How do I know if I can trust my IT? Am I paying too much?
Recently, when asked to speak to a CEO peer group, those are the two questions asked first. Honestly, talking to 30 CEOs from across the greater Houston area, I was surprised that those were the questions I was being asked. Nonetheless, that’s what I had to work with, so we spent the next two hours on those two questions. This post is a summary of my answers.
How do I know I can trust my IT? Unlike law or medicine or insurance, IT is an unregulated industry. Think about that for a second. The entire world now relies on, runs on, depends on computers, and the internet. All of that combined is called Information Technology. Despite IT being arguably the most crucial aspect of our daily lives now, it’s still unregulated. There is no American Bar Association. There is no American Medical Association. There is no United Nations for IT. This means just anyone can hang out a shingle and advertise themselves as an IT specialist when they might not know the first thing about it! This happens quite a lot! So, how do you know if you can trust your IT? You vet them properly, that’s how.
When you are hiring an IT company, without question, you need to verify at least three different references, and you need to dig deeper than just whether or not the reference likes the IT guy(s) who service their office. You need to know what projects the IT company has done for their customers. You need to ask about individual techs and whether or not they know what they are doing. You need to ask about lost data, data breaches, response times, interpersonal skills (geeks are socially awkward people) and this is important.
It's not just references, but it’s also certifications. Certifications are different than education. You can find IT people with college and university degrees, but that means nothing in IT. Certifications are what matter, and even those can be faked, cheated, etc. This is why you need to vet your IT company and vet your IT people to make sure they are doing what it is you need. Sadly, there are many web sites dedicated to providing the answers to certification questions. You see, it’s unregulated so IT is very much a wild and untamed industry. Just like wandering thru the wilderness can get you eaten by a bear, wandering thru the wilderness of IT can get you compromised.
Dig deep! Vet your IT company and their techs. Find and use someone who’s been around for a long while and has many years of positive results. Get this information from existing clients, not the internet. Ask your IT company for references and actually call them and ask questions.
Am I paying too much for my IT?
There is so much to unpack here, but let’s start here: If you’re paying north of $200/hr for IT, you’re paying too much. I can also count on my one hand the people who are worth that. I don’t care if you’re migrating one mailbox to the cloud, or merging two companies with 100,000 employees each, $200/hr is just about it.
There are IT companies who charge $350 an hour and more. There are IT companies who charge what I consider to be stupid fees and I can tell you firsthand, no one in IT is worth that. If you are paying more than that, you are paying for someone’s summer home in the south of France, not their IT skills.
Next, let’s talk about HOW you pay for IT.
Some companies pay for managed services where there is a flat monthly fee for IT service, per device, and then IMACS (installs, moves, adds and changes) are extra. Managed services is one of the popular buzzwords you see a lot online.
Managed services involve installing monitoring software in your environment and letting your IT company proactively monitor your equipment for problems, failures, etc. On its face, this sounds great, but in practice, it’s horrible.
This monitoring software the IT companies install can also be used to generate false positives, which in turn generate tickets for which you are billed. Sadly, when my company is called in, we see this quite a bit. It gets towards the end of the month and the IT company goes on a fund-raising excursion, and they generate a few extra tickets for their customers, and finish with a big windfall of invoices on the last day of the month. Again, we see this a lot! Remember that vetting part? I never recommend managed services unless there is a robust auditing process in place that’s handled by a third part to keep an eye out for false positives.
Next, some IT companies want you to buy bulk hours at reduced prices. For example, buy 1000 hours at a 20% reduction in our normal pricing and you save money. However, it’s now in the IT company’s best interest to run through those hours as quickly as possible. Absent robust auditing, you don’t know if the hours were misused or not.
Lastly is my favorite, and that is a fixed fee IT management scenario. Any good IT company worth their salt should be able to come in and tell you with reasonable assurance what it should cost to maintain your network month to month. IMACS should be extra, and see above for approximately what that should cost. Experience has shown me that to maintain a single workstation for one year should not cost more than $150 and maintaining a server for one year should not cost more than $200 to $250 per year. That being said, let’s do a little math.
1000 workstations X $150/yr should run you about $150,000 for the year.
200 servers X $200/yr should cost you about $40,000/yr.
Those prices are at the high end so expect to see something less than that.
So, let’s say you have a small office with 10 workstations and five virtual servers. You’re looking at 10 X $150 for the workstations and 5 X $200 for the servers. Your yearly IT costs to maintain what you have should come in at about $2,500/yr. That’s an approximate cost, but it’s very close. We took over a client once with 150 workstations and 17 virtual servers. That should cost somewhere in the neighborhood of $26,000/yr to manage, and the client was paying well over $84,000/yr. That’s just unethical and it really gives good IT a bad name.
Now, I want to be clear here, the above is a lot of approximation and ballparking based on over 30 years of IT experience. What you read above is not chiseled in stone but does provide a good base from which to work.
The last thing I’ll say about hiring your IT company is never – I mean NEVER – sign a contract. You should be able to fire your IT company when they screw up. You also need to read my blog on KNOWING and having access to your critical passwords and access credentials. This is very important.
This is just a summary, so reach out to me if you have specific use questions and I’ll help you navigate thru that. IT should be like a hickory hammer…you should just pick it up, use it, put it down. IT should not dominate your budget, your life and it certainly should not interfere with you making widgets.
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