How to Measure the ROI of Managed Services

How to Measure the ROI of Managed Services

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Lets talk about something that might sound a little dry, but is actually super important if youre using managed services: figuring out the ROI, or Return on Investment. Basically, are you getting your moneys worth? Its not always as simple as looking at a bill and saying "yep, thats how much I spent," because the real benefit of managed services often lies in the things that dont happen, or the efficiencies you gain.


So, how do you actually measure this elusive ROI? The first step is pretty straightforward: identify your costs (the money youre spending). This includes the monthly fee you pay to your managed service provider (MSP), but also any internal costs associated with managing the relationship, like the time your team spends in meetings or reviewing reports. Dont forget to factor in any initial setup fees or migration costs.


Now comes the tricky part: defining the benefits. This is where you need to dig a little deeper and think about what you were hoping to achieve by outsourcing your IT or other functions in the first place. (What problems were you trying to solve?)


One major area to consider is reduced downtime. If your systems were constantly crashing before, and now theyre running smoothly thanks to your MSP, thats a huge win.

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Think about how much downtime cost you in lost productivity, missed sales opportunities, or even damage to your reputation. (Quantifying this can be challenging, but even a rough estimate is better than nothing.)


Another benefit is increased efficiency.

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Are your employees spending less time troubleshooting IT issues and more time focusing on their core responsibilities? If so, that translates to increased productivity and potentially higher revenue.

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(Again, try to put a number on this, even if its based on employee time saved and their hourly rate.)


Improved security is another big one. A breach can be incredibly expensive, both in terms of financial losses and reputational damage.

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If your MSP is helping you stay ahead of security threats and prevent breaches, thats a significant ROI, even if its hard to put an exact dollar amount on it. (Think of it as insurance – you hope you never need it, but youre glad you have it.)


Dont forget about scalability. Managed services can make it easier to scale your business up or down as needed, without having to invest in expensive infrastructure or hire additional staff. This flexibility can be a huge advantage, especially in todays rapidly changing business environment. (Consider how much it would cost to handle growth internally versus using your MSP.)


Finally, consider the softer benefits. Things like peace of mind, knowing that your IT is being taken care of by experts, can be incredibly valuable.

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While these are harder to quantify, they shouldnt be ignored.

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    (A happy and less stressed team is a more productive team.)


    Once youve identified your costs and benefits, you can calculate your ROI.

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      There are several ways to do this, but the simplest formula is: (Benefit - Cost) / Cost 100.

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      This will give you the ROI as a percentage.


      Remember, measuring the ROI of managed services is an ongoing process. Its not something you do once and then forget about. You need to regularly review your costs and benefits, and make adjustments as needed. (Think of it as a feedback loop that helps you optimize your managed services relationship.) By taking the time to carefully measure your ROI, you can ensure that youre getting the most out of your investment and that your managed services are truly helping your business thrive.

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