You’re on your way to a fancy restaurant for dinner. As you pull up, you notice they have a valet service. Instead of parking in one of the five garages within the vicinity, you opt for the convenience of the valet. You toss your key to the driver, drop a tip on the podium and head inside for dinner. You don’t know it yet, but, while you’re eating, you’re incurring a plethora of hidden costs. Unfortunately for you, you didn’t pay attention to the sign on the front of the podium that said… Valet service: we charge parking by the hour.
As you prepare to leave, the valet hands you your bill with all of the hidden costs spelled out, as well as a large lump sum to cover the fee for them to retrieve your car.
After everything was said and done, you ended up paying $97.53 for your parking services, rather than the alternative $17.00 fee for the parking garages.
I know what you’re thinking… A 80-dollar upcharge for a valet service? Seems a little far-fetched. However, this kind of price differentiation happens pretty regularly, even in the IT industry…
The cost of hosting data
Hosting services is often listed as one of the “ingredients” of IT services. Some managed service providers (MSPs) offer this service as an add-on in their contract. Others require it. Either way, opting for hosting services with an MSP can set you back upwards of “a thousand dollars per month,” according to Web Hosting Provider List. But how?
First and foremost, if you’re going to be hosting data with an MSP, you’re most likely going to need to lease their server equipment. Those costs depend on the kind of server they have, how many you’ll need, what applications you’re migrating as well as how much data needs to be stored.
In addition to the fees for leasing their server(s), you will also have to pay for other hidden costs that aren’t typically made obvious within their contract. Some of these “extra” services can include:
- Data migration onto their servers
- Debugging
- Data backup
- Installation of SSL scripts
- Email archiving
- Upgrades and installations
- Data management
- Security costs
- Bandwidth usage
To make matters worse, each of these service fees can fluctuate depending on the size of an organization, as well as the type and amount of data it has.
However, on top of all the additional service fees, the most heinous charge of all arises when you decide you’re unhappy or dissatisfied, and you want to change IT partners… You have to pay to recover and move your own data to another location.
To put a number on it, my experience predicts that an average organization with only one to two servers of data would be looking at fees anywhere between $3,000 to $10,000 dollars for their data migration expense. This hefty cost often leaves companies feeling trapped. If we break the contract or make a move, we’re going to have to pay large fees in order to move to our data to another location… Many organizations find themselves asking, is it really worth it? Simply put, it becomes more of a headache to leave your current IT provider than it is to stay with them. At MainSpring, we call this getting sticky.
Why is managed hosting appealing?
You might be wondering… If there are so many repercussions from managed hosting, then why would this option even be appealing in the first place? Good question.
In some instances, organizations find that they need control over an application or their server environment. Other organizations use managed hosting simply for convenience—but, like the valet analogy above, they always end up squandering their money.
In the past, managed hosting was a relatively standard IT service. Over the years, however, many IT strategy and consulting firms, including MainSpring, have shifted away from this model of IT.
Why? Well, at MainSpring, we recognized that managed hosting was just another way for MSPs to gain additional revenue and exploit their customers. Plus, the service itself doesn’t necessarily bring any benefits to the client, other than sheer convenience, so, for most clients, there’s no reason why we can’t store their data in another place.
We feel that clients should retain ownership of their data, as well as their solution. In effect, we built ProSuite, our managed IT service, to be more like a partnership (i.e. if you grow, we grow).
Alternative options for managed hosting services
The good news is: there are so many public hosting companies that there's really no reason for an MSP to host your data or email in their facility. And, while there’s no such thing as free hosting, it’s probably going to be cheaper to host with a vendor. Which vendor you choose, however, should really depend on the following:
- Storage space needed
- Desired bandwidth
- VPN connectivity needs
- RAM
- Number of users
- Number of processors
Each of these factors will not only determine your cost, but it can also help you select a vendor to work with.
Living by example
At MainSpring, we consider ourselves to be our own ProSuite client, so we strive to live by our recommendations. For instance, as of right now, 95 percent of our company is run out of the cloud, using Microsoft and Amazon as our platforms. And, while we don’t personally use it, Rackspace has also proved to be an effective alternative for a hosting platform.
Consult an IT professional
As with any recommendation, it’s important to provide a disclaimer: every organization is different, with different needs and requirements. Therefore, it’s nearly impossible to determine the correct solution without gathering more information about your current IT situation. If you have an IT partner, ask them:
- Where is our cloud data stored?
- Does your company manage our contract?
If it turns out that you are currently hosting with them, be sure to ask them what it would cost to move your data elsewhere, so you can at least know where you stand. Finally, talk with your team about what processes are currently in place to evaluate your data hosting on a recurring basis. …If this evaluation process doesn’t already exist, then you are officially sticky.
But remember, if you’re interested in discussing a more appropriate solution for your organization, be sure to consult an IT professional.
Assess your current IT contract
Want more information on how to assess your current IT contract? Download our eBook, How to know when you're in a bad contract, for more helpful tips like this one.
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