As in most things, the answer to the question "do managed services benefit small businesses?" is "it depends." As unsatisfying as that response may be because of our seemingly inherent desire to drive things to black and white statements, some benefit and some do not.
I find that there are three categories of small businesses as it relates to technology:
1. Technology does not really matter:
This group may express pain, but when push comes to shove they are not willing to invest more or make a change to eliminate that pain. I met with the president of a small manufacturing company recently and she described all sorts of issues with her server environment, e-mail reliability and vendors pointing the finger at each other. I pressed in a little bit and determined that the e-mail problems were impacting sales and profitibility. As we discussed what was going on, it was clear that they had a reactive information technology (IT) process and this was the root cause of their issues. I indicated that this was fairly easily solved and it would cost $250.00 more than what they were effectively paying. They did not agree to another meeting and I suspect that unless something blows up, they will not make a change. Why is this? They confused vendor bills with IT costs. They are currently paying $495.00 per month, but when we add in the other costs, it really goes up to closer to $1,000.00 per month. What rational person would decide not to solve their business issues for an additional $250.00 per month? One who really does not value technology. In this case, they are likely experiencing cash flow issues and have alternative means to run their business than rock solid technology. This is not necessarily the wrong answer, but it is important to be honest to determine what the best strategy for the business is.
2. Pain, while there, is not obvious at the executive level:
This group is in the toughest spot. They experience pain from their technology process, but they do not always know it. In some cases, pain is there, but it is really more of a nuisance. One of my partners compared my company to a physician. I think that this is good analogy, but a medical practice or hospital is probably better. One of my relatives is dying due to Chronic Obstructive Pulmonary Disease (COPD). She smoked for sixty years and as recently as a month ago. Yesterday, she said, "this is all my fault." Why did she continue to smoke? She knew it was bad for her, but she did not feel enough pain to overcome her addiction. Furthermore, she did not truly understand the entire impact of her lifestyle on her health. While this is an extreme comparison, it is really very similar in small businesses. When we walk into a new customer and implement our process, we find twenty technology issues that are out of alignment. Not all of these issues are mission critical, so we need to drill into those which pose the biggest business risk or opportunity. It takes a wide variety of skills and sufficient time and process to do this. Most small businesses are simply not equiped to do it themselves, but unless they have painful symptoms, they will not take action.
3. Technology is Mission Critical:
In this category, the company is absolutely dependent on technology. The president of one of my customers described it in this way. If their IT infrastructure is down during their busy season, they lose 70 customers per hour. This is clearly a company that relies on technology. Not only do they have a sales impact from technology downtime and poor performance, all of their business areas are affected from customer service, marketing, finance and the executive team. In this case managed services provide tremendous benefits. They were using an IT service provider, but not a true managed services provider by my definition. After making the change, their employees have an order of magnitude more productivity due to substantially lower ticket counts.
In conclusion, managed services or not, assessing the impact of technology on a small business is a very important activity. As in most things, rather than there being a single black and white answer, small businesses fall on a spectrum. To find out where you are, the first step is honestly understanding the reality of your situation. How important really is IT to your businesses. Most business owners I encounter minimize this. IT is typically something they want nothing to do with – they delegate and just want it to work. The reality is that for many businesses, it is either mission critical or has a significant impact on productivity, risk, return on capital investment among other areas. It would be as if I delegated and did not measure or manage the sales function because I am not comfortable with sales. As a business owner, I do not have that luxury.
Key Take Aways:
- Technology creates a huge impact on businesses.
- Sometimes it's hard to tell how much your business is suffering.
- Utilizing IT resources properly can improve operations and cut costs.