March 21, 2015

Managed Services Cost a Lot Less Than You Think

Laurent Slutzky


I was speaking with one business owner in depth, I began to understand why many business owners are reluctant to start implement a managed service solution. This particular business owner was spending about $1500 per month on IT, and had significant reservations about spending more than that for a managed service solution. I spent some time explaining to him the less obvious (but very real) costs that are derived from a less-than-optimum IT solution. Costs related to downtime, such as reduced employee productivity and lost business, can quickly dwarf the marginal increase in monthly costs for a managed services solution. After showing him the numbers, he realized the only smart move was to migrate to managed services.

I know a lot of business owners, and one thing the successful ones have in common is a desire to make their businesses more profitable. Even the most successful business owners want to find a way to increase their margins, either though increased revenue or reduced overhead.

That type of mindset is just good business, and goes beyond simply wanting to make more money. Greater margins mean greater room for error or other unexpected hardships within the company, and it logically follows that the companies with the largest margins can weather the harshest storms.

The challenge that many business owners I’ve spoken to face is a concern over spending money on IT services, such as our own managed service package. After all, managed services cost money, which means a corresponding reduction in a business’s profit margins.

Or does it?

While it is true that there is a cost associated with the use of managed services, what is less obviously apparent, yet still incredibly expensive, is the cost of NOT having a reliable managed service solution set up for your company.

According to a report by Forrester Research, about 73% of companies have had at least one major disruption to their business operations within the past five years. These disruptions lasted anywhere from a few hours to several days (or even longer in some cases), and had a significant impact on bottom lines.

According to that same report, the average cost for downtime was $212,100 per hour. For small to medium sized businesses, the number was not quite so shocking, but was significant nonetheless, coming in at an average of $12,500 per hour.

Even worse is what occurs when there is permanent data loss (as opposed to just a temporary disruption). According to one study, an estimated 43% of companies that suffer major data loss never reopen, and a shocking 96% of companies that suffer data loss eventually go out of business.

So yes, there is a cost associated with managed services. However, the cost of having an unreliable IT infrastructure can cost your business many times that cost, and could potentially even shut down your business for good.

Managed services ensure that your company will have little to no downtime, and will also keep all of your critical company information safe and secured against catastrophic data loss. While the cost of managed services is certainly more visible on your company’s quarterly reports, those same managed services help ensure that there are quarterly reports to give.


For more information about managed services in Los Angeles, California, or for general questions about cloud migration, including how a managed service provider can ensure a seamless transition to an Office365 environment, please take a look at our website by visiting us at or call us at (310) 286-0111

Laurent Slutzky is the founder of Last Line Solutions Inc., a full service Managed Service Provider