Why the Break/Fix Model for IT Services Is Dying
Break/Fix Service Models No Longer Fit for Purpose
Definition of break/fix: Break/fix service models refer to IT services provided and billed on an as-needed basis, as opposed to paying a fixed monthly fee for an ongoing service.
Break/Fix is on the decline. Digital transformation continues to reshape the way SMBs manage their IT infrastructure.
The frequency at which new technologies emerge continues to disrupt the break/fix operating model, as more organizations opt instead to partner with a Managed Services Provider (MSP).
You only have to take a look at the projected market growth for MSPs to see this rapid disruption, with the industry expected to hit $296.38 billion globally by 2023, up from $173.4 billion USD in 2018.
As companies grapple with the greater complexity of their IT infrastructure, the familiar break/fix way of doing things is no longer sustainable, but why?
With a limited in-house IT department, many SMBs simply don’t have or don’t want to spend the resources to keep up with new technologies while maintaining and upgrading their on-premise networks and systems.
MSPs, such as us here at Impact Networking, have dedicated teams and experts who ensure that customers can leverage new technology to increase productivity and reduce their expenditure on costly infrastructure year after year.
What’s the Difference Between Break/Fix and Managed Services?
Break/fix is, by definition, a primarily reactive approach to maintaining IT infrastructure.
The organization only engages with external engineers when a piece of hardware fails, or when in-house IT professionals cannot locate the root of a problem within their system.
Once the engineer fixes the issue, the company receives a bill for their services.
This as-needed approach to managing IT systems requires no monthly agreement and usually no ongoing expenses.
89% of companies expect to grow or maintain their IT budgets this year. Naturally, given the circumstances, this figure will be skewed for 2020, but when normality resumes we can expect IT spending to pick up once more.
Conversely, MSPs are proactive and take a prominent role in managing all of an organization’s network.
MSPs provide their services based on a Service Level Agreement (SLA) for a fixed monthly fee.
They monitor the devices and networks according to their remit in the contract with remote tools and respond instantly if they notice any issues in the system.
Depending on the nature of the company’s IT operations, a variety of core functions considered essential to their daily activities can be included in the contract.
Issues With the Break/Fix Model
While older generation IT systems were less complex, in-house teams still needed specialists to configure networks, monitor security, and ensure application uptime.
This made break/fix models of operation a popular service method for SMBs. You could get whatever you needed and then fix the occasional issue whenever it arose.
With networks becoming increasingly complex and the protection of data more important than ever, flaws in the break/fix model are more apparent.
With a break/fix service model, companies have no real control over their expenditure.
Although this approach may seem cost-effective at first, callouts as a result of a recurring issue or a problem which requires a lot of work from a contractor can be a very expensive exercise for an SMB. Think of it like not having any insurance: It’s great when the sun is shining, but when things go bad, costs can add up very quickly.
The department has to make sacrifices and upgrade cycles are prone to stagnate if issues take longer to resolve.
Break/fix service companies have an incentive to take longer to fix a problem and drive up the number of callouts, as it’s their primary revenue source.
As they handle every issue on a case-by-case basis, the callout fees are the only consistent expense the organization knows about upfront, and everything else only becomes clear only after receiving the final invoice.
Investment in Networks
Similarly, the break/fix model doesn’t incentivize service providers to invest in the company’s networks or digital infrastructure.
SMBs are spending nearly 1/10th of their IT budgets on server technology. An MSP will help you achieve your upgrades by guiding your strategy depending on your infrastructure needs.
The company’s biggest network losses are the service provider’s biggest gains, so there’s no reason for a break/fix provider to get involved with the future development of the business’ operations. If a break/fix business could give you infrastructure that lasted forever and didn’t break, they would be putting themselves out of business.
With a managed IT services provider vs. break/fix company, the MSP works continuously to ensure the uptime of the network and keep outages to a minimum.
The break/fix model doesn’t provide companies with access to best-in-class solutions, nor the business development experts who can make recommendations on how to take the organization forward.
Finally, break/fix vendors provide no certainty about response and repair times.
If engineers are already dealing with a client and there’s no one available, you’re out of luck.
Due to the uncertain nature of break/fix services, it’s difficult for providers to guarantee service times for their customers.
For companies that rely on their underlying digital infrastructure to maintain operations, this poses a major risk to both reputation and revenue, particularly in serious cases.
If there is a major issue with the network, like an outage or even a breach, a business needs assurances that it can be dealt with in an acceptable timeframe.
Benefits of the Managed Services Approach
Related Post: Does Your Business Need a Managed IT Service Provider?
What’s clear is that the break/fix model is no longer fit for purpose in a modern business environment.
The MSP model has enjoyed enormous success in recent years because it has allowed businesses to partner with providers who have an active interest in taking a proactive approach to their IT and its future.
Fixed Costs and Clear SLA
The costs associated with implementing an IT system from the ground up remain expensive.
Apart from the infrastructure costs, there’s also the installation, training, and operational management overheads.
If an MSP provides the service at a monthly cost, the parties can clearly define and specify the requirements in the contract.
The SLA will outline all accountabilities and responsibilities, so each side understands the other’s expectations.
This applies to other areas, too, so there are no surprises and the company can regain total control over their IT expenditures, making budgeting consistent and predictable.
75% of SMBs outsource at least some of their IT to an MSP
Proactive Network Maintenance and Monitoring
As the SLA clearly specifies the agreement between the MSP and customer, proactively monitoring the IT system remains in the MSP’s best interest.
With Impact, for example, the network is monitored 24/7 and any issues are detected instantly.
Problems are often resolved before the client becomes aware they occurred.
In contrast to the reactive break/fix model, the MSP will resolve issues before they become a large-scale operational problem.
An MSP model will ensure maximum uptimes of the system and respond effectively to any incident.
The difference here between an MSP and a break/fix service is that a quality MSP will commit to an onsite call to fix your issue within a guaranteed timeframe, which should be included within the fixed-price terms of the contract. In other words, they don’t get paid extra for coming to service your issue.
This means that, unlike break/fix services, it’s fundamentally in an MSP’s interest to do everything they can to make sure your systems run smoothly and to prevent the need to send an engineer to your place of work unless as a last resort.
The result of this is that you have eagle-eyed partners who are looking out for any potential issues, no matter how small, to head-off before they develop into something worse.
A Partner Who Is Aligned With Your Business Objective
MSPs become partners in the long-term process of implementing, maintaining, and upgrading your network systems and digital infrastructure
They work with customers to establish an effective digital transformation strategy and align their goals with the operations of the company.
A quality MSP will partner with and make use of the best solutions for modern SMBs.
They act as an expert consultant and provide guidance and recommendations where opportunities exist that might not be spotted by the client.
MSPs are hotbeds for technology professionals of all kinds. What if your vCIO sees an area where a solution can help your productivity? Like implementing an RPA software bot that can automate your invoices to be more accurate and quicker. Maybe you’re on the warehouse floor and you’re wishing for a dedicated app that can speed up order fulfillment? Your MSP can help with that too by pointing you in the direction of low-code development.
Ultimately, the business gets peace of mind and risks associated with major concerns like cybersecurity, compliance, and workplace efficiency are mitigated by having a partner who wants to help and has the knowledge and tools to do so.
Clients Can Request Help as Frequently as Needed
With an MSP, the service management team will process all the tickets, leaving the onsite team to deal with their day-to-day tasks.
The MSP will have a dedicated team of IT professionals to quickly assess and escalate issues when necessary, and in most cases, they can deploy corrective actions remotely.
An MSP will reduce pressure on the in-house teams, freeing them up to focus on more strategic initiatives for business operations, rather than their tech infrastructure .
Key Takeaways for Managed Services vs Break/Fix Models
- Break/Fix is a legacy model: The old way of doing things doesn’t serve company goals for transformation, and managing everything in-house simply isn’t feasible for many businesses.
- Managed Services helps with future goals: As more companies move to the cloud and adopt a digital transformation strategy, a team of experts on-hand to guide the implementation of new technologies is an increasing necessity.
- MSPs have your best interests at heart: MSPs work with organizations to manage networks and improve business functions to further a company’s strategic goals, rather than operate on a one-and-done basis.
In light of recent events, many organizations have found themselves playing catchup, trying to implement makeshift cloud solutions to make up lost ground while their workforces see drastic transformations.
To find out more about how the cloud can ensure your business is in good shape for the future, download our eBook, “Which Cloud Option Is Right For Your Business?”