Service Agreements or Ad Hoc?

Businesses often task the receptionist or another person to make a few phone calls in order to obtain pricing from 2 or 3 IT service companies on their hourly support rate. Often the motivation for this ranges from obtaining cheap IT support on the one end of the spectrum, all the way to obtaining reliable and responsive IT services at the other end, with a dozen other objectives or motivations in between.

If your IT does not serve an important purpose in your business, there would be little to no benefit in pursuing anything but a cheapest option and even a on demand or ad hoc arrangement may serve you best.

However, if IT provides your business and its processes anything more than the most rudimentary support, a service agreement may be a much more cost effective option. It is difficult to imagine any business operating today that can operate without technology. When the business’s IT platforms are not operating as they should, productivity is impeded, costs increase and revenue diminishes. Therefore, avoiding operational disruptions would be a primary objective, and addressing those disruptions when they do occur, would be a strong secondary objective.

Ad Hoc IT support

Given the definition of the term ad hoc, expectations need to be tempered. Ad hoc implies an ‘as and when needed’ basis. It is good for non-critical scenarios such as environments where there is no dependency on the system which is down, or where a viable alternative is available.

As the engagement with the IT support service provider is an ad hoc engagement, it also stands to reason that the service provider will only engage with the client on an ad hoc basis, and that such an engagement would be completely re-active. Put differently, the service provider will not perform any actions or activities unless the business requests such an activity to occur. Therefore, it is probably not reasonable for the business to expect the service provider to perform any on-going or even periodic check or assessment of the business’s systems. Unless there is a capable person within the business who is competent and has the capacity to perform periodic assessment of entire IT environment, issues will go unresolved which will result in unnecessary disruption to the main business processes. Backups which are not running, or are failing, would be examples of such latent problems. Security risks from anti-virus definitions which are not up to date on all network computers would be another. Gradual performance degradation due to low disk space circumstances, expiring subscriptions resulting in loss of access and decreasing UPS battery capacities are all typical issues which may arise with lack of proper oversight. As the engagement with the IT service provider is ad hoc, these situations will go unknown and unnoticed until it is too late, resulting in unnecessary business disruption and great productivity and financial expense.

Ad hoc agreements also lead to situations where the business becomes dependent on one specific person within the IT service providers’ business. Because there is no engagement beyond when there is a problem, the structure of the business’s systems is unknown to anyone not directly involved with the business. There is no opportunity for the service provider to implement standards within the business technology structure, or to document the environment as it is. Every support engagement will be with someone who does not know the business, its’ platform architecture or any nuances which may exist. This leads to greater risk of unintended disruptions from the lack of insight into the business structures, or for longer time to resolution in addressing the current problem. It is probably not reasonable for the business to expect the IT service provider to maintain a set of documentation for the business, as well as ensure that all technical resources in the IT service provider are familiar with the client business’s IT systems, when there is no ongoing engagement other than ad hoc incident. So the cheap IT service motive is unrealized because of the time it takes someone to familiarize themself with the environment, as well as the increased risk of further problems created unintentionally due to lack of exposure to the businesses systems.

Service Agreement IT support

A good IT support agreement will address the short-comings of the Ad Hoc engagement and will deliver additional value. It should ensure that the business has access to competent technical resources familiar with the business technology platforms, it should provide sufficient capacity in resources to undertake the engagement and must provide the business with a guaranteed response time. Another key deliverable of a good service agreement is the breadth and extent of pro-active services such as monitoring services – backup logs, antivirus definitions, infected computers, disk space and general server capacity, UPS battery monitoring and critical services monitoring. Service agreements not offering this as a minimum should probably best be avoided. Good IT service providers may even have standardized network system architectures which allow them to leverage their investment in their technical staff, their processes and methodologies in order to provide a more mature level of service (predictable and repeatable) more cost effectively.

A network proactively managed will suffer fewer issues that impact the business performance by means of non productive employees or loss of revenue opportunities. When the basics are taken care of methodically, computer networks tend to keep running well. There are many external factors that affect the stability of a network, some necessary and others not, but when due care and attention is given where it matters and when it matters, a business’s IT systems can run for years without disruption. 100% scheduled up-time in smaller businesses is not unheard of, albeit down to a bit of good fortune too. Factors such as lightning strikes, power outages and internet outages are beyond the control of most businesses. While technologies such as generators can extend the run time of the business during prolonged power outages, many of them are too expensive or just impractical for business sharing on office building or park. The point is that there are certainly many things other than these types of circumstances that will adversely affect the business’s technology, which can and should be taken care of by a good service agreement. Even critical but disruptive activities such as firmware updates and software updates which require equipment to be restarted, can be planned, scheduled and undertaken without negative impact on the business.

With proactive maintenance comes greater reliability. With greater reliability comes fewer major incidents resulting in greater productivity and the lowest cost of IT. Therefore, the cheapest IT is reliable IT.

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Service agreements need not be for a fixed term. A month to month service agreement will provide the primary benefits required to keep the network operating well. Term based service agreements need to offer additional value over month to month agreements, such as fixed pricing for the term as an example. Alternatively, where fixed price is not possible, a term agreement should make known escalations at commencement of the agreement. Hardware and software provisioning may also be included in the term agreement, moving the support agreement closer to the complete Outsourced IT model, which in itself can free the business from legacy constraints and depreciation cycles. Ask you prospective service provider for references from similar sized or type of clients which they already engage with.

Reputable IT service providers will also allow you to scope a service agreement in line with your requirements. You may opt for a service covering essential services on your network only such as servers, switches and wireless access points. Or you may wish to include remote support for users computers in addition to the core services. You may wish the agreement to be fixed price allowing you to budget for your IT expenses, and view this in addition to employee staff costs as employee costs to company (direct and indirect staff costs + IT cost per capita). This way you know that your systems are taken care of and what those systems will cost.

In principle, it may be beneficial to seek service from service providers who operate by service agreement primarily or even exclusively. Such businesses will perform their own capacity calculations based on the number of users and networks which they support. In general business profitability terms, few businesses will employ a greater number of staff than what they require to accomplish their objectives. Therefore, if those businesses were to scale their capacity based on service agreement requirements, it stands to reason that if they undertake Ad Hoc activities, it would be inevitable that a capacity constraint will develop. When this happens, the service provider is unable to meet its obligations to the business, either in terms of response times or in terms of sufficient capacity to invest in behind the scenes pro-active services as discussed previously.

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