Measuring the ROI of managed IT services: Key metrics to track

Measuring the ROI of managed IT services: Key metrics to track

Maintaining technology systems and troubleshooting technical issues has become more accessible, thanks to managed IT services. Yet, not all managed IT services providers (MSPs) deliver the same value. Without a clear understanding of what you’re getting back from these services, companies could end up with a partnership that costs more than it benefits. To avoid this pitfall, you can track the return on investment (ROI) of managed IT services by focusing on specific metrics and key performance indicators.

What key metrics should businesses track for managed IT services?

Measuring ROI accurately requires tracking metrics that reflect your company’s unique goals and how well managed IT services help meet those objectives. Here are the key metrics businesses should consider when estimating ROI for their MSP partnership:

Efficiency and productivity

Although it's tough to gauge the direct impact of managed IT services on productivity and efficiency, there are ways to quantify its influence. For example, businesses can track the time spent on IT-related tasks before and after partnering with an MSP, as well as the number of help desk tickets submitted by employees for technical issues. A decrease in these metrics can indicate that managed IT services have helped free up time and resources for employees, allowing them to focus on more critical tasks.

Many MSPs utilize automation to perform common tasks such as patching, regular maintenance, and monitoring of systems. If you were to do these same tasks internally, calculate all of the labor costs involved with doing these tasks manually.

Cost savings

Like with any investment, tracking cost savings is a vital part of measuring ROI. With managed IT services, it’s essential to track the overall cost of your MSP partnership compared to the expenses you would have incurred by managing your IT needs in house. More specifically, companies should track the cost savings in areas such as IT staff salaries, benefits, hardware and software costs, maintenance expenses, and operational overhead. By comparing pre-managed services costs with post-managed services costs, businesses can accurately track the financial impact of their MSP partnership.

Downtime

Downtime is any unplanned interruption in your business operations due to technology issues, such as server crashes, network outages, or software failures. One of the primary benefits of partnering with a managed IT services provider is its ability to minimize downtime. Measure the average downtime before and after partnering with an MSP. The comparison can give a clear picture of how much a particular MSP has helped reduce downtime and improve overall business operations. Especially critical for larger organizations, the cost of downtime that impacts the entire organization can really add up quickly. For example, if a company has 100 employees that aren’t able to do their work for an entire day, the payroll cost alone of all of the cost productivity can be enormous.

Response and resolution time

Another critical metric to track is how quickly an MSP responds and resolves technical issues. A speedy response time can reduce the impact of downtime, minimizing disruptions to business operations. Most MSPs will promise a specific response and resolution time in their service level agreements or service level objectives, but it's important to confirm the MSP is meeting these metrics in practice. Businesses should therefore track average response times, ticket resolutions and re-open rates, escalation rates, and customer satisfaction scores to ensure their MSP is meeting their expectations.

Security incidents

The frequency with which security incidents occur can also be a useful metric for tracking ROI on managed IT services. By tracking the number of security incidents before and after partnering with an MSP, as well as the overall impact of these incidents, businesses can determine the effectiveness of their MSP’s cybersecurity measures.

Quantifying the benefits of managed IT services

To perform an ROI analysis accurately, businesses need to quantify the tangible and intangible benefits of managed IT services. Tangible benefits such as cost savings from reduced hardware expenditures, lower IT staffing needs, or decreased downtime are straightforward to measure.

Intangible benefits such as improved security, enhanced productivity, and streamlined IT processes may not have an immediate dollar value. To measure productivity improvements, businesses might evaluate the reduction in support tickets or tech-related issues that disrupt workflows. Employee satisfaction can be gauged through surveys or tracking lower turnover rates, attributing improvements to smoother technology operations.

Then, once the business has estimated the value of both tangible and intangible benefits, they simply need to add up the total benefits and compare them to the costs of managed IT services.

How to calculate the ROI of managed IT services

Calculating the ROI on managed IT services involves the following formula:

ROI (%) = Net benefit / Total costs × 100

Here’s how it works:

  1. Determine total cost of managed IT: Include both the direct costs paid to the MSP and any indirect costs (if applicable) such as any required in-house IT oversight or specialized software that may accompany the service.
  2. Calculate the net benefit: Subtract the ongoing costs of managed IT services from the total savings or added value generated over time.
  3. Compute the ROI: Use the formula above to arrive at a percentage that reflects your return. A positive ROI indicates that your investment in managed IT services has added value; a negative ROI may signal the need to reassess or renegotiate your MSP partnership.

Tracking and calculating ROI on managed IT services is not only possible but essential. With Fidelis, a premier managed IT services provider, companies can rest assured that they’re getting the best return on investment, with customized strategies to maximize performance and support business growth. Ready to see the benefits of managed IT services for yourself? Contact us today to learn more.


Scott Wittstock

Scott Wittstock

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