The break/fix model no longer helps SMBs achieve strategic goals. See the differences between managed IT vs. the break/fix approach here.
Blog Post
8 minute read
Dec 28, 2023
In today’s economy, most organizations outsource at least one, if not several, of their operations departments. Whether that’s their IT team, cybersecurity strategy, marketing, or anything else, it’s rare for companies to develop all these different departments internally.
One of the benefits of relying on strategic partnerships for fundamental services is that it allows you, as the business owner, to focus on the meat and potatoes of your service or product offerings while your partners keep those operations running smoothly.
That said, it used to be common for strategic partners to operate with a break/fix model, meaning organizations would only be serviced and billed if something went wrong. This model is quickly being phased out, though, as both strategic partners and the businesses they serve find an ongoing service model much more beneficial.
A break/fix service model is IT services provided and billed on an as-needed basis. For instance, if your business uses a break/fix provider, the IT company will come and deal with a breakdown or other issue after it has already happened, and then bill you the applicable amount.
This differs from a managed services provider (MSP), which charges a monthly fee but provides ongoing and proactive service. It's the difference between having full-time access to IT professionals and needing to take your technology into "the shop" when you experience a problem.
Why Is the Break/Fix Model on the Decline?
The break/fix model is on the decline as an increasing number of businesses and strategic partners lean into an ongoing, proactive service model. The frequency with which new technologies emerge disrupts the break/fix operating model, which doesn't typically include the installation of new tech or long-term technology strategy.
This is apparent in the market growth experienced by MSPs. The global MSP market size reached $261 billion in 2022 and is expected by some researchers to surpass $427 billion by 2028.
Many businesses 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 systems. By instead establishing a strategic partnership with a managed IT services provider, organizations have this burden taken off their shoulders and can focus on the core of their business.
Break/Fix vs. Managed Ongoing Services: What are the Differences?
Break/fix is a primarily reactive approach to maintaining IT infrastructure.
The client 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 outsourced 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.
Conversely, MSPs are proactive and take a prominent role in managing all of an organization’s network.
MSPs provide their services based on an SLA (service-level agreement) for an agreed-upon, predictable monthly fee.
They monitor the devices and networks according to the contract with the client organization using remote tools and respond instantly if they notice any issues.
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 a popular service method, particularly 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, however, this touch-and-go approach became less effective and businesses wanted to see more from their partners.
All-in-all, this created the perfect environment for the rise of the ongoing service model.
Low Cost-Effectiveness
With a break/fix service model, companies have no control over their IT budget.
Although this approach may seem cost-effective at first, calling an IT contractor whenever an issue requiring a lot of work arises can be very expensive for SMBs. 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.
Additionally, break/fix service companies have an incentive to take longer to fix a problem and drive up the number of calls as it’s their primary revenue source.
Since 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.
Lack of Incentive to Optimize IT Infrastructure
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 organization could give you infrastructure that lasted forever and didn’t break, they would be putting themselves out of business.
If we consider the break/fix model vs. managed IT services, the MSP works continuously to ensure your network is optimized and outages are minimized.
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.
Uncertain Service Times
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 a major IT issue were to arise, like an outage or even a cybersecurity breach, a business needs assurances that it can be dealt with in an acceptable timeframe.
Benefits of the Managed Services Approach
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.
Below, see a video on how Impact’s managed IT services helped a local business achieve its goals:
Fixed Costs and a Clear SLA
The costs associated with implementing an IT system from the ground up remain expensive.
Apart from the infrastructure costs, there are 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 (service-level agreement) 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 client company can regain total control over their IT expenditures, making budgeting consistent and predictable.
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, client networks are monitored 24/7 and any issues are detected instantly.
Problems are often resolved by IT experts before the client even becomes aware they occurred.
When it comes to managed IT services vs. the reactive break/fix model, the MSP will resolve issues before they become a large-scale operational problem.
An MSP model will ensure the stability of your IT systems and respond effectively to any incident.
A quality MSP will commit to fixing your IT issues within a guaranteed timeframe, which should be included in the terms of your contract. In other words, a managed IT service provider doesn’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 IT network runs 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 IT professionals who are looking out for any potential issues, no matter how small, so they can proactively address them before they turn into big IT problems.
A Partner Who Is Aligned with Your Business Objectives
MSPs become partners in the long-term process of implementing, maintaining, and upgrading your network systems and digital infrastructure.
They work with customers and their own digital transformation experts to establish an effective digital transformation strategy and align their goals with the operations of the company.
A quality MSP will determine the best modern solutions for businesses.
They act as an expert consultant and provide guidance for where opportunities exist that might not be spotted by the client.
For example, they may notice your organization has many manual repetitive processes. The MSP may recommend implementing a robotic process automation (RPA) software bot to automate these tasks. Or they may point you in the direction of low-code development if your business needs a custom app.
Ultimately, the business gets peace of mind. 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
Traditional IT teams can struggle to support their systems, especially if there’s a flood of tickets into the incident management solution.
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.
Bottom Line
Break/fix is a legacy model: The old way of doing things doesn’t serve company goals for digital transformation. Managing everything in-house simply isn’t feasible for many businesses.
Managed services support business goals: As more companies move to the cloud and adopt a digital transformation strategy, a team of experts on hand can guide the implementation of new technologies.
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.
