Managed Service Providers: The New Enemy Of The SME?

Findings from a recent survey conducted by The Internet Group, of 100 Small to Medium sized businesses, it was found that an amazing 92% of them were potentially exposed to technological disasters as a direct result of their current IT Service Provider not configuring or managing their IT correctly.

The forensic audits were conducted to understand every element of the IT network from domain name registration details right through to a review of the disaster recovery plan. Post audit, each business owner was given a 40 document reviewing all the components of their systems and each of the 34 sections was given a grading of between (A = Good - F = Bad). These grades were formulated on varying metrics; largely based on the impact the IT has on the business and also how the setup compared to best practice as dictated by each vendor e.g. Microsoft. These studies took over 18 months to complete and the companies involved were privately owned UK limited businesses with between 10 staff and 250 staff.

The results were quite outstanding and in some cases they defy any logic. From a complete server farm with no Antivirus, to a network being used by the IT manager to search for extra terrestrial life, right through to the worker running an EBay business from his employer's office.

• 93% did not have any current network documentation
• 91% of companies hadn't considered data leakage as a threat to their business
• 87% of companies do not enforce restrictions nor monitor Web usage
• 85% of the Servers audited had errors listed in the Event Viewers that had not been attended to in more than 3 months and in some cases 2 years!
• 80% of companies had badly configured file permissions and as such staff could access sensitive company information such as payroll and HR.
• 72% of companies have not provisioned for the growth of their data and were unaware they were running out of disk space
• 61% of the networks contained some form of potentially illegal software/files
• 58% of the business owners did not know the Administrator Password to their own network
• 57% of the servers had failed to be update with the latest Microsoft fixes for over 6 months.
• 39% of the companies domain names were incorrectly registered and in a lot of cases the domain name was registered to the IT company and not the client.
• 38% of Windows Servers had been incorrectly configured and as such were having a direct impact on the network
• 35% of companies failed to ensure that their backups were working on a regular basis
• 32% had Wireless but it was unrestricted
• 24% of PC's audited had 256MB of RAM or less
• 16% of companies were being sold desktops as servers
• 14% of companies do not have a Firewall
• 9% of PC's audited still were running Windows 2000

These statistics are quite unbelievable and the findings have highlighted that the low level of IT literacy within most companies has led them to engage with companies that are likened to the cowboys of the building trade.

Too many companies allow themselves to be dazzled by smart talking and technical jargon and end up buying something they don't understand and typically doesn't fit the business. We estimate the average SME spends approx £2100 per annum on IT services and products that are not required or due to poor configuration.

Managed Services Providers (MSP's) are companies that manage your network and constantly look for potential errors that could impact the business and resolve them before they do. MSP's are in other words, companies that can demonstrate they are proactive as opposed to a reactive. The problem that faces businesses today is that there are literally hundreds of MSP's throughout the UK, all of who proclaim that they will manage your network and they have your best interests at heart. Our report shows that this is clearly not the case and companies are suffering as a result.

One interesting point not mentioned in the results above is that not one of the 100 companies surveyed received weekly/monthly reports detailing the performance of their IT and more so the performance of the MSP. As all business owners will know, you cannot gauge the effectiveness of your staff or company without measurable milestones (KPI's). The same should be for the IT but unfortunately most SME's do not understand the IT so in turn they do not understand what they should be measuring.

For companies that admit they do not understand IT, they must find an independent trusted expert to evaluate the requirements of the business. Once they have completed this they will typically help you select to a partner and ensuring that they the relevant experience, alliances with the appropriate vendors and have the technology and people to deliver their promises.

In an economy when business is slower than in previous years, uptime and reliability are paramount to a company's success. Never more so has downtime impacted business and the cost of not doing business during these periods will no doubt surmount to millions of pounds a year.

One interesting statistic that The Internet Group has seen over the last year is a dramatic increase in companies requesting an independent audit to measure the effectiveness of their existing incumbent. This is obviously a positive sign and shows some companies are in fact getting wise to the poor performance of their IT providers and realising that consistent IT failures are not the norm. More importantly they realise that their business is too precious to leave in the hands of someone who cannot manage the company's most prized asset, the IT.

Without a governing body to enforce standards within the IT industry, this problem doesn't seem to be going away anytime soon. Our only hope is that these companies find out how bad their providers are before it is too late.

Our recommendation is that before you consider engaging a new supplier, check their references, check what accreditations they have (ITIL, ISO etc) and also what associations they have with people like Microsoft. Understand how you can measure their effectiveness and what management information do you receive on a weekly/monthly basis. This is by no means a guarantee that they are going to fit the bill but at least you have will have more than a fair chance of getting it right.