At first, time and materials (T&M) seem like a good business model for IT services. After all, if you’re only paying for the services you receive, you reduce your costs, right?
In actuality, paying on a T&M basis could be costing your company more than you think. Let’s take a look at a few ways that time and materials could be costly.
The Little Things
With a managed services model, any employee who has a small question or problem can get help without having to worry about what the time is costing. They’ll be much more likely to report and get their minor problems resolved if they know it will not cost the company anything extra.
If you are paying every time something breaks, the threshold for reporting issues is higher, and therefore many employees will be tempted to let their issues go unreported and unresolved.
Problems Escalate
Unfortunately, a lot of problems aren’t as simple as they first seem. With managed services, you’re covered if a problem escalates hours beyond what was originally planned. With T&M, however, you could predict a tiny cost to fix an issue and have it blow up into a huge problem; every hour worked is costing you more.
It’s not a question of if these issues will happen; they eventually will. With time and materials, it’s you are not able to budget your IT expenses consistently.
Break and Fix Isn’t in Your Best Interest
In a T&M model, your IT provider really only makes money when something breaks. But since prevention isn’t a focus, when something breaks, it’s going to cause a big disruption.
With managed services, your IT provider actively seeks to prevent problems instead. This means that catastrophic problems don’t happen as often and thus your systems are more stable overall. In addition, managed services align the interests of both the IT provider and their client. Whenever they keep everything running smoothly, they avoid having to invest lots of time fixing big problems and you avoid slowdowns.
In the managed services model, IT is a symbiotic relationship.
No Time for Strategy
When your IT works on T&M, you don’t want them to spend more time than needed on issues since it will cost you more money. But there’s more to good IT than just fixing present problems. If your company doesn’t plan for the future, you could set yourself up for big problems in the future.
A Managed Services model allows for this important aspect without costing your business extra money. Whenever it’s time to have an important conversation about upgrading equipment, budgeting, or making sure your IT helps to meet your business goals, you can spend that time without worrying.
An Irregular Cash Flow
As mentioned above, T&M can vary wildly from month to month. If you don’t have any problems for a while, you might not even see your IT provider in a given month. That means your cost is low for a time, but what about the next month? If you have double the usual amount of issues, then your cost becomes much higher than you planned for.
Not only is this erratic and disruptive, it’s difficult to budget for. The graph below illustrates an example situation of cash flow for T&M and managed services:
As you can see, your company’s IT costs can change drastically every month with T&M. Managed services is a fixed cost that you can plan for every month, and you won’t have to worry about a bad month costing you extra.
Decided Time and Materials Isn’t for You?
There’s a better way. If you’re sick of paying too much for time and materials IT service, contact us and learn how we can take your IT to the next level.
