It seems like we hear this story with a different spin on it almost every week: a company that’s grown and become more successful starts to outgrow their outsourced IT consultant or their first managed services provider.
As a company goes through the stages of evolution, the level of skill required to meet the business’s needs changes. Just like you wouldn’t rely on your bookkeeper to provide CFO-level services for a 100-person firm, chances are that your outsourced IT person or first MSP isn’t going to get the job done either. Not to mention that higher skilled labor costs more money and better management takes longer, making the pill tough - and expensive - to swallow.
A big mistake we see companies make is trying to hire that IT consultant internally, or decide to replace the low-performing MSP with an internal “IT guy.” While it’s great to have someone who’s right there when you need them, this solution creates a bunch of problems of its own.
All your eggs in one basket
Your newly minted internal employee will quickly become the only person who understands what they’ve built, and they’re incentivized to protect it (and their job) rather than to improve it. If you’re the CEO or CFO and you’re not getting the answers you’re asking for, there’s a good chance that a really big problem is about to happen. And if for some reason that one person decides to leave, it puts you in a pretty vulnerable position.
IT skill gap
For the same reason you wouldn’t hire a handyman to build a skyscraper, you probably shouldn’t hire internally to build and manage your internal IT architecture. While that handyman may be great at fixing the day-to-day stuff, like patching a hole in the wall, he’s probably not experienced at designing buildings, creating structural or mechanical engineering plans, or leasing out and managing the space. If you were building a skyscraper, you’d hire a team of experts to manage the project, and you’d know that not just anyone could to the job.
In a 100-user firm, you’ll need help desk people to handle the day-to-day IT issues, systems administrators or engineers to design and implement new systems, IT managers to plan and oversee changes, and solutions engineers to investigate the right approach to each problem. And of course, this team of specialists all needs to be under the leadership and management of an experienced CIO.
If you’re asking the help desk guy to develop or launch a new IT system, then the help desk tickets don’t get done. If you ask a systems engineer to handle the basic stuff, they’ll be more concerned about big-ticket items, and make the small task their lowest priority. Hiring one person to do it all just doesn’t work very well – they end up producing a mediocre result (at best) in just about every area, especially the areas they don’t have the skills to do.
Finally, you’ve got the challenge of managing the internal IT guy. Since the CEO rarely comes from an IT engineering background, this task is usually delegated to the CFO or controller. While they’re often great at finance and administration, they usually lack the technical expertise and experience to evaluate and assign work, review performance, suggest improvements, and most importantly assist and empower this internal IT employee with their growth and training.
Build it right
At the end of the day, hiring internally usually doesn’t work until you can build a true team. That typically takes a minimum of 3-4 people and $300,000 or more in annual payroll, tax, and benefits costs. By comparison, a great IT Managed Services Provider will charge that same $300k/year to manage the IT for a company of 100 – 150 users, depending on size, complexity, and other factors. That top-performing MSP already built the team you need years ago, and they know exactly how to execute to meet needs of small to mid-sized businesses. They’ve also made the mistakes you’d like to avoid, and did it on their own dime.
We tell our clients it makes sense to consider bringing their IT in-house at somewhere around 150 – 200 users. That still depends on a ton of factors, including number of locations, complexity of the system, and the requirements of the users. Many companies with 500+ employees outsource their IT successfully, and can get a much better result at a lower cost than building a team internally.
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A little about us: Dynamic Computing provides managed IT services, IT support, IT consulting, & cyber security services to top performing small to mid-sized businesses in the greater Seattle area. We're focused on being the premier managed IT services firm in the Pacific Northwest, and we act as a complete IT solution for companies who don't have internal IT departments. Our clients typically range from 10 to 200 employees and we work primarily with professional services firms in the Puget Sound Region.
About the author: Kevin Gemeroy is the President & CEO of Dynamic Computing, a company he founded while in Business School at the University of Washington. He's was recognized as a 40 under 40 honoree by the Puget Sound Business Journal in 2018 and as Washington State's Mr. Future Business Leader by FBLA in 1998. He resides in Seattle, Washington.