What is Co-Managed IT and How Does it Reduce Costs?

What is Co-Managed IT and How Does it Reduce Costs?



Jed Fearon

Solution Advisor, 17+ years of experience in MSP Solution Development, Sales and Marketing Communications

Any term with “IT” in the title can be confusing.

MSPs monitor, manage, support, and secure the infrastructure of small and midsize businesses for a fixed fee. Organizations with up to fifty people usually opt for fully managed IT services because they do not have full-time IT staff managing infrastructure.

Infrastructure (physical servers, cloud servers, Azure, M365, switches, firewalls, and backup, etc.) is a different discipline than two other specialties frequently lumped in with IT: line of business software (HubSpot, Salesforce, or SAP Business One) and custom application development (Amazon’s eCommerce Platform, the Fly Delta Mobile App, and Self-Service kiosks at McDonald’s).

Organizations with more than fifty people usually opt for Co-Managed IT services and partner with an MSP to monitor, manage, support, and secure their infrastructure. Co-Managed IT is a team approach with carefully defined lanes and clear-cut responsibilities.

For instance, a company with 100 people may have an IT Director and two help-desk specialists. In this arrangement, the MSP agrees to manage the backend IT systems while the help desk team provides just in time, high-touch, level one user assistance. Level one means low-tech, tactical guidance, and basic intervention. The IT Director plays the role of generalist.

Combinations like this can save you money in three ways. (Additional examples will appear in future articles on this popular topic.)

#1 - Automate Routine Tasks

MSPs invest in high-end, integrated IT management solutions like Professional Services Automation (PSA) and Remote, Monitoring, and Management (RMM).

Both are continuously upgraded and customized to deliver 24/7 control of your digital estate, including automated system updates, alerts, work-flow rules, routine task reminders, and more.

Neither solutions make financial sense for an in-house IT department. A small MSP could easily invest $750,000.00 to get everything up and running and still have annual licensing and consulting fees well into six figures.

The market leader, Connectwise, (and their PSA peers) can easily do the work of three in-house system engineers. It’s not uncommon for three IT staffers to pull an all-nighter doing routine updates on four servers and still not get it right.

When this happens, they are exhausted and significantly less chipper when assisting users. And the patching job still isn’t finished!

Learn More: Connectwise Automated Patch Management

#2 - Lower Your Cybersecurity Insurance Liability

An incomplete server patching project also leaves your IT systems vulnerable to intrusion with some of the following consequences:

  • Malware
  • Ransomware
  • Wire Fraud
  • Data loss
  • Identity Theft
  • Lawsuits
  • Public relations blowback
  • Higher insurance premiums
  • Denial of insurance coverage

Each of the aforementioned events has an associated cost. Every wire fraud incident I’ve heard about in recent years has involved bank transfers of at least $100,000.00.

And it’s not unusual for a business to be down for two weeks if they get hit with a ransomware demand, they don’t have a good backup, and can’t decide if they want to pay thousands of dollars in bitcoin to get their data unencrypted and released.

A Co-Managed IT partner can do a lot more than routine patching. They work from established cybersecurity frameworks to ensure your IT systems are aligned with the appropriate regulation and compliance requirements for your industry.

This governance-based approach not only creates smoother, more resilient IT systems, all technical details are documented so you have evidence of due care and quick answers to the most demanding cybersecurity policy renewal questionnaires.

A quick glance at the CyberRisk and Multi-Factor Authentication Attestation applications on Traveler’s website makes this point abundantly clear.

Learn More: CyberRisk Policy Applications

#3 - Reduce HR Expenses

Attracting and retaining talent is a never-ending challenge, especially in the technology space. Seasoned and motived CIOs, CTOs, CISOs, IT Directors, Network Engineers, System Engineers, and Cloud Architects are in high demand and likely to jump ship for new challenges, advanced certifications, and higher pay.

Now you’re faced with ongoing recruiting fees, onboarding expense, and new employee learning curves.

On the flip side, less ambitious IT professionals may be content to stick around for years. While this loyalty is admirable, IT skills become obsolete every eighteen months which jeopardizes your uptime, quality of service, and business continuity.

Both scenarios are expensive as per the following rundown of average annual salaries, courtesy of PayScale:

  • Network Administrator - $60,000.00
  • System Administrator - $61,000.00
  • Technical Support Engineer - $65,000.00
  • Cybersecurity Analyst - $76,000.00
  • Senior Solutions Architect - $137,000.00
  • Vice President Information Technology - $153,000.00

Learn More: Popular IT Jobs & Salaries

What’s Next?

A company with in-house IT has a number of options when it comes to slicing and dicing Co-Managed IT Services. Just make sure you find an MSP to assist with the formulation of your strategy and assess the technical aptitude of your team.

The following general scenarios and potential savings may be relevant to your organization:

  • Your MSP assumes the role of IT Director if your IT Director suddenly leaves (temporarily or permanently).
  • If you have Level One techs who wish to advance or leave, their duties can be supplanted by their peers at the MSP.
  • Level One techs can often gain new skills through collaboration and exposure to new tools via the MSP relationship. (Who knows, today’s Level One tech may be tomorrow’s IT Director.)
  • MSP services can be scaled up and down depending on your headcount and budget so you don’t have to hire and lay off staff.

To get a better idea of how Co-Managed IT pricing compares to your in-house IT costs, visit: Managed & Co-Managed IT Pricing.

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