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May 25, 2023

How to Measure ROI of Managed IT Services?

How to Measure ROI of Managed IT Services?

Managed IT services are a way of outsourcing your IT needs to a third-party provider who can handle your digital infrastructure, support, security, and strategy. Many businesses choose to use managed IT services because they can save time, money, and resources while improving their IT performance and reliability.

But how do you know if you are getting a good return on your investment (ROI) when you hire a managed IT service provider (MSP)? How do you measure the benefits and costs of using managed IT services?

In this article, we will explain how to measure the ROI of managed IT services and what factors to consider when choosing an MSP.

What is Managed IT Services ROI?

Managed IT services ROI is the ratio of the net benefits you gain from using an MSP to the total costs you pay for their services. It shows how much value you get for every dollar you spend on managed IT services.

To calculate managed IT services ROI, you need to estimate two things:

  • The net benefits of using an MSP
  • The total costs of using an MSP

The net benefits of using an MSP are the positive outcomes that result from outsourcing your IT needs to a professional team. These can include:

  • Reduced downtime and risk of data loss or breach
  • Increased productivity and efficiency of your staff and systems
  • Improved security and compliance with industry standards and regulations
  • Enhanced scalability and flexibility of your IT infrastructure
  • Access to expert advice and guidance on IT strategy and innovation

The total costs of using an MSP are the expenses that you incur when hiring an MSP to manage your IT needs. These can include:

  • The monthly or annual fee that you pay to the MSP is based on their pricing model
  • The setup or transition costs that you pay to switch from your current IT provider to the MSP
  • The additional costs that you pay for extra services or support that are not covered by the MSP’s contract

To calculate managed IT services ROI, you can use this formula:

ROI = (Net Benefits – Total Costs) / Total Costs * 100%

For example, if you pay $10,000 per month to an MSP and estimate that you save $15,000 per month in reduced downtime, increased productivity, improved security, and other benefits, then your ROI would be:

ROI = ($15,000 – $10,000) / $10,000 * 100% = 50%

This means that for every dollar you spend on managed IT services, you get $1.50 in return.

How to Measure Net Benefits of Managed IT Services?

Measuring the net benefits of managed IT services can be challenging because some of them are intangible or hard to quantify. For example, how do you measure the value of having peace of mind that your data is secure and backed up? Or how do you measure the impact of having access to the latest technology and innovation?

One way to measure the net benefits of managed IT services is to use key performance indicators (KPIs) that are relevant to your business goals and objectives. KPIs are measurable values that show how well you are achieving your desired outcomes.

Some examples of KPIs that can help you measure the net benefits of managed IT services are:

  • Downtime: The time your systems or applications are unavailable or not functioning properly.
  • Recovery time: The amount of time it takes to restore your systems or data after a disruption or disaster.
  • Security incidents: The number or frequency of cyberattacks, breaches, or data leaks that affect your business.
  • Compliance: The degree to which your business meets the legal or regulatory requirements for your industry or sector.
  • Productivity: The output or efficiency of your staff or processes.
  • Customer satisfaction: The level of satisfaction or loyalty that your customers have with your products or services.

You can use these KPIs to compare your performance before and after using managed IT services. For example, if you had an average downtime of 10 hours per month before using an MSP and reduced it to 2 hours per month after using an MSP, then you can estimate that you saved 8 hours per month in downtime.

MSPs help you focus on growing your business instead of on computer problems. Thanks to managed IT, smaller companies now have the tools to compete with larger players through managed IT services. Get in touch with our team and see how APEX 365 can help with your business.