# Calculating Managed Services ROI

Before choosing to outsource IT, it is important to calculate Managed Services ROI (return on investment). This article will walk you through how to determine the exact cost of annual IT including losses of productivity and the impact of network downtime. This number can then be compared to the proposed annual Managed Services cost to discover Managed Services ROI and savings.

## Annual Loss of Productivity from Managing Vendors

Review the number of vendors your company currently uses for IT needs. Then review how long the employee who works with these vendors spends on each one (average) per month. Multiple those hours by the number of vendors involved. Then multiply that number by average hourly salary of the employee who manages vendors. Multiple that number by 12 to get the annual cost of the loss of productivity from managing these vendors. Keep this number to discover Managed Services ROI at the end of the article.

## Annual Loss of Productivity from Staff Handling IT Problems

The next step in discovering real Managed Services ROI also regards loss of productivity. Determine the number of hours the company’s staff spends performing IT functions. This could be the hours of full time IT employees or just the percentage of time that other employees spend on IT issues. Multiply those hours by the average hourly rate of these employees.

## Annual Loss of Gross Revenue from Network Downtime

Note how many hours per month each of these services goes down (for whatever reason): email service, internet connection, servers, and desktops. Add those hours together and multiple by 12 for the annual amount of downtime. Using your gross revenue, determine how much your company makes per hour on average. Take that number and then multiply it by the number of hours of downtime. You’ll need this number as well for the total Managed Services ROI.

## Annual Loss of Productivity from Network Downtime

This is the final step in calculating Managed Services ROI. Multiply the average employee salary by the number of employees on location with the network. Then, using the average number of hours each employee works a year, find the average cost of all staff per hour. Multiple the hourly rate for all employees by the number of downtime hours found in the last section.

## Managed Services ROI – Final Calculation

After the first 4 steps, you can now determine Managed Services ROI. Add existing IT costs both in house and outsourced together. This should include support for all computers, printers, servers and copiers. Take this number and add the totals from the 4 previous sections. This will give you your company’s total annual IT costs. Then simply compare that number to the annual cost of the managed services. To find total savings, subtract the managed services cost from the total annual IT costs.

There are number of worksheets and downloadable Managed-Services ROI Calculator to help walk anyone through the process of discovering the true costs of an IT Department. When comparing costs with Managed Services, it is not just basic products and salaries, but should also include all of the costs listed in this article. This article will help you calculate a more exact Managed Services ROI.

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