Don’t Let Your MSP Treat Your Budget Like an ATM
Outsourcing IT tasks to an expert Managed Service Provider (MSP) provides unique advantages for an organization. But often, they can also incur inflated, inappropriate, or unexpected costs. Just because your MSPs services are invaluable, doesn't mean they can charge you as if money was no object! In most cases, MSP fees can be traced back to issues that could have been prevented simply through better oversight. Our snackable guide will help your organization avoid, address, and prevent the most common MSP billing mishaps.
Of course, your MSP will need to perform an initial assessment to fully understand your infrastructure layout and maturity. But often, organizations wind up paying for assessments they didn't need when they assume their MSP is on the level (and to continue the general theme, we all know what happens when you assume).
The solution: The key to assessment success is simple. Specify what you want assessed and confirm the MSP assessment conforms to this requirement. Better still, make an IT team member responsible for evaluating the necessity of all MSP services—including assessments. Naturally, this person must be well-versed in your regulatory environment to understand which ones are essential.
Look. We believe in the power of project management as much as the next guy. Maybe even more so. But sometimes, organizations make the mistake of failing to establish how much they intend to pay for these services from their MSP. Your MSP may even charge for meetings nobody on your team attended—because they were "internal MSP meetings." Don't fall for it. Have them provide the recordings and transcripts of meetings, along with their actionable outcomes.
The solution: Your overall budget for PM support should be openly acknowledged and agreed-upon. Establish guardrails on project management and internal MSP meetings—and include these details in your service agreement. But also be sure to make an internal team member responsible for carefully reviewing all vendor charges.
Frequently, MSPs bundle the licensing of third-party software (e.g., antiviral software, productivity tools) into their service agreements. While this seems like a logical, convenient approach, it often comes at a cost. Literally. These MSP cost markups add up quickly, particularly if licenses need to be renewed annually, such as the cloud costs associated with Microsoft 365 and Azure.
The solution: Organizations should insist their MSP provide a breakdown of all third-party software costs, then compare it with the vendors' direct pricing. To avoid excessive markups, businesses should stipulate in the service agreement their right to purchase software directly, along with their right to leverage the MSP only for installation and support services, should they deem it necessary to do so. Alternatively, if your MSP insists on handling software licensing, your organization should negotiate for more reasonable fees.
Frequently, organizations find themselves being charged for fixes to problems caused by the MSP. Worse yet, if a technical misstep leads to downtime or service disruption, you may find yourself paying for the blunder twice: 1) by losing productivity during the disruption, and 2) by being charged for the time it takes the MSP to resolve it—despite that the MSP was at fault.
The solution: To minimize issues caused by the MSP, be sure your Service Level Agreement (SLA) specifically defines what constitutes an MSP-owned mistake. Also, be sure the contract requires test environments and user acceptance tests. Because not having a test environment means they'll wind up breaking stuff in the dev or prod environment, which incurs far greater consequences. Lastly, be sure effective backup and disaster recovery plans are in place, so productivity isn’t lost in the event of a catastrophic “mistake.”
Hidden and unexpected MSP charges don't just inflate costs, they can also destroy relationships and erode trust. Maintaining internal oversight, negotiating contracts, and monitoring third-party software costs are key to keeping your organization protected and ensuring you can keep outsourcing IT, without losing focus or control.
Seabeck Systems manages your MSP and helps you avoid unnecessary charges by validating that all work is necessary, and all hours are accounted for. To help you avoid overcharges, we'll independently assess software costs, along with the cloud costs associated with your cloud and on-prem infrastructure. Finally, we'll document your infrastructure to confirm any modifications of your environment. And if your MSP gives you any trouble, have no fear. We'll even push back on your behalf, like Nicky Santoro in Casino.
For over 25 years, we've empowered clients to extract greater value from their MSPs and internal teams and enabled newfound levels of business success by providing strategic planning, change management, cybersecurity, and infrastructure modernization services custom-tailored to each organization. Your organization should be next.
Stop settling and start transforming. Reach out to the folks at Seabeck today.
