If you’re thinking about contracting IT services for your SMB, you may wonder how to go about choosing the appropriate vendor.
These days, many business operations rely on solid technology, so this is most certainly not a decision you’ll make lightly. One way to tackle the decision is to engage your CFO and COO in the decision-making process.
We’ve put together a list of things CFOs and COOs in Oregon should consider before contracting IT services.
In our experience, the most successful businesses are those that emphasize long-term business planning that includes strategic cost analysis.
When leaders like you have a better understanding of the cost structure of your business, you will naturally make management decisions that will encourage growth and help your company become more competitive.
Determine your IT spending ratio: CapEx and OpEx
Capital expenditures, or CapEx, are major, one-time purchases that a business makes to accumulate assets that will be used over the long term.
Operating expenses, or OpEx, are purchases that a company makes in the day-to-day to keep the business operational. As a leader in the finance department, you may be tasked by your CEO to determine which technological goods, tools, and solutions will become part of the company’s CapEx, which will depreciate over time, and which will become OpEx, which is tax deductible.
Tax deductions on the company’s income is a great advantage, and to leverage this tax advantage, you may consider recommending that your organization look into hiring a managed services provider (MSP) to boost your internal IT unit and handle many of your day-to-day technology requirements. When it comes to IT, many products and services could be categorized as either CapEx or OpEx. For example, for one business, it may make more sense to purchase copy machines and other hardware and peripherals, while another may elect to contract the services of a company that leases the equipment and bundles supplies and maintenance of the equipment into a monthly fee.
Whatever you decide to do at your particular organization, it is important to keep in mind that as CFO, having insight and control over the CapEx and OpEx spending ratio, will position the company for success in the long term.
Establish IT budget
One important tool to include in the decision-making process is your IT budget.
After all, how could you truly understand the cost-value and potential return on investment of MSP offerings if you don’t have this baseline to compare to? In addition, budgeting will improve your teams’ communication, planning, coordination, and evaluation and will facilitate working with the operations staff to align IT with the overall business goals.
Appoint your internal IT point person
From a financial perspective, if you are considering engaging in a contract with an MSP, it is wise to name an internal point of contact that will be responsible for liaising with the vendor.
The appointed person should be extremely knowledgeable about your organization’s needs and budget, as well as be willing to take full responsibility and accountability for the vendor management, to ensure the service-level agreements are being met, projects are on track, and costs are properly controlled. The ideal point person will be a relationship manager with excellent follow-up and people skills, as well as the experience and knowledge required to engage with your IT provider.
While analyzing costs, budgets, and the appointment of a vendor relationship manager are all important tasks, in our experience, these three things will all fall short if the COO isn’t supporting the CFO with a couple of tasks on the operations side of the organization.
Take a look below for our top two considerations from the operational perspective that you should look into before shopping for a new MSP.
Align IT goals with business goals
When technology is the backbone of your business, it pays to make sure your IT goals and business goals are aligned.
Why is this important? Because if the IT unit —regardless of the size of the team and whether they are an internal team or a hired vendor MSP— understands the priorities of the business, the team will have the ability to better support and enhance those priorities.
In our experience, it is well worth the time and effort to ensure that every single member of your staff understands how IT aligns with the overall business goals. As COO, you may want to enlist the aid of your fellow executive team members, especially the CFO.
When discussing the company’s goals, you may explore the following:
Assess the needs of all internal stakeholders
Engaging key players of all departments together may bring up tools and solutions that could serve more than one business unit.
You could encourage managers to hold huddles with their individual contributors first, compile the feedback, and then report back to you. As a COO, taking the time to understand the day-to-day issues your staff face is an excellent way to look into technology that could help solve them, and is a great way to enhance your company culture and employee engagement.
Talking to stakeholders in each department will give you the insight you need to start building a plan that will inform your MSP interview process. Assessing the needs of all internal stakeholders can be a daunting task. You could consider hiring virtual CIO, or vCIO, services.
A vCIO creates significant impact for small and medium businesses, by strategically advising their clients on how to get the most out of a given solution. vCIOs can work with your internal IT manager or specialist to visit with teams while they are executing. Having IT witness firsthand the pain points in the wider organization will provide you with the data you need to justify any new expenses that need to be included in your plan. The vCIO can also help you create the plan.
Now, if you are ready to talk to an experienced IT service provider, why not reach out to us at StepUP IT?
Whether you’ve created your plan in-house or are looking to bring on a vCIO to help create one, we may be able to help. Contact us, and we can get started with any questions you have about managed services and vCIO services.