When It’s Time to Hire an IT Resource for Your SME

“When should I hire a full-time Information Technology (IT) person?”

Every small- and mid-size enterprise (SME) owner asks this question at some point. It is partly a marker of the importance that information technology has assumed in business of all kinds. From – desktop computers to wireless devices, business systems and servers, IT is both a critical function for most businesses as well as a competitive differentiator.

Given the increasing importance of IT to business, the question, “Should I hire a full-time IT person?” is typically raised as the business approaches the 40 to 50 staff-member size. Before that time, a variety of approaches to IT management are often used:

  • The IT role is filled part-time by another technically inclined staff member, one of the owners or partners.
  • IT functions are overseen on an ad hoc basis by service providers like Geeks-For-Hire.
  • End users are largely responsible for selecting and managing their own computer systems and software.
  • Commonly, some of the IT systems are outsourced to a variety of disparate vendors, which internal IT staff do not typically have the skills to manage these various vendors.

To answer the question correctly, it’s important to identify your SME’s IT needs and requirements, as well as to evaluate the complete, or loaded, cost of hiring.

Identify Your Needs

Your IT needs will be based in part on your type of business and the industry that you operate in. For example, accounting firms, law firms and health care providers must be able to demonstrate that their IT infrastructure and maintenance meets industry-specific standards in terms of data security, backup and disaster recovery.

Other industries do not have such regulatory requirements, but businesses may determine that IT systems and the business/customer data that these hold is mission critical to the business. Or, a business may recognize technology as a competitive differentiator – indeed, technology can provide competitive advantage by enabling new, more efficient or very innovative business models, or by dramatically reducing operating costs.

Whatever your industry, the IT needs of the majority of businesses today can generally be divided into four unique categories of skill set. These are:

  1. Help Desk Staff. Typically comprise 80% of the IT requirement. Provide front-line support to end users. Are professional, polite, competent and empathetic to end users.
  2. Network/System Administrator. Typically 10% of the IT requirement. Work in the background to keep servers and the network running.
  3. Network/System Engineers. Typically 10% of the IT requirement. Plan and deploy complex new systems and technologies as required.
  4. Chief Information Officer (CIO). Typically 5% of the IT requirement. Understands both the technology and the business. Ensures alignment between a company’s technology investments and the business’ strategic goals.

A single individual is unable to adequately fulfill all four of these roles. Each requires a different skill set, personality type, emphasis and relevant accreditation. When determining your business’s IT needs, consider each of these four areas and weight or prioritize their value to your business.

Evaluate the Loaded Cost

When hiring their first full-time IT resources, businesses generally underestimate the actual cost of having that function in house. Following is a calculation that you can use to evaluate the loaded cost of establishing an IT department at your business:

Annual Cost Item Notes
$80,000 Annual fully loaded cost of internal IT resource salaried at $50,000(To obtain loaded cost, calculate annual salary multiplied by 1.25*)  The internal effective utilization rate of that employee is typically 75%**
$10,000 – $15,000 Additional outsourcing services,
excluding IT projects
Examples of additional services include: server administration, server and application trouble shooting, network security, and others that fall outside the scope of an IT help desk resource.Examples of IT projects include: Business Intelligence projects, Intranet, Collaboration, new application deployment, etc. 
$95,000 Total annual IT support cost @75% effective utilization rate
*Depending on the accounting method, the following may (or may not) be included in the loaded cost: vacation, insurance, office space, etc. Various industry statistics estimate the loaded labour cost at between 20 and 30%, so we have used 25% in this calculation.
**Utilization depends upon the individual’s productivity; we feel that this is a conservative estimate and actual productivity may fall below 50%.

Business people will recognize a distinct business disadvantage in this math – the decision to establish an internal IT department is a costly venture with poor effective utilization of resources. SMEs that realize that they cannot realistically afford an internal IT department – but are unwilling or unable to continue in ad hoc fashion – are increasingly outsourcing or partially outsourcing their IT functions.

A Managed IT Service Model for SMBs

A “managed IT service” model provides businesses with outsourced IT functions in one or more of the four IT skill sets outlined above. In some cases it is possible to outsource all four functions to a single managed IT service partner. The benefits of outsourcing include:

  • Achieve 100% utilization of dollars spent on IT resources and match IT costs to needs.
  • Leverage qualified, expert resources in all IT functional areas without loaded costs.
  • Establish a stable IT budget through managed IT service retainers.
  • Remain educated about and confident in your IT service, systems and network through monitoring and reporting.
  • Benefit from industry best practices learned and leveraged by a dedicated IT provider.
  • Benefit from industry and cross-industry experience.
  • Ensure that vendors are being managed by experienced experts who have both technical knowledge and the big picture in mind.

At Tango Technology Group, we offer IT outsourcing especially for small- and mid-sized enterprises. Our practice areas include outsourced Help Desk, System Administration, Network Administration, Engineering, and a virtual CIO (vCIO) function. Our structure enables us to provide SMEs with fully or partially managed IT services in addition to guidance to ensure alignment between your business and IT strategies.

To learn more:


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