The FD in the recruitment agency…
The role of a recruitment agency Finance Director is certainly a busy one. Sales and purchase ledgers, budgeting, cash flow and working capital; audits and HMRC reporting; agency staff, temps and contractors; expenses, salaries and headcount. It all requires diligence and accuracy.
One of the trickiest areas is managing technology financing. The relative importance of IT means technology spend is often prioritised. However, IT cannot be allowed to hoover up cash. Budgets need to be sensible and realistic. The right tech to support the current and foreseeable needs of the business needs to be planned for without breaking the bank.
There are a number of ways the cloud brings these threads together to provide a better way for FDs to plan technology spend by enabling ‘dream’ budgets.
The truth about IT in smaller and growing businesses
When it comes to technology, recruitment agencies with 10—100 employees may find themselves between a rock and a hard place. They are large enough for IT to be critical, but too small to be self-sufficient when technology fails. They don’t have the in-house tech expertise and redundant systems that are needed when IT breaks.
Are you fed up with annual agency IT budgets that look like this?
If we take the conventional on-premise approach to IT, for a typical recruitment firm of 50 people, the budget looks something like this. It contains all the costs associated with provisioning technology by using in-house systems.
Description |
In House Systems |
CAPEX |
OPEX |
|
PCs / End User Devices |
PCs and Laptops @ £700 – including set up, but often costs more; typical lifespan of 3 years |
Approx. £35,000 |
|
|
Servers |
3 servers with storage and UPS systems
|
Approx. £25,000 |
|
|
Software Licensing |
Windows Server & PC Operating Systems Microsoft Office, Email server, Security/Anti-Virus Databases (e.g. MS SQL), SSL Certificates, etc. |
£15,000 |
£18,000 |
|
Telecoms |
A phone system for 50 users – handsets and system has a CAPEX of about £20,000 ISDN 30 e phone lines C. £1,500 a quarter |
£20,000 |
£6,000 + call & DDI charges |
|
Energy |
Electrical power to run servers and network, PCs and monitors and air conditioning |
|
Approx. £3,300 |
|
IT Management |
£4000 a month for an IT Manager - plus support for specialist applications or holiday cover |
|
£60,000 +cover |
|
Maintenance |
Server/PC Maintenance Costs - routine updating, patching and housekeeping such as defragging C. £2,000 labour per month for 50 computers |
|
Approx. £24,000 |
|
Disaster Recovery |
Duplicate data kept off site – servers replicated Fees charged if the DR system is actually used |
£5,000 |
£6,000 + fees |
|
Setup costs |
A new 50 user system could cost £20,000 to set up, configure and customise. |
Approx. £20,000 |
|
|
Totals |
|
Approx. £120,000 |
Approx. £117,300+ |
But supposing it looked like this?
Now, what if the same IT capability could be obtained from a budget that looks like this? These are the costs for a Hosted Desktop solution based on a secure private cloud platform.
Description |
Hosted Desktop on secure private cloud |
CAPEX |
OPEX |
|
PCs / End User Devices |
Thin Clients or Zero Clients @ approx. £250 Typical lifespan 5 years Setup can be completed without technical assistance, and can be done in less than 15 minutes per device |
£12,500
|
|
|
Energy |
The energy hungry servers and air-conditioning in the on-premise model are not needed for Hosted Desktop |
|
£1,000 |
|
Maintenance |
On Site Maintenance is limited to local network and Thin Clients |
|
£2.000 |
|
Hosted Desktop Rental |
Includes:
|
|
£30,000 |
|
IT Management |
Support is included in the cloud enabling the IT manager to perform a more strategic role |
|
£60,000 |
|
Totals |
|
£12,500 |
£93,000 |
What is Hosted Desktop?
Hosted Desktop is a business computing solution delivered by a Managed Services Provider (MSP) from a secure private cloud. The firm’s applications and data are housed in cloud data centres on high-end servers and storage.
Productivity tasks and communication tools are accessed by the firm’s staff using Thin and Zero clients, low-cost desktop computing devices. Business-class broadband internet connections ensure that users have a seamless experience - there is no time delay.
Maintenance is all centralised within the data centre operations of the MSP which supplies the Hosted Desktop solution. IT managers have a significantly reduced workload and may be freed up to support end users, deliver training and assume a more strategic role.
There is no requirement for servers, storage, and backup as well as PCs and laptops on-premise. Mobile workers that need to remain working on laptops and ‘Power Users’ - typically media workers who need graphics and powerful desktop computers like the Apple Mac Pro - are easily integrated by the Hosted Desktop system.
Cost summary: On-premise V. Hosted Desktop
For a typical 50 user system we can summarise the comparative costs like this:
Typical Hosted Desktop Solution for 50 users |
||
|
On-premise |
Cloud |
|
|
CAPEX year 1 |
120k |
12.5k |
|
OPEX recurring every year |
117.3k |
93k |
|
Total year 1 |
237.3k |
105.5k |
|
Total over 3 years |
471.9k |
291.5k |
|
Cost difference |
-180.4k |
|
|
Percentage difference (%) |
-38% |
|
|
|
|
|
|
Summary |
Over 3 years, a cloud solution costs 38% less than on-premise |
|
|
All figures approximate and in £K except where percentage is indicated |
||
What is the cloud worth to recruitment agencies?
The cost reduction above makes a compelling case to give Hosted Desktop serious consideration. Besides the savings highlighted above, the solution offers greater value through:
- Better financial efficiency
- Improved employee productivity
- Streamlining technology
Who is Serviced Cloud?
Based in the heart of London, in Canary Wharf, Serviced Cloud was incorporated in 2009 with a clear and simple vision. The Managed Services Provider is dedicated to helping businesses successfully adopt cloud technology to transform efficiency and reduce costs. You can find out more about its services for recruitment firms here.
Justin Dean can be contacted on 0207 093 6020.