Managed IT Infrastructure vs In-House Teams

Choosing the Right Operating Model to Meet Your Business Needs

Growing companies face an important decision at some point:

Do we run our IT infrastructure in-house or do we outsource to a Managed IT Provider?

This decision seems simple and typically looks like a Cost Comparison at face value.

But really it is a decision that has a much broader scope. Some of the additional areas of impact that each method will affect are:

• Reliability and Uptime
• Security Posture
• Speed To Deliver
• Engineering Focus
• Long-term Scalability.

Companies often make this decision reactively (or after experiencing service disruptions, failing to meet service-level agreements (SLAs) or their cloud bills have increased); by then it has become very costly for them to switch to another vendor.

This article will outline in practical terms how to compare Managed IT Infrastructure team (outsourced) versus in-house IT teams so everyone involved can clearly identify their priorities and goals, rather than making assumptions about these subjects.

Managed IT Infrastructure

Managed IT Infrastructure means your IT environment is managed for you by someone other than you through an agreement with them (i.e., a Managed IT Provider).

Managed IT Providers typically provide:

• Cloud Infrastructure Management
• Network/Server Administration
• Monitoring and Incident Response
• Backup/Disaster Recovery
• Security/Compliance Support
• Patching and Upgrade Support

Providers manage the IT infrastructure on your company’s behalf, typically under a Service Level Agreement (SLA).

In-House IT Infrastructure Team

In-House IT Infrastructure Teams consist of employees within the company who design/build/Responsibilities usually include:

Infrastructures, the SDLC, Cloud and on-prem Infrastructure Building

• Alerting/Monitoring
• Security Access and Control
• Incident Response
• Performance Optimization
• Cost Management.

This model allows you to gain Control but also to have 100% Responsibility for that Control.

The Core Difference is Ownership Vs. Execution.

While you know who is doing the work, you will learn who owns the failed result.

In-House Teams own the entire cycle of “Execution” and Accountability.

Managed IT Providers execute, with an associated SLA, and share, or take on, Accountability.

The difference is how you manage Risk, Cost and Speed because the Ownership cycle has changed.

Cost Comparison

Managed IT Vs. In-House Teams

The Cost Reality of In-House

While the salaries of the Infrastructure Team is obvious, there are hidden costs associated with:

• Retention of Employees
• On-Call and Burnout.
• Training / Upskilling of Personnel
• Licenses and Tools.
• Replacement Coverage for Vacations or Attrition.
• As Complexity increases, the associated Costs will also increase at an exponential rate.

The Managed IT Cost Reality

In most cases, the Infrastructure Management of a Managed IT will typically use:

• A “fixed” monthly charge for the Managed Service.
• Cloud Costs will be Usage based.
• A support SLA model.
• The Benefits of the Managed Service Itself will be:
• The Operations are predictable.
• There are no hiring costs for Operational Needs.
• There is Continuous Coverage.

With a Poor Vendor Selection, there may be Hidden Costs associated with Too Much Rigidity and Slow Response Time.

Scalability & Growth With In-House Teams

When you want to Scale Your In-House Team, the process includes:

• Hiring “ahead of the Demand.”
• Understanding “Skill Gaps.”
• Coordinating Time Zones.
• Managing Internal Starvation Events (Surge Incidents).
• This works great at Scale – but this is based on a Mature Process.

Scaling Managed IT Providers:

• Managed IT Providers Can Scale “Operational Capacity” Instantly.
• Managed IT Can Absorb “Traffic Spikes” & “Incidents.”
• Managed IT Providers Have “Battle-Tested Runbooks.”
• The Managed IT Model is Focused on, and is the Best Fit for “Unpredictable Growth.”

Reliability and uptime (in-house) Reliability and uptime (managed IT) Reliability of in-house providers is an important aspect of how well their systems (internally operated) perform at the maximum level.

Managed IT providers have different features that can allow businesses to achieve greater uptime (and therefore, more revenue) from their systems. A business’s revenue will be reduced if its systems are not operational.

Managed IT Providers have different benefits than in-house providers for businesses to consider when evaluating which type of provider to engage with. Benefits include:Improved Speed; Improved Focus; Improved Reliability.

Managed IT providers help reduce the operational burden of your in-house internal team so that they can focus on developing new products, enhancing the customer experience, and delivering new features faster. This reduction in operational burden will also enhance the previous velocity of the in-house team’s efforts by separating operational responsibilities and, therefore, improving the focus and speed of innovation.

Some in-house teams may find themselves having to manage all of the following operational responsibilities simultaneously:providing new feature support; dealing with infrastructure fires; responding to security incidents; managing the cost optimization of their systems.

When faced with these multiple operational responsibilities at the same time, in-house teams may find themselves slowing down their ability to innovate on their products.

In-House Control vs. Managed IT Convenience

In-House Control

Benefits:

• Ability to fully customize.
• Direct access to your data and infrastructure.
• In-depth knowledge of your business processes and technology.
• Drawbacks:
• Longer reaction time in a stressful situation; i.e., under pressure.

Possibility of silos (knowledge) being created; potential for employees to become overwhelmed and burn out due to the demands of their position.

Managed IT Convenience (Work) vs. Managed IT (Infrastructure)

Benefits:

• Standardized processes help create an efficient operation.
• Faster response time (i.e., quicker reaction).
• Processes are predictable.

Drawbacks:

• Less flexibility with regards to the use of the Managed IT Provider.
• Dependence on the Managed IT Provider (Vendor).
• Subject to SLA constraints.

The best combination of these models will depend on how significant and strategic a piece of infrastructure is within your company.

Managed IT is the best option when:

• Uptime is critical to operations.
• Infrastructure is not your main differentiating factor.
• Team sizes are small, or scaling quickly.
• Compliance (regulatory) is heavy.
• 24/7 coverage is needed.

Examples of companies that fall into the Managed IT category include many SaaS companies and mid-market businesses.

Conversely, hiring in-house personnel makes sense when:

• The infrastructure provides a competitive advantage over other companies.
• There is a need for customized architecture.
• Your Company’s scale warrants having dedicated personnel.
• The security constraints for your technology are unique.
• You have the ability to sustain a level of operational maturity.

Typically, large enterprises combine in-house leadership with a Managed IT Vendor for operational support.

The Hybrid Approach: A Common Model Used By Successful Companies

Today, most high-performing organizations leverage a hybrid model, consisting of the following components:

• In-House Technology Architect and/or owner(s) of the Platform;
• Managed IT Providers (third-party) for operational and monitoring purposes.
• This hybrid model achieves the following:
• Strategic Control
• Operational Resiliency; and
• Cost Efficiency.
• Hybrid Models tend to outperform managed IT or maintenance-only models.

Typical Mistakes/Errors When Making This Decision

• Selecting Vendor/Supplier solely on price
• Outsourcing without having a clear agreement regarding ownership of data/information
• Believing that Managed IT Services can replace all internal knowledge/expertise
• Maintaining an entirely in-house team with no 24/7 support, and
• Ignoring the need for a defined Exit Strategy.
• Whatever model you select must always be flexible and evolve with

A Decision-Making Framework with Practical Implications

The following questions need to be answered in this decision-making framework:

• To what extent does uptime affect revenue generation?
• Will we require 24/7 operational availability?
• Do we see IT infrastructure as a way to set ourselves apart from competitors, or is IT infrastructure simply a resource we use?
• Are we able to attract and retain senior operations personnel?
• How quickly is the complexity of our infrastructure escalating?

Once you answer these questions, you can make a definitive decision about whether you’ll maintain an in-house, managed, or hybrid model of IT.

In Conclusion: This is an Operating Model Decision

The key issue is not about choosing between in-house or managed IT; the real issue is:

• Where should your most valuable engineers spend their time?
• On managing servers?
• Or on building products that will generate revenue for your company?

If you can manage IT through a managed IT provider, your teams are able to focus on activities that create value for the company, while the infrastructure itself provides the value to the business.

When you maintain in-house teams, the infrastructure becomes the value to your company.

No matter what choice you make, it should align with your overall business strategy and not just your IT budget.

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