Managed network services provide many advantages to SMBs. Typically the service provider designs, implements, installs, and maintains one or more major network functions. The ability to keep and attract employees is just one benefit. SMBs also gain:

• Technology expertise at predictable, affordable monthly rates
• 24-hour management of network services
• The ability to manage rapid business growth while keeping a small staff
• Freedom to focus on core competencies
• Enhanced productivity
• Reduced network and communications costs
• Rapid access to new technologies without needing in-house expertise
• Increased agility to respond to business conditions

More and more SMBs are realizing these benefits. In 2005, 11% of U.S. small businesses and 6% of U.S. mid-market enterprises outsourced their entire IT infrastructure to a managed service provider, up from 3% and 4% respectively in 2004, according to Yankee Group Research.

Widening Service Selections

More providers are competing to reach SMBs with a wider variety of services, notes Sanjeev Aggarwal, senior analyst at Yankee Group. "These services have become more affordable for SMBs," he says.

For managed IP telephony service, M5 Networks monthly charges are approximately $700 per office location plus $40 to $70 per IP phone. M5 CEO Dan Hoffman estimates that this arrangement results in average monthly savings of 23% over the typical costs of running a traditional PBX phone system.

Lloyd Group, a value-added reseller (VAR) and Cisco SMB Select and Premier Partner based in New York, provides IT services including remote, proactive network management and PC support. The typical cost for such an arrangement is $100 to $200 per month per user, according to Brad Leiber, relationship manager for Lloyd Group.

Providers in many countries offer managed services for SMBs. For instance, British Telecommunications offers a range of IP network and communications managed services; some of its remote maintenance and support services are priced as low as approximately $1,400 per year, according to Darren Chatterley, the firm's IP telephony solutions product manager.

F.W. Honerkamp: Increasing Agility

When F.W. Honerkamp, a family-owned architectural plywood distributor in the metro New York area, acquired another company in 2001, it had Lloyd Group upgrade the company network to a single end-to-end Cisco IP network and then remotely manage it. The goal was to streamline operations with a single IP network infrastructure that easily accommodates new sites and applications.

The company wanted its 88 employees at both of its locations to collaborate as if they were in the same office. But the inability to transfer calls between the two offices and the lack of voice mail in the new office was a hindrance. Lloyd Group recommended that F.W. Honerkamp hire M5 Networks to design, install, and manage an IP communications system built on top of the IP network.

Collaboration between VARs and specialized managed service providers is increasing, according to Leiber. As a trusted advisor, the VAR makes it easier for an SMB to engage new managed services and acquire equipment less expensively.

Out-tasking saves F.W. Honerkamp at least $2,000 annually in moves, adds, and changes to the phone system (and the costs of rewiring to enable them) and at least $3,600 in long-distance charges.

More important, it enables the company to allocate resources to its best advantage.

Rossel et Cie: Saving Time, Keeping It Simple

Belgium-based Rossel et Cie, SA, is a media holding company with about 50 small and medium-sized newspaper operations in Belgium and France. Philippe Romboux, technical director of Rossel's Vlan Groupe division, says that each newspaper had different telephony systems and service-level agreements. "We didn't have the ability to centralize management or optimize communications among all these sites."

Since 2000, Rossel has relied on a managed IP VPN service from Belgacom to connect its sites. Last year, Rossel asked Belgacom to design, implement, host, and manage a Cisco IP communications system. Rossel has rolled out the service to two of its main sites and will add others as existing telephony service contracts end, Romboux says.

Rossel's internal IT staff serves as a first-level help desk and develops applications. Belgacom manages the network's hardware, software, maintenance, and support.

Having one provider for all the group's managed services is another plus, says Romboux. "We have only one contact in case there's a problem."

Caseworks: Saving Money by Telecommuting

Caseworks, a marketing services agency near London, recently doubled annual revenues and staff. Its office space was becoming crowded. But moving costs and expenses at the new space would be considerable. Caseworks decided to use a managed IP voice and data service from British Telecommunications and let employees work from home two to three days per week.

Caseworks estimated a one-time expenditure for equipment for the remote workers and added to it the monthly management, backup storage, and residential broadband fees for Caseworks' teleworkers. The company expects first-year cost savings of about 53% with its decision, says company chairman Tony Linsell.

Caseworks also considers retaining employees a huge benefit. The cost to hire an hourly worker often equals six months' wages, and hiring a salaried employee may cost a year and a half's salary, says Marc Drizin of Employee Hold'Em, an employee retention research and consulting firm.

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About the Author

iQ Magazine contributor James A. Martin is a principal of Martin Parham Group, a marketing consulting firm, and writes a newsletter on mobile computing for PC World.

iQ Magazine, Third Quarter 2006