IT as an Expense or Profit Centre – Support Models

IT as an Expense or Profit Centre

What does Financial Year 15/16 have in store for your business? Will you be affected by events in the Eurozone? Are South Australia’s record unemployment figures deeply furrowing your brow? Or has business never been more prosperous?

Whatever the coming months have in store you’ll need to make some decisions around your IT.

Such decisions come down to a fundamental question.

“Do you see IT as an expense to be minimised or do you see IT as a profit centre to be utilised?”

Over a few posts, we’ll look at things to consider if you’re in either camp that might influence a rethink of your current practices.

IT as an Expense or Profit Centre – Support Models

Managed Services vs Ad Hoc Support

Your business may be under contract with a Managed Services Provider (MSP) whereby all of your critical IT systems are under watchful electronic and human eyes. Managed Services provides your business with peace of mind that proactive maintenance and preventative upkeep activities are periodically undertaken. Your servers, for example, are being regularly patched with the latest updates to close-out security risks and improve stability. Resource consumption is monitored to identify trends that may require the repositioning of future plans or changes to the behaviour of software or the people using it.

Ad Hoc Support is precisely just that. When something goes wrong, you phone through to a Service Desk where your problem is addressed via some form of time and materials (T&M) rate. To facilitate this, your business might have an established working relationship with one or more IT providers.

We can think of the differences in how we might manage the servicing of our teeth, an analogy I’ve chewed on before in Do Computers Really Need Servicing?

Under Managed Services, you pay for regular visits to the dentist whereby proactive monitoring (x-rays, visual inspections) and upkeep activities (cleaning by a hygienist) help address and identify issues before they become bigger problems. This work is conducted on some form of regular schedule but, of course, costs money to do. And you still need to pay for things that need fixing – the fillings to address minor caries. So, it’s not a guarantee, rather a commitment to be proactive in the hope that this will avoid unsavoury aftertastes.

Under Ad Hoc Support, you’re only seeing a dentist when you have a gnawing toothache or when that handful of almonds becomes extra-crunchy with fragments of one of your rearmost molars. It could be an expensive and time-consuming visit. And you’ll need to find a reputable dentist because you’ve hardly ever seen one. Perhaps your friends know one. On the plus side, you may have saved a lot of money in the intervening months or years.

Why Managed Services?

The Managed Services model works well if one or more of the following resonate:

  • Your business demands peace of mind where both proactive and reactive tasks are taken care of, allowing you to get on with running your business.
  • Your business can’t afford major unplanned outages and wants to effectively take insurance to mitigate this risk to an acceptable level.
  • Your IT environment is large, complex, and heavily customised to provide you with competitive advantage.
  • Your business, and financial controller, finds comfort in predictable expenditure patterns where IT services-related costs are typically fixed from month-to-month.
  • Your risk profile aligns with this model.

Why Ad Hoc Support?

The Ad Hoc Support model works well if one or more of the following resonate:

  • Your business just doesn’t have the budget to spend on proactive IT. There may be many other competing priorities such as: a new office in Thargomindah; platinum sponsorship of the local underwater knitting club; a Tesla Roadster for the CEO; or more practical priorities.
  • Your business employs someone who considers themselves the first line of IT defence.
  • You know a trusted IT Service Desk that is responsive enough to your needs that you’re essentially getting the rapid response needed from a Managed Service Provider anyway.
  • Your business doesn’t place business critical reliance on IT. For example: you can afford to be without your e-mail or documents for an hour or even days, if necessary.
  • Your business trades in a market that fluctuates and therefore staffing and technology requirements must fluctuate with it. Consequently, spending a fixed amount on IT per month may seem excessive during those leaner periods.
  • Your business can afford to make a major investment in time or technology to resolve a critical issue that has seemingly occurred on a whim.
  • Your risk profile aligns with this model.

Depending on your business, and whether you consider IT a cost or profit centre, either model can be acceptable. In your case, there may not appear to be a clear win in either camp, although, generally speaking, larger businesses do find themselves under a Managed Services arrangement. And with some sectors of the economy seeing a decline in confidence – including a possible cascade of instability in the Eurozone – it’s prudent to consider the best approach for the months ahead.

The above advice is intended to be generalist in nature and it’s important to consider your particular situation.

Next Steps

  • Share this article – who else might find this of interest?
  • Start a chat at work – what model does your company use?
  • Leave a comment below – what do you think?

Contact Us or phone 1300 LOFTUS (1300 563 887) to discover how the Loftus Service Desk can exceed your expectations. At Loftus, we’re happy to help.


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