There are two general flavours of IT Network support:
- 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: 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.
Both of these are legitimate models. Smart Dolphins offers both types of offerings:
- Lifeguard is largely the “Reactive” model.
- LIGHTHOUSE and Alliance are mostly the “Managed Service Provider” model.
What determines which model is best for a particular business? It really boils down to how important the network infrastructure is to a given company. A Managed Service Provider is going to tend to be more expensive (on the surface) than a “break fix” provider, but if they are doing their job properly, they are going to reduce the risk and the waste in comparison to the results from 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 down time 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 security of data and employee retention (employee retention will suffer if you’re always battling 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 is likely 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 justify a Managed Service Provider. Professional service firms, such as lawyers 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.
We describe the incentives of the two models as this is important to understand. We don’t mean to imply that Reactive providers make a practice of intentionally creating work so they can bill more. More importantly, they don’t get paid for trying to reduce problems so there is no incentive or responsibility for them to do so. MSPs, on the other hand, typically get paid a fixed amount of money each month, regardless of the number of problems that the client experiences and their primary responsibility is to reduce downtime, degradation and risks.
This is a pretty simplistic look at this topic; there is more to consider.
A Reactive Service Provider is very simply a provider of raw technical service. A Managed Service Provider is ultimately about a strategic business relationship. It is about embracing technology and making sure it is working for a company and not against it. A good MSP should play a strong consultancy role within the company and be contributing to higher level discussions and decisions. A Managed Service Provider is a partner and very much as important as a good accountant or lawyer for the right business.
