Introduction
Managed IT services a outsourced solutions to help manage an organization’s technology and operations.
IT teams are under increasing pressure to deliver revenue-building projects. These can range from new digital products to new services or streamlined customer experiences.
Using a Manager Services Provider (MSP)has many advantages. However, recruiting an MSP is often misinterpreted as a threat to internal IT functions. On the contrary, a well-executed MSP strategy can work seamlessly and productively with IT staff.
By taking on the responsibility for regular administrative tasks, MSPs can free up employees to work on more strategic initiatives.
These tasks can include:
- maintaining network operations
- repetitive tasks such as server and storage administration
- daily monitoring tasks and user support/help desk functions.
This article helps to demystify the key terminology of MSPs, how their service delivery model has evolved and provide insight into their operating models. It also summarizes how MSPs help your business deliver its core IT functions and drive modernization programs.
What do MSPs do?
MSPs deliver some or all of an organization’s IT operations. This can range from fully managed IT to tactical elements such as backups or cybersecurity services. Service level agreements (SLAs) vary depending on the extent of the work being carried out.
Other dependencies include the organization’s cloud strategy and how much physical infrastructure they still hold onsite. MSPs tend to be flexible about how they manage their customers’ infrastructure. Since many end-user companies have a hybrid model of on-premises, private cloud, and public cloud infrastructure, it is in MSP’s interest to be flexible.
MSPs provide a range of advantages to their customers which are outlined below:
Lower overheads
Purchasing, leasing, and maintaining physical hardware on-premises can be an expensive exercise for organizations. This cost includes the acquisition cost of the equipment and the human cost of maintaining it. Using an MSP fundamentally takes away this challenge for the organization and IT team by managing infrastructure in several ways.
Top talent without the recruitment cost
Recruiting, training and maintaining a high-functioning in-house IT team adds fixed costs to a business. In addition, hiring can be a risky business, and it has no guarantee of success. Using an MSP provides utility-based expertise available for contractual or one-off work when required.
Redeployment of internal resource
By not having to make a fixed investment into IT staff, businesses have the option to bolster their internal resources in other departments. In addition, freeing up this fixed investment in IT means other core business functions such as finance or sales can be bolstered to grow revenue.
Maximizing user productivity
User productivity has become a key theme in recent years. Collaboration tools such as Microsoft 365 or G Suite are designed to enable users to work online and offline. However, unplanned network downtime can be disruptive to core business functions and customer service even with this.
MSPs proactively monitor the company network to minimize the chances of downtime occurring. If the worst does happen, they can use their expertise to get the network back up and running as soon as possible.
Making core IT functions more effective
Security and backup are two of the core features of an effective IT function. With security updates changing on a daily basis to combat modern cyber threats, staying on top of the organization’s defenses is vital.
Backing up data is often confused with using cloud platforms such as OneDrive or collaboration tools such as SharePoint. The reality is that an effective backup strategy is required as an additional layer. This ensures data can be recovered in the event of a ransom attack or a lost or stolen device. In addition, a robust security and backup strategy delivered by a reputable MSP ensures data privacy laws are satisfied, and no reputational damage can impact the business.
Scaling to meet demand
Scalability is a nice problem to have for many businesses, but it is a problem nonetheless. Sales and marketing teams work hard to build a strong pipeline for future revenue growth, but it could all be wasted if the core IT infrastructure is not built to handle the extra demand.
MSPs work with customers to design network, storage and other core infrastructure to cope with current demand while also planning ahead for the future.
Capitalizing on the cloud and futureproofing
Utilizing the power of cloud computing is almost essential for firms looking to survive and thrive in the modern era. However, the agility and elasticity the cloud provides are difficult (not to mention costly) in on-premises environments.
In 2020 research, over 80% of organizations globally had at a minimum of one application running in the cloud. In total, this amounted to 93% of firms using a multi-cloud approach, while 83% were taking advantage of a hybrid cloud strategy.
MSPs help firms to maximize their use of the cloud in a secure way. This model facilitates greater productivity for users and more predictable billing for finance teams.
Good MSPs also utilize the best technologies on the market to optimize customers’ IT operations. From operating system updates to the latest cybersecurity defenses, MSPs save their customers the task of sourcing the best technology for the job.
MSP services
Modern MSPs offer tactical services from the most tactical helpdesk functions through to the delivery of strategic projects.
MSPs catalog usually includes services such as monitoring, support ticket resolution and the management of key IT functions such as networks, backups and storage, plus disaster recovery. In addition, this often includes traditional helpdesk services for users, including issue resolution and remote technical support.
Other services include application packaging, updates/patch management and deployment of collaboration tools such as the Microsoft 365 suite. In addition, user hardware management can be offered through traditional break/fix services.
Some MSPs also go further to offer operating system (OS) migrations, as well as reporting of IT KPIs in a centralized dashboard for key stakeholders and company executives.
MSPs also offer more strategic services and include digital transformation programs and deployment of company-wide Software-as-a-Service (SaaS) rollouts.
Depending to what extent a customer wants to outsource their IT functions, some MSPs have added scalability by adopting new capabilities. These include Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS).
IaaS is commonly adopted by SMBs to capitalize on virtualized servers, managed networks and IP addresses, and other services on which clients develop their own platforms. Of course, PaaS also works on virtualized infrastructure, but this allows organizations to manage their own applications that usually require a more complex server hardware configuration.
MSPs add value to initiatives such as these by handling complex licensing discussions with vendors and providing skilled consultants to manage implementation and deployment. Many MSPs also provide ongoing training and onsite support to enable clients to maximize the value they glean from core software-based tools such as CRM platforms.
Services offered by MSP include the following:
Network management
Most organizations rely heavily on their networks to enable user productivity. Yet networks are a time-consuming aspect of an IT department’s work. They require ongoing updating and consist of a multitude of hardware plus software. In addition, network management becomes increasingly complex with more distributed networks and users working in the field.
Cybersecurity
Cyber-attacks hit the news daily, and all sizes of organizations are being targeted. These threats are becoming more advanced and are constantly evolving. This makes it almost impossible for generalist IT staff to keep track of threats and react to them.
The security challenge is even more acute for organizations running hybrid cloud environments with data on different platforms. Each cloud host operates different retention and security policies, making it essential to run an additional layer of security to protect vital data.
MSPs provide a range of specialist services to galvanize their customers’ cybersecurity across their entire IT environment. This includes:
- assessments to provide insightful reports of threats and vulnerabilities
- securing cloud data in hybrid cloud environments
- threat detection to provide notifications about incoming threats via the network, devices, apps, or data
- endpoint protection to quickly react to threats at the device level to enable users to work safely in the field.
Remote monitoring
MSPs’ remote monitoring capabilities also extend past networks and other areas of an organization’s core IT infrastructure. This can include applications, websites, servers and endpoints.
Real-time monitoring services provide IT teams with visibility of potential threats or downtime across the entire IT environment. With this insight, business continuity can be reliably upheld and user productivity maintained.
Application management
With organizations running increasing numbers of programs to facilitate productivity and working from home, a typical environment can easily consist of over 1000 applications. To run, these applications require ongoing management, patch updates, licensing administration, user support and configuration.
The result is increasing operational resources to keep the application portfolio running and a potentially sprawling cost of software licenses.
With an MSP’s application service, customers can benefit from efficient, remote packaging of desktop and server applications to end users’ devices. This eliminates the need for the user’s machine to be physically present for updates to be carried out.
MSP application services transform a sprawling application estate into a more tightly managed, documented inventory that IT can proactively manage. The benefits include:
- reduced manual management and resource constraints
- optimized operational performance for end-users
- ongoing evaluation of application usage to give users what they need, when they need it
- eliminating unused licenses to reduce software licensing costs
- identification of functionality overlaps between applications to reduce costs where possible
- smooth migrations between operating systems
- proactive management of platform or software compatibility
- smooth delivery of applications via different cloud providers such as AWS, Google, or Azure
- consistent delivery of applications even in virtualized environments
- tightening access control policies depending on user requirements, location or the sensitivity of data held in the application
- regular QA of apps and road mapping of warranties or end-of-life cycles.
IT helpdesk
MSP IT helpdesk services provide outsourced support for users facing problems with their devices, network connectivity, applications or other issues. The service reduces the burden of tactical issues for IT teams while ensuring users have the right support to carry out their work uninterrupted.
An MSP-led helpdesk can provide:
- an efficient, skilled team of IT support technicians on hand to resolve user IT challenges and issues
- technical, creative staff that can solve most problems with first-level support
- a culture of quick response to build confidence with staff that their problems will be dealt with efficiently
- cost savings both in dollar terms and soft benefits such as user productivity
- 24/7/365 service if required, based on the nature and needs of the business.
Outsourced helpdesks also help organizations to scale their business into new markets. In addition, many MSP helpdesks can provide support in different languages and time zones, as required.
MSP helpdesks also have the advantage of recruiting from much wider talent pools than locally situated environments. This creates a dynamic working culture in which different skills, experiences and industry best practices can serve customers more effectively.
For companies located in expensive employment hubs such as New York, Washington or San Francisco, MSP helpdesks can create considerable savings compared to paying top dollar for local talent.
Many organizations struggle to manage these core IT functions in-house simply because of the technical knowledge required to run a reliable, secure network. In addition to the skills required, the time burden can also be debilitating for overstretched internal teams.
MSPs use advanced network management tools to deliver a range of functionalities across their customers’ networks. This helps them manage all aspects of a network, from the physical equipment to the virtual administration components. Proactive monitoring services enable MSPs to have sight across hybrid networks and multiple vendors where required. MSPs can:
- proactively monitor customers’ networks for bottlenecks or issues. This prevents downtime before it occurs and maintains user productivity.
- establish SLAs with their customers to monitor performance and provide reliability.
- automate basic administration tasks to free up IT employees’ time.
- quickly identify issues to enable rapid fix and recovery.
How do MSPs charge for their services?
This will depend on your chosen MSP, as there are different costing models to work from. Depending on the terms that have been agreed, MSPs will charge flat fees over a defined period.
Detailed SLAs help ensure that both parties are on board with the services to be delivered, the timeframe they will be delivered in and the response times for urgent issues. Key performance indicators (KPIs) are used to establish baseline targets for key services and a consistent way to measure their delivery.
Why it is cheaper to hire an MSP than an internal IT department
Whether you already have an IT team in-house that needs extra resources or are looking to outsource your IT fully, there are advantages to utilizing an MSP.
Recruitment and HR
The cost of recruiting and managing outsourced agencies is very different to managing permanent employees. This is because workloads may peak at different times of the year depending on your business. Specialists can also be recruited from MSPs to work on specific migrating operating systems or implementing new technologies. However, these roles would not be appropriate for full-time staff since they are carried out in a defined period.
It is cheaper to hire an MSP for this requirement than an internal IT manager for several reasons. First, the time and cost of recruiting temporary or contingent staff can be debilitating for smaller firms. Second, recruiting, training, budgeting and supervision of contractors can quickly create their own burden. Finally, MSPs can provide experts on-tap for this project and handle the onboarding required to get the people up to speed with your IT infrastructure.
Another challenge that MSPs can help organizations with is how to manage contingent workers. This task can prove burdensome or even impractical for small HR departments. Costs can quickly increase as HR teams are forced to take on extra resources to manage temporary labor. These activities can be managed outside of your organization using an MSP while still delivering the skills and competencies required for short-term contractual work.
Hiring efficiency is another advantage of using an MSP. Even using a traditional agency, hiring external contractors can be costly and time-consuming. Moreover, this model does not guarantee that workers with the right skill levels or security clearance are actually required.
Using MSPs to fill these open positions and project needs can create cost savings of up to 15% compared to using contingent workers. This cost-saving is achieved by reducing the internal HR teams’ burden and ensuring the talent matches the cost.
The MSP model offers the benefits of contingent labor to organizations but with further advantages. These include:
- ability to hire specifically skilled professionals such as cybersecurity or backup.
- greater flexibility to move quickly on projects to cope with customer demands.
- rapid and effective recruitment to save costs and time.
- ongoing assessment of business requirements and skilled labor to fit it.
- skilled professionals can bring new perspectives and approaches to the table.
- fill skills or resource gaps without the risk of hiring new staff.
- reduced turnover rates and overtime costs.
Technology management and licensing
The visibility an MSP provides is also significant to its overall value contribution. MSPs provide high-level views of a customer’s IT infrastructure by providing control over vendor relationships, licensing agreements and pricing.
This can reduce the burden of managing workflows and drive consistency in service levels, performance and quality. For example, instead of customers needing to manage several invoices across several different vendors, this is all transacted through regular invoices with the MSP.
IT is becoming more complex for all sizes of organizations. As technology increases in all areas of business operation, more cloud environments are adopted and the focus shifts from keeping the lights on to business enablement. With this, MSPs can support general business operations to free up internal resources for more strategic initiatives.
Reducing costs of hardware
Outsourcing infrastructure to an MSP can generate cost savings in numerous ways. It can reduce facilities management, plus the cost of property or space. The power and cooling required for running physical infrastructure are also reduced. IT costs such as storage, software licensing and human resources for maintenance are also eliminated under the MSP model.
The rigmarole associated with hardware lifecycle management is also passed onto the MSP. Under normal circumstances, IT teams face an ongoing administrative burden to keep track of hardware assets and controlling life spans. This involves tagging hardware plus components, as well as managing manufacturer contracts and warranties.
By outsourcing this responsibility to an MSP, organizations no longer need to track end-of-life dates on hardware. In addition, good MSPs have strong relationships with IT vendors to track and manage ongoing hardware management tasks efficiently.
Licensing and networking
Maintaining uptime for users is one of the core objectives for IT departments, as it is vital to maintaining business operations. Unplanned downtime is costly and can mean wasted labor time or prevent business transacting.
MSPs provide 24/7 monitoring to scan for potential issues proactively. This means they can act and address problems quickly before the organization and end users even know about them. Experts are on hand to solve the problem and prevent disruption to the business.
IT staff productivity
Manual, regular work that keeps the lights on is essential to good IT operations. Paying a premium for in-house staff to do this is not the best approach. An MSP can be used to emancipate internal IT employees from these day-to-day tasks.
This service from MSPs enables two benefits for customers. First, IT employees become free to work on value-added projects that drive the business forward instead of treading water. Second, MSPs can work to standardize processes and eliminate bottlenecks. This creates more optimal business conditions and better customer experiences.
To do this, good MSPs can draw on wide experiences from work with their customers and a ready-made talent pool that would otherwise be impossible to hire with any kind of agility.
Reputational cost reduction
A ‘soft’ benefit of using an MSP is to ensure a firm’s reputation is maintained to the best possible standards. Experiencing data breaches, loss of customers’ valuable personal information, website downtime or call center network failure can all create negative impressions.
With state, national and international laws to protect personal information, the stakes are high. Outsourcing key infrastructure to MSPs guards against network downtime or data breaches, and as a result, reputation risk management can be satisfied by an MSP.
MSPs are much better placed than internal IT teams to minimize operational risk by implementing best-in-class cybersecurity standards and comprehensive infrastructure management to ensure uptime.
MSPs are also able to apply their knowledge of compliance standards and regulations to help their customers. This can be an essential resource for in-house IT teams, especially in firms with no compliance experts. However, from industry-specific regulations to more localized data privacy laws, ensuring all regulations are satisfied can be a daunting task for already overworked IT staff to keep on top of.
How MSPs have evolved
The IT industry has experienced a significant change in the last 20 years. For example, in the early 2000s, before cloud adoption became mainstream, IT resellers looked vastly different than today.
During this time, resellers generally fulfilled hardware orders for customers. Their service offerings consisted of outsourced helpdesk and break-fix services for devices. This model became popular before the rise of remote working and virtual collaboration, and involved office-based break/fix shops to help customers meet users’ needs onsite.
The adoption of cloud collaboration tools and subsequent evolution of working approaches in recent years has turned this model upside down. As of 2019, IDG estimated 20% of IT infrastructure spending was by cloud service companies and managed service providers. This number is estimated to grow to 60% by 2023. This shift demonstrates the scale of the shift in recent years from end-user organizations running infrastructure in-house.
Furthermore, outsourced IT and the MSP model are becoming increasingly embedded with organizations’ financial planning. As CFOs try to shift more costs from CAPEX to OPEX, the MSP model becomes more appealing.
This fits the model of reducing the upfront costs of IT projects while building greater levels of agility to meet customer demands.
Utility-based OPEX billing for MSP’s services enables customers to pay for what they use in core IT functions such as backup or disaster recovery. This ‘as a service’ model is also becoming embedded into vendors’ offerings to better meet market demands. This means more predictable pricing for IT services, and less need to budget for expensive hardware acquisition for end-users.
MSPs have begun to identify new opportunities to provide clients with advanced data analytics solutions in more recent years. This can be done by utilizing automation, AI, robotics and other leading-edge technologies. Leveraging these technologies, MSPs can provide further value-add to customers and provide new, innovative services.
With this new tech stack, MSPs can provide integrated services such as advanced analytics to make the most of an organization’s data. This can create new ways of providing additional value to existing customers to meet market demands and identify new market opportunities.
Similarly, integrated communications solutions can be provided across collaboration tools, high-speed networks, and connectivity services. These integrated connectivity solutions solve a skills problem for customers because ordinarily, they would require professionals with various skills. Using an MSP eliminates the need to hire, and smaller firms can even the playing field with larger competitors to get services to market more rapidly.
How MSPs work
MSPs help businesses in many ways. MSPs can add value without the costs of permanent headcount, from keeping the lights on, carrying out key metrics, or delivering strategic initiatives.
MSPs use their expertise to deliver services by using remote monitoring and identifying issues before they actually occur. Examples include monitoring users’ endpoint devices, identifying potential cyber-attacks and working to close bottlenecks in backup windows or network bandwidth that could affect productivity.
A reliable MSP enables organizations to concentrate on core business delivery, safe in the knowledge that their IT is in good hands. In addition, a well-executed MSP arrangement results in a seamless environment in which the outsourced team forms part of an extended team focused on a common goal.
Outsourcing models can consist of full-time or part-time helpdesk staff or even shared resources with the MSP’s other customers. Full-time helpdesks usually involve a team of dedicated IT technicians to work only on one client’s account, either onsite or virtually.
Part-time relationships on similar terms can also be arranged for clients without sufficient work to justify a technician for a full working week.
The latter shared resource model enables costs to be kept to a minimum while the helpdesk staff work to appropriately tailored SLAs. It can also be the perfect solution for clients requiring round-the-clock out-of-hours support.
Since MSP staff become embedded with a client, there is also the opportunity to meet with them before you make your decision on which MSP to select. In the same way you would approach a new hire, the proposed extended team members can be interviewed before the contract and onboarding procedures are completed.
In summary
The statistics show that increasing numbers of US firms are turning to MSPs to replace traditional internal hires. This article has outlined some of the benefits of doing so to different business departments.
For HR this includes reduced recruitment costs, access to more skilled resources and less risk than taking on traditional hires. Finance departments benefit from reduced CAPEX requirements for purchasing hardware, administration of IT vendors or distributers and more predictable monthly billing cycles with one supplier.
The biggest winners are IT teams themselves. Far from being threatened by the prospect of outsourced work, IT teams can be freed up to deliver genuine value to their firm.
By embracing a converged infrastructure of systems and a centralized management structure under a single MSP, end users can consolidate applications, optimize investments and ultimately reduce costs. As well as improving utilization rates, this convergence also helps facilitate the ability to work from any remote location without a negative impact on the organization, user or their productivity.
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