How to Budget for Managed IT Services

budget for managed It services

Have you ever seen something while shopping that immediately caught your eye and you knew you wanted to buy it?

It could be a piece of clothing that would coordinate with your favorite pants and shoes. Or perhaps, it’s a tool that would expedite your next home-improvement purchase.

Regardless of what the item is, you believe it would add value to your life if you were to purchase it.

But then, you examine the price tag on said item, and after picking your jaw off the ground, you decide you don’t actually need it, especially for that price.

As a technology services provider, The KR Group has witnessed, on occasion, similar reactions when we explain how much you should set aside to pay for a managed services contract and related expenses.

Here are all the items you need to consider when creating an IT budget with the intent to use managed services:

  1. The contract
  2. New implementations
  3. After-hours support
  4. IT lifecycle replacement
  5. Contract changes

Suppose you’re an organization with 25 users. You can expect to pay around $3,750 per month for software subscriptions (email, office applications, and backup), cybersecurity solutions, and leased networking hardware.

However, that only covers the first budget item. You should still set aside funds for other IT-related expenses.  

And while in a perfect world, you’d never have to call your MSP for after-hours support. Unfortunately, that’s not the reality of IT support, and we want you to feel prepared for how much you could spend when contracting for managed IT services.

 

Budget Item #1: The Managed IT Services Contract

Of course, when budgeting for managed IT services, you’ll need to account for the contract.

Your contract generally consists of a flat monthly fee to cover your IT support, leased hardware, backup, office solutions, and security services. You’ll receive a monthly bill for these items.

Depending on your MSP, other initial costs, such as the audit, compatible firewall, and other necessary equipment, may not be covered in this monthly fee. (At The KR Group, they are.)

Either way, it helps if you understand any upfront costs at the beginning of your contract, so you’re not surprised by them.

The contract and any initial fees will take up the majority of your IT budget, but there are other factors you should still consider when building your budget.

 

Budget Item #2: Non-Managed Services Projects

budgeting for managed services

Your managed IT services contract includes all the support and solutions you’ll need to keep your organization’s technology running smoothly.

However, if you plan to expand your facility, take on a second location, or replace a solution, you’ll need to think about more than monitoring and maintaining your IT environment; you need to talk about new implementations.

MSPs are capable of many of these projects. However, your contract does not include the time and material to complete these goals.

Because the scope of these projects varies, you should work with your MSP before signing a contract to understand anticipated costs.

 

Budget Item #3: After-Hours Emergencies

With a managed IT services contract, you have access to support 24 hours a day, 7 days a week, and 365 days a year, but that doesn’t mean the price is covered by your contract.

Your MSP will have normal business hours from 8 a.m. to 5 p.m., Monday through Friday.

Any regular service an engineer performs during this time is covered by your contract. However, any IT issue your MSP responds to outside of the workweek will have a surcharge.

This doesn’t mean you should never request support, but you should save after-hours service requests for true emergencies. (A good rule of thumb for deciding if an IT issue is an emergency is if it ceases your operations and there is no workaround.) 

 

Budget Item #4: IT Lifecycle Updates

The equipment in your IT environment doesn’t last forever. If something malfunctions or is simply no longer meeting your needs, you’ll need to replace your devices.

Additionally, your hardware requirements might change over time. If you need a new device that can accommodate more of your IT environment or has better features, this is out of the scope of your contract.

You’ll need to purchase the device, but you’ll also have to pay for the time it takes for your MSP to configure the new solution. In most cases, your MSP will eventually cover the new hardware in your contract, but there might be a brief time when even support on the device isn’t covered by your managed services contract. 

 

Budget Item #5: Changing Your Managed Services Contract

managed IT services budget By signing a managed services contract, you’ll be locked into the agreement for a set amount of time – generally 1, 3, or 5 years.

That doesn’t mean your IT needs are the same on day 1 as on day 1,000; in fact, it’s more likely they’ll be different. You’ll often need to make user and/or device changes before your contract is up for renewal.

You’ll want to work with your MSP on finding the ideal balance between taking on new technology and achieving stability. Of course, you should make adjustments when needed, but continually changing your contract can undermine the effectiveness of your IT environment.

The most important point for you to remember is to leave some room in your budget because you may need to make changes to your IT environment and managed services contract. If you do, there’s the potential your monthly bill will increase.

For example, if you’re 25-user organization has grown to 30 users two years into your contract, your monthly rate will now be $4,500. 

 

Crunching the Numbers for Your Managed IT Services Contract

The cost of managed services is not only unique to your business’ size and needs, but it’s also dependent on many other factors.

The contract, after-hours emergencies, additional users, and new equipment are all things you should consider when calculating the total cost of managed IT services.

For each of these variables, you should set aside some funds so you’re prepared to financially accommodate them.

And the best way to learn how much you should budget for managed IT services is to schedule a free appointment with us to talk about contract options.

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