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Definition of a Managed Service Provider (MSP)

February 16, 2021 | by Sean Dawson

If you’re a startup, you may have a small IT department. Your network may be running on a server in a shared office space. If you’re a larger company, you may have rooms full or server racks. Either way, a key to your success is reliability and a proactive approach.

 

What is a managed service provider

 

With more people working remotely and the increase in online shopping, delivering a robust and consistent customer experience is essential to your growth. You can’t afford to wait until something goes wrong before you deal with it.

Downtime and the consequences of  break/fix, troubleshooting, etc is expensive. You frustrate your employees and customers. It can damage your reputation and lead to long-term losses. Even in the short-term, expenses can add up quickly. The most recent survey of businesses shows that the hourly cost of downtime exceeds $100,000. For large businesses, a single hour of downtime ranges from $1 to $5 million — not including any fines or penalties they may also face. Now, imagine what that can mean for a small business.

With more people working remotely than ever before, a robust and reliable network infrastructure is essential to keep your business running efficiently.

A Managed Service Provider (MSP) provides the resources you need to run your business efficiently and all but eliminates downtime.

 

What Is a Managed Service Provider?

A Managed Service Provider handles the operation and maintenance of a company’s IT infrastructure and end-user systems. An MSP provides services, such as network, applications, infrastructure, and ongoing support and administration. Services can be delivered to on-premises data centers, third-party cloud data centers, or cloud providers.

Billed as a subscription model, a Service Level Agreement (SLA) defines the relationship between the MSP and the customer.

Your Managed Service Provider ensures all your IT needs run smoothly, are secure and up-to-date, and will manage the day-to-day tech issues. This lets you focus on your business rather than the technology.

An MSP typically handles one or more of your IT’s business functions, such as:

  • Planning
  • Business Communications, including Email
  • Cyber Security Services, including but not limited to Antivirus and Firewalls
  • Networking
  • Data Storage
  • Backups and Disaster Recovery
  • Software Updates and Patches
  • Software Licenses
  • Asset Management
  • Employee Training
  • Device Management
  • Cloud Services
  • Cloud computing
  • Continual Optimization of IT Environment Using Relevant Metrics

MSPs will remotely monitor (rmm) your network for performance and security and address any issues that arise in real time. They’ll also work as your internal Help Desk, if required, to resolve employee tech problems and serve as your VCIO (Virtual Chief Information Officer).

 

What Are the Benefits of a Managed Services Provider?

So what is the core business of an MSP? Due to the business model they provide a variety of benefits. The biggest one is that it can relieve most of the burden of it management, so you can focus on business.

MSPs act as an extension of your business without the need to hire full-time employees. There’s no worry about recruiting, hiring, and training expensive IT workers. You don’t have to deal with scheduling, vacations, sick days, or availability. You get an experienced IT team, the technology behind the scenes that drives your business operations, deep expertise, and improved security. And, you get a significant reduction in your CapEx budget.

 

What is a Managed Service Agreement?

A Managed Service Agreement will define the terms between you and the MSP. You’ll pay a flat monthly fee on a regular schedule which helps you know ahead of time what your cost will be.

You may have the option to pay fees based on per-device, per-user, or per-service.

  • Per-device pricing: Monthly fees are determined by the number of devices managed
  • Per-user pricing: Monthly fees are determined by the number of users with accommodations for users that need access on multiple devices.
  • Per-service pricing: Also called all-inclusive pricing, MSPs charge a flat fee for IT infrastructure support and management.

Each of these plans has pros and cons depending on the size of your organization and operational needs.

You may also have a Service Level Agreement that governs performance and service. Some MSPs offer different tiers depending on the level of service you need. For example, it might offer different pricing for availability and responsiveness.

The SLA works as a document to ensure each party knows what the expectations are for things such as monitoring and reporting, procedures for reporting problems, and resolution times. SLAs should address these six areas in particular:

  1. Hardware and/or software requirements
  2. Hours of service
  3. Cost of managed services
  4. Contract length/term
  5. Remediation of problems
  6. Exit clauses or penalties for failure to delivery

This avoids misunderstandings. SLAs typically provide consequences for failing to meet service obligations. For example, if an SLA guarantees 99.999% uptime, but fails to deliver, you may be entitled to a rebate or service credit based on downtime exceeding the

threshold.

 

How Do Managed Service Providers Operate?

MSPs have teams of experts working for them that specialize in various areas of IT. Since they operate across multiple customers, they can more easily amortize the costs of hiring highly experienced professionals that smaller businesses may not be able to afford.

They are also able to apply the same strategy to equipment and infrastructure. Because they can accommodate multiple customers, they can avoid duplication of costs that would exist if you had to duplicate the infrastructure to multiple on-premises locations.

For businesses, this means a more cost-efficient way to manage and maintain your IT infrastructure. MSPs also take on what can be a big burden for companies: recruiting, hiring, retaining, and training your IT staff. There’s a significant shortage of trained professionals in the field due to the incredible growth in the industry over the past decade. Not only is it difficult to find and pay for high-caliber IT support staff, but it’s also time-consuming and expensive to continually train workers to make sure they are current on the latest technology and software. MSPs do all that for you.

By the 24x7 remote monitoring of your systems for performance and security, MSPs operate to provide a safer and more reliable environment.

 

What Are Managed Service Providers Used For?

Businesses of all sizes outsource all or some of their information technology. Smbs may do so because of limited in-house resources or to augment expertise. Large companies and government agencies often outsource their IT to an MSP as a cost-savings measure to replace or supplement their staff.

When outsourcing to a Managed Service Provider, you get more efficient, reliable, cost-effective, and scalable IT operation. For business owners, you get all the benefits of the latest technology without the headaches. By taking advantage of outsourced IT services, you’re protecting your business with enhanced security and business continuity, eliminating costly capital expenses, while using new technology giving you a competitive advantage.

Most importantly, you’re freeing up resources within your organization to focus on revenue-generating activities by choosing the right it services provider.

 

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Categories: Managed Services, cyber security, RMM, IT Outsourcing, Managed IT Services, IT Management, MSP

Sean Dawson

About Sean Dawson

Sean seeks to understand the heart of a challenge and then focuses on creating practical and timely solutions. He is an avid DIYer, gardener and master house re-doer who loves spending his free time with his wife, four children and six chickens.

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