Thriving in tough times: Why managed services are a business imperative

By Charles Courquin, Director, Symatrix.

  • Monday, 3rd June 2024 Posted 1 week ago in by Phil Alsop

In today's economic climate, with inflation and interest rates improving but still remaining high, businesses face significant financial pressures, compelling them to prioritise the escalating costs of technology in their strategic planning. The challenges are complex, covering not only the initial expense of new implementations, but also the ongoing cost of managing the technology through its entire lifecycle.  

 

The integration and harmonisation of disparate systems, coupled with the costs of operation, maintenance and upgrades, further strains budgets. Enterprises must navigate this intricate landscape, balancing innovation and operational efficiency with stringent cost control to ensure they remain competitive and resilient in an ever-evolving digital world.

 

The skills dimension

When it comes to technology expenses, one of the biggest issues many businesses face is associated with the people they have in place to support it. IT skills shortages and recruitment difficulties have become a costly challenge across multiple business sectors. Many organisations lack the internal capability to drive their organisations forward because their IT teams don’t have the right skills and are finding it difficult to acquire them.

 

That’s a problem that is unlikely to ease soon. As the baby boomer generation retires, for example, there is a lack of experienced workers in many areas of the economy, with manufacturing, construction, and healthcare among the sectors worst affected. Alongside this, technology is constantly evolving and therefore the skills required to work with it are becoming increasingly complicated.

 

As a consequence, recruiting new people remains challenging and it is costing businesses considerably. Symatrix recently polled 200 IT decision-makers, working for large businesses, all of whom are involved in buying or managing technology for their businesses.

 

Over three-quarters of respondents (77%) said their organisation’s IT recruitment costs have increased over the past three years – and nearly half (45%) said costs have increased by more than 10%.

 

Nearly a quarter (22%) estimated that IT skills shortages are costing their businesses more than £100,000 a year in recruitment fees, temporary staffing, increased salaries, investment in employees starting out their careers and colleagues bringing new starters up to speed over time.

 

Vacancies are still high and companies struggle to fill them quickly which means that their costs ramp up. The survey found 27% of companies take more than two months to fill a vacancy today, which is up on the figure for two years ago. Despite moving past the pandemic's job market disruptions, recruitment challenges persist, escalating businesses' direct and indirect expenses through prolonged vacancies and reduced operational capacity.

 

Finding a way forward

In real terms, managing IT systems using internal resource is expensive for many businesses. More than a third (36%) of respondents whose businesses manage at least part of their IT systems in-house, are spending more than £250,000 a month on doing so. Moreover, 42% of those managing IT fully in-house said they find the process of receiving vendor updates in the cloud to be costly overall. And that is likely to be at least in part down to skills shortages.

 

The use of managed services will be key as businesses strive to make cost savings in the current difficult economic times. Beyond pure cost savings, however, a managed services approach is also likely to help organisations to achieve enhanced value over time. When asked about their previous experience with enterprise software, 100% of respondents that were using managed services only had achieved a return on their investment and a higher proportion of those respondents also recorded a return on investment (RoI) within a year compared to those managing IT fully in-house.

 

61% of businesses currently running their IT in-house believe they could save more than £50,000 per year if they were to use a managed services provider, which begs the question why they have not moved to managed services already? In fact, over three quarters (76%) of businesses who are using managed services estimated that they had saved more than £50,000 a year since they started to use the outsourced capability.

 

It is further evidence that with a higher return on investment and quicker realisation of benefits, the use of managed services holds the key to thriving in the current challenging economic landscape, and beyond.

 

As businesses navigate the complexities of the current economic environment, leveraging expertise outside the organisation emerges as a strategic imperative, enabling organisations to not only survive but to thrive and innovate. This shift not only promises immediate financial relief but also positions companies for sustainable growth and competitive advantage in the future, highlighting the importance of managed services as a critical component in the modern business landscape.

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