As founder and president of a growing commercial property development firm, Fred Ceolin's focus is on business development -- but since he knew "a little bit" about computers, he was also the person staff called to fix network problems.
Like many small businesses, Vaughn, Ont.-based Downing Street Properties Management Inc. could not afford an information technology department or even a single full time network specialist to keep the company's technology in top shape and troubleshoot problems. Sometimes, Mr. Ceolin would be heading to a sales meeting when the phone would ring: "The network is down. What do we do?"
If he couldn't deal with the glitch over the phone, staff would have to do "busy work" until he returned. Then they often waited an hour or more until Mr. Ceolin fixed the problem, or gave up and called in an expensive technician. That is not conducive to running an efficient business when you have a staff of 30 who cannot work because the network is down, he added, admitting he learned that lesson the hard way.
While he did not consider his time spent on network problems an expense, he could not solve every issue and the company's IT spending fluctuated wildly. Some months, there were no IT costs; other months, the bill would be "thousands of dollars," Mr. Ceolin said.
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As his company grew and clients started to report property management issues by e-mail and on-line, Downing Street became even more dependent on its network. Mr. Ceolin went looking for an IT solution that offered cost certainty and network reliability. He found it when he signed an IT managed services agreement with a remote service provider.
Under the contract, Downing pays a set price each month to have Markham, Ont.-based Dynamix Solutions Inc. monitor, update and maintain the network. Instead of placing technicians on-site, which would be an expensive option, Dynamix accesses Downing's network remotely to monitor and maintain it, using a secure Internet connection. Mr. Ceolin only pays extra if Dynamix has to send in technicians to fix hardware problems.
The result is that Downing's IT costs are consistent and "considerably" lower when averaged out, and the network is seldom down, Mr. Ceolin said. If it goes down, "almost all problems" are solved remotely so there is no extra charge.
Dynamix's remote network monitoring and management prices start at $500 a month, which would cover a company of about 10 employees running a small network, said James Moutsos, Dynamix Solutions president. That's a fraction of what it would cost to have just one dedicated tech expert on staff.
While remote monitoring might sound like insurance, the companies offering these types of services usually do more than just deal with tech crises.
Dynamix, for example, updates small businesses' antivirus software and security patches and monitors the validity of data backups -- services that otherwise might not get done and that can prevent problems and downtime.
Downing's experiences aren't unique -- remote monitoring and management (RMM) is a growing business as small firms become more dependent on technology but realize they can't manage it on their own. The North American small and medium-sized business IT managed service market was estimated to be worth $220-billion (U.S.) in 2003 and will grow at a compound annual growth rate (CAGR) of 7.6 per cent from 2004 through 2008, according to Gartner, an IT research firm. RMM is the hottest segment and is expected to grow by nearly 36 per cent (CAGR) through 2008 in North America. The number of RMM service providers in North America is up from an estimated 200 vendors in 2001 to about 450 in 2004.
It hasn't necessarily been easy for new service providers to set up shop and tap into this growing market, though. Shortly after Mr. Moutsos launched Dynamix, he wondered if he would be better off delivering services on-site rather than remotely. "We were saving companies IT costs, but losing money initially," he said of the company he founded in 2001. However, Dynamix has "passed the hump" and is now profitable as its subscriber base increases. Growth is doubling every year and Mr. Moutsos is on track to add 40 new clients in 2005, he said.
He is not alone. According to the Managed Service Provider Alliance, 84 per cent of MSPs reported their managed services revenues grew in the past 12 months.
NicLyn Consulting Corp., a Toronto-based MSP, is also experiencing "tremendous growth," vice-president Lynda Morris said. The company charges small-business clients about $50 (Canadian) per computer per month, less than what customers would spend if they had to staff an IT department or bring in technicians, she said. "The savings are mainly due to the preventive services we provide. That cuts down on [network] problems before they occur."
"Before, it was all resting on my shoulders," Mr. Ceolin agreed. "If I wasn't doing it, it wasn't getting done. Now, I don't even get involved. If there is a problem, which is seldom, in five minutes we are back in business. Sometimes I'd spend an hour or more trying to fix a problem and only make it worse."
Special to The Globe and Mail
