Apr 01 2005

Outgrowing Your Size?

Smart businesses recognize when to seek outside tech support, and from whom.


Michelle Houston, Payroll Administrator and MIS Coordinator, Wild Acre Inns

MIS Coordinator Michelle Houston never thought she'd be overseeing 20 computers when Wild Acre Inns hired her four years ago. The wireless network and application software were a bit of a surprise, too. That's because Houston was hired—and continues to work—as payroll administrator. She inherited the MIS title later.


"I'm completely not an MIS person," says Houston from her office at the mental health services firm based in Arlington, Mass. "If there's a problem, I'll play around with it for a while, but I'm no expert." So the facility does what many small businesses do: It outsources most of its information technology (IT) work. In fact, only 27 percent of businesses with fewer than 50 employees have in-house staff to maintain their computer equipment, according to a May 2004 survey of 500 small businesses conducted by market researcher Penn, Schoen and Berland Associates of Washington, D.C.


Houston was hired to handle payroll. Then she inherited responsibility for the information technology systems.

When should a small business use outside help? When it costs more to play computer expert than to hire one. Even when that hired expert pays your office a costly visit—it's not uncommon for PC techs to charge up to $700 to fix a server onsite—summoning outside help is usually the most cost-effective choice. "Small businesses are smart to use outside tech support so they can concentrate on the business at hand," says Jeff Demarest, president and director of research at Advantage Business Research, an Encinitas, Calif.-based research firm specializing in high tech. "Even if they have a few techno-whizzes on staff, those persons can't be everywhere at once."


Just ask Greg Milewski, IT manager at Fortune Footwear, a 20-year-old importer headquartered in New York's SoHo district. Milewski single-handedly supports 70 desktop users, fielding daily calls about broken printers, forgotten passwords, data backup and innumerable tech gremlins. Most requests come from his 50 co-workers in New York, but on occasion he also must accommodate 20 desktop users who work in the importer's Shenzhen, China, office.


A Custom Fit in Tech Support


And just where should businesses turn for outside tech support? The answer depends on the budget, level of trust and extent of the problem. Some use telephone help-desk support. Others trust remote diagnostic support. Still others want only onsite support. And small businesses that don't have time to maintain up-to-date virus protection and data backup can turn to third parties to do this for them.


Greg Milewski, IT Manager, Fortune Footwear

Milewski uses a bit of all of the above: A combination of tech-support phone sessions, a subscription to an online security service and regular use of a remote diagnostic tool helps him keep the company's desktops up and running from the comfort of his office. It also lets Fortune Footwear focus on making money.


"There would be a large payroll cost if we couldn't outsource," he says. "The money we save on all that can lead to new systems and services."


It has certainly contributed to the company's growth. By concentrating more on its espadrilles than its electronics, Fortune has expanded its operations from 2,500 square feet of office space in SoHo when it was founded in 1985 to 12,500 square feet in New York and China today. The privately held company, which has 50 employees, imported 1 million handbags and 4.5 million pairs of shoes last year.


Milewski also relies on outside support for the company's mission-critical software—a specialized application for the footwear and apparel industry. The value-added reseller of the package visits Milewski every few weeks. "It started out as just a sales-commission tool, and is now being used to track shipping and inventory," he explains.


Servers Tip the Balance


For Honest Tea, a tea importer and wholesaler based in Bethesda, Md., outside tech-support decisions come down to how much employees' time is worth. "If we think about how we value our time, it becomes obvious," says Seth Goldman, Honest Tea co-founder. Goldman realized he needed help when he discovered his national sales representative replacing a computer mother­board. "I said, 'Focus on where you can add value,'" Goldman recalls. "If I'm spending my time fixing computers as opposed to closing a deal that will bring in $18,000 worth of tea, I'm wasting money."


The company initially had junior-level staff people supporting IT, but "then we bought a server. The server brings a different level of sophistication." Honest Tea now uses a local computer service company, which visits the office weekly and is on call to handle any digital disasters.


A move into servers, specifically a decision to install Microsoft SQL Server, also prompted Tampa, Fla., moving company Movex to outsource tech support. "Before this, we had one or two servers, but we're not server people," says Trace Kuhn, vice president of marketing and de facto chief technology officer of the 55-person company. So Movex turned to two systems integrators: one to handle networking and desktops and the other for the SQL database.


When selecting a provider, small businesses should find out whom they should call if there are problems, advises Rob Enderle, president of the Enderle Group, a consulting company in San Jose, Calif. "Staffing changes are normal, so you may want to see if you can build in a clause that requires they provide you notice if any of the resources that are critical to you are leaving their jobs," he says. "This is a relationship, so the harder you work to get to know the people servicing you the better your service will probably be."


One way of deciding whether to outsource is to calculate the total cost of ownership. This sum includes both the purchase price and the cost of repairing and maintaining a computer system, network or related product. A company buying a new system or computer-related product should consider purchasing the optional multiyear service contract offered by the vendor or re-seller. The cost of one visit often can justify buying the service contract.


A one-year onsite service plan might cost as much as $300 for 24 × 7 server repairs. However, a four-year onsite plan might cost only $200 if the customer is willing to wait one business day for repairs and requests service only during business hours. Either way, it's cheaper than paying for each service call. When a customer is not under a long-term contract, a single service call can run $600 to $700, including travel expenses, technician labor at $100 to $175 per hour, plus the cost for parts.


Selling Service in Packs


Most product sales include telephone support, at least for basic problems. Otherwise, for a fee, third-party support services can help resolve common software and system problems over the phone. They generally charge by the hour or by the number of repair calls and sometimes sell service in "packs," priced according to the number of employees requiring support. A small business with five or fewer employees might pay $160 for two hours of support per employee per month; one with 26 to 100 employees might pay a monthly fee of $140 per employee.


IT Takeaway
To determine whether to outsource, look at total cost of ownership.
Decide which type of service you require: telephone support, remote diagnostic or maintenance and repair.
Consider adding a clause in the service contract requiring the provider to give you notice if a key support person quits.

Remote diagnostic and repair software often is offered as an optional service when a business buys a new system. Using secure remote-access software, the technician sees what the user sees on his or her screen and, with permission, takes temporary control of the user's mouse and keyboard. One advantage of remote diagnostic support is that the technician can teach the user while repairing the system.


At Fortune Footwear, Milewski uses a desktop tool on his PC to manage software updates on all his company's U.S. computers. "It saves a lot of shoe leather," he says.


Although remote support might diagnose a hard-drive failure, a new drive can't be installed over the Internet. That's why experts recommend that small businesses try to select a tech-support company that offers telephone help-desk and remote diagnostic support—to avoid the need to repeat tales of repair woes to different technicians.


Whatever type of support a company chooses, it ultimately will profit by focusing on its expertise and letting the computer geeks do their thing. "It's only the small businesses that try to do everything themselves that stay small," Demarest says.