Savings, Security, and Risk Mitigation
Alaska Communications’ Business Technology Center.
No business ever wants to have its telephone system stop working—especially at the beginning of a workday. But that’s what happened to Business Insurance Associates a few months ago.
Why outsourced IT services are indispensable
Thankfully, James Parks of James Parks Consulting was able to quickly resolve the situation. Business Insurance Associates doesn’t have any internal IT professionals, so it relies on Parks to manage its routers, servers, and other technology-related hardware. “He keeps us online and takes care of everything, so we don’t have to spend the time and resources to figure it out,” says President Christopher Pobieglo.
Business Insurance Associates, with a total of eight employees in Alaska and Idaho, is an independent commercial insurance broker that depends heavily on outsourced IT services. The Anchorage company uses The Agency Manager (TAM) Online from Applied Systems for various tasks, including client billing, maintaining policy records, and issuing certificates and auto insurance cards. The cloud-based system, which the company has used for about eight years, gives employees the flexibility to log in anywhere and work remotely. “It manages the entire operation,” Pobieglo says. “It’s super critical to what we do… They provide things on a level that we couldn’t [provide] internally.”
Varied Solutions Available
IT providers offer a wide range of services to help businesses maintain the hardware and software they need to keep their operations running smoothly. The complexities of modern IT are driving many businesses to enlist the aid of managed services specialists, according to Cindy Christopher, Alaska Communications’ senior portfolio manager of managed IT services.
Alaska Communications offers a range of managed IT options, including full-service desk support, around-the-clock network monitoring, technology budgeting and planning, proactive equipment maintenance, and vendor management. “Along with general IT support, cybersecurity is a critical focus for businesses,” Christopher says. “Businesses need a provider that can provide layers of security, protecting from external threats. Alaska Communications’ engineers follow current cyber trends and employ industry best practices to protect against attacks.”
However, IT is not a one-size-fits-all endeavor. It’s important to select a provider that understands the business and can provide appropriate solutions, Christopher says. She adds: “Alaska Communications works with customers to create unique solutions to meet their needs. We take care of our clients’ IT so they can focus on running their business.”
DenaliTEK offers fully managed services to cover a variety of IT processes and functions. In fact, the firm only offers fully managed IT services; it does not conduct hourly billing. “This allows us to focus on doing business one way and doing it well, as opposed to trying to be everything to everybody,” President Todd Clark explains.
DenaliTEK’s fully managed service includes long-range planning to provide clients with a comprehensive solution at a fixed cost. The company creates a technology management plan with recommendations, performance statistics, and a budget that is updated quarterly. “We have a vision that when people look over the previous year, their IT expenditures will be pretty close to the budget that we establish with them,” Clark says. “Our managed contracts are always a 100 percent fixed-fee; the only thing that isn’t included are the projects we’ve budgeted for in our technology management plan.”
As part of its fully managed plan, DenaliTEK maintains the client’s entire infrastructure, including all backups, email, security compliance, and cloud infrastructure. DenaliTEK takes an all-inclusive approach by providing all the IT components that clients need. For instance, it furnishes all the technology for the backups, the antivirus solution, and the cloud infrastructure solution—which means clients can avoid purchasing and constantly upgrading their technology. By supplying the technology, DenaliTEK can ensure clients have best-in-class solutions while keeping their costs down. “I don’t want to see clients get hit with any costs that we haven’t predicted in their technology management plan,” Clark says.
So what are some of the most common IT services that businesses outsource? Clark’s quick answer: service desk (responding to trouble tickets) and patches and updates. In terms of which industries outsource IT services the most, it’s not a cut-and-dry answer. It’s not a particular industry but a matter of size, Clark says. The companies he typically sees outsourcing IT are those with fewer than one hundred employees. “There’s a lot of wisdom in outsourcing if you have more than one hundred employees, but we see most of them when they’re smaller,” he says.
Christopher has similar thoughts about the size of outsourcing companies. She says: “While Alaska Communications’ managed IT can be scaled to fit any size business, typically small- to mid-size companies are the best candidates for this service. We see the highest need for managed IT in the retail and professional services industries.”
“It’s something we couldn’t afford to hire someone for on a full-time basis being a company our size… To have an onsite IT administrator, it would cost $65,000 to $105,000 annually, plus 40 percent of that base in benefits.”
Paula Bradison, owner of Alaska Executive Search, has a unique vantage point when it comes to IT outsourcing. Her full-service staffing agency helps companies fill IT positions on a short-term basis. The positions encompass everything from help desk and network administration to chief information officer.
Network administration positions are a prime example. When there is a systemwide modification, companies often hire temporary employees for three to six months during the implementation. This allows them to minimize the stress that tends to go hand-in-hand with significant software changes. It also permits the company to acquire a temporary employee with particular expertise and/or to augment a permanent staff member.
Bradison says she has noticed an uptick in demand for certified security analysts or IT security specialists. That makes sense given the increase in security attacks that are threatening companies’ proprietary data. And some businesses are taking a proactive stance by outsourcing IT services to evaluate the potential security risks within their computer system.
Outsourcing IT services can provide companies with a variety of benefits. Managed IT allows businesses to keep their IT systems running and updated without hiring, training, and retaining full-time IT staff, according to Christopher. It also allows the company to focus on its business goals, rather than worrying about day-to-day IT functions. Take a small doctor’s office, for example. Rather than hiring a full-time IT employee, paying salary and benefits, providing professional development and training, and having a plan for what to do when that person is sick or on vacation, managed IT providers can address those problems. “For a flat monthly fee, Alaska Communications’ managed IT services can help businesses ensure smooth operations, reduce risk, and eliminate budget uncertainty,” she says.
Clark says the key advantages of outsourcing IT boil down to depth in expertise and coverage. With outsourcing, a business can instantly have a team managing and following best practices because a managed service provider is an expert in managing IT staff members and in knowing best practices. This level of expertise is often too extensive or impossible to have with a single, full-time employee. Also, having managed services gives the company round-the-clock access to a staff of IT experts. “With fully managed services, you have a team, so you’re not worried about coverage during after hours, vacations, and other times,” Clark says.
DenaliTEK has fifteen employees available to assist businesses with a broad range of needs. Sometimes that means stepping in to manage a system after an employee has been let go. Other times, it entails supplementing the efforts of internal IT staff. DenaliTEK also offers a complimentary onsite consultation for businesses that are contemplating managed IT services. During the consultation, Clark starts by asking probing questions, and sometimes that’s enough to determine the feasibility of using a managed IT provider. If it’s not, he can also schedule a free network assessment. “Even if they don’t go with our services, it’s an eye-opener in all the things they should be paying attention to,” he says.
For Bradison, cost, security, and risk mitigation are the main motivators for outsourcing. She has an extensive amount of employee and client data to maintain and protect and cannot afford for her computer system to be down—not even for a few hours. “Outsourcing is a necessity for me,” Bradison says.
Bradison outsources IT administration for Alaska Executive Search, which has eight employees, and her consulting firm, Bradison Management Group, which has four employees. The external administrator not only maintains their network but also monitors it twenty-four hours a day and issues alerts if there is any unusual traffic. Bradison says, “It’s something we couldn’t afford to hire someone for on a full-time basis being a company our size… To have an onsite IT administrator, it would cost $65,000 to $105,000 annually, plus 40 percent of that base in benefits.”
Also, there are IT network administration duties that are simply beyond Bradison’s level of technical expertise. Most of her software applications are web-based—plus there are certain regulatory requirements for businesses that accept credit cards and store private health information that make outsourcing IT a necessity for Bradison.
Cost and risk are also primary reasons for outsourcing IT at Business Insurance Associates. Specifically, Pobieglo uses outsourcing to reduce and control the company’s IT costs. “It brings down the cost compared to if we tried to do it ourselves. It also gives us a defined cost, so we can budget and account for that. It keeps the company focused on the revenue-generating activities,” he says.
The company pays about $50 to $100 per hour to use the expertise of James Park Consulting, and it’s money well-spent, Pobieglo says. “To be able to have him on call when we do is worth the expense,” he explains. “He knows our system… We’re comfortable with him.”
Using an IT provider also helps the company reduce its risk. It gives Business Insurance Associates the ability to maintain accurate information, which is critical for its industry. Not keeping accurate information can result in errors and omissions claims, which are made against professionals for inadequate work or negligent actions. “Errors and omissions are a big concern for insurance brokers,” Pobieglo says. “To be able to keep the accurate data really reduces our E&O risks.”
At Alaska Communications’ Business Technology Center clients learn about managed IT services.
Outsourcing with TAM Online also provides a major benefit for Business Insurance Associates. It costs the company about $5,000 a month to use the software, which is a significant—but justifiable—expense, according to Pobieglo. With the agent software system, the company has access to broader resources. “They have products and services to offer that we could never do in our office with our size and in Alaska,” he says.
Granted, there are more cost-effective solutions available, but they don’t offer the same capabilities, level of service, and other benefits as TAM Online, according to Pobieglo. “It was important for us to have a system our employees could understand and use,” he says. “Plus, Applied Systems provides extensive support… They can take over our system remotely and address technical problems.”
Pobieglo says he is comfortable with outsourcing the agent software system through Applied Systems, which is located outside Alaska. But it’s a different story when it comes to his intraoffice IT and hardware needs. “I would be pretty reluctant to outsource outside Alaska,” he says. “There are some things that just have to be done in person when it comes to maintaining the hardware.”
Bradison agrees. She outsources IT services to two companies in Alaska: HiTech Alaska and Applied Microsystems. Alaska is a unique and relationship-based state, and using a local provider makes a difference, she says. She adds: “It’s awfully nice to know that somebody is in our time zone. We do have unique concerns, such as earthquakes, and computer accessibility can make the world small.”
Bradison and Pobieglo share the views of many business owners in Alaska. Most Alaska-based companies work with in-state providers, according to Christopher. “While most managed IT can be performed remotely, businesses like the feeling of having their provider close by,” she says.
Not for Everyone
Despite the advantages of outsourcing IT for some, not all businesses choose to go this route. For certain companies, it’s simply not feasible. For instance, companies that are highly regulated or have complex lines of business application requirements typically have their own IT departments. Corporations or large businesses usually have the scale that allows for internal IT departments. However, Christopher says, “Managed IT is not all or nothing. Some businesses have internal IT departments and contract out for one service, like help desk support.”
On the other hand, Clark says, some companies opt not to outsource IT services because of their perception of the cost. They make a skewed apples-to-oranges comparison of outsourcing with maintaining a full-time IT employee. But a managed service provider can deliver a tremendous amount of expertise and benefits, including implementation of best practices, data backup, cloud storage, licensing, anti-virus software, support, and 24/7 remote monitoring and management.
Over the years, managed IT services have evolved from a flat-rate scenario to clients investing in comprehensive services that result in fewer service calls. This translates into value and convenience for clients. “With managed services, it appears that we’re doing less work, but we’re increasing the productivity and reducing the frustration for our client,” Clark says.
The importance of outsourcing IT for some companies is indisputable, Pobieglo says. “It’s become such a big piece for business owners to be able to effectively run their business,” he says. “Outsourcing is here, and it’s not going away.”