers and accountants are excellent examples of these types of businesses. It could potentially cost a law firm thousands of dollars per hour if their network were to become unavailable and so the added value of the Managed Service Provider will do a lot to reduce that risk and other similar costs.
Related to all this, it is important to consider the incentives of the two different models. A Reactive Service Provider has very little incentive to invest in technology or process that will reduce problems for their clients (beyond the point of their clients’ satisfaction) as it will be reducing revenue – a negative ROI. A Managed Service Provider, on the other hand, has enormous incentives to invest in proactive technology, for example. If automation were to reduce problems by 10% across their client base and perhaps save the need to hire additional techs, there could possibly be tremendous ROI in those investments. They can reduce their own costs and not impact their own revenue.
At the end of the day, a company’s IT Provider needs to be a trusted relationship and that is at the heart of the MSP. Often a business just wants someone that they can trust to take care of their IT so that the people in the business can focus on what they do best. Responsibility for the IT network is the core difference between a Reactive Service Provider and a Managed Service Provider.
If you feel a Managed Service Provider might be a choice worth looking at for your business, give us a call.