It feels like the term ‘managed service provider’ (MSP) has been around since the beginning of computer technology. In a nutshell, a managed service provider is a company which can be outsourced to manage some part or all of an organisation’s IT platform.
Before MSPs became the norm, companies predominantly worked around a break-fix model of outsourcing when an issue couldn’t be handled in-house, however, over time, the market demanded more proactive solutions. MSPs filled this gap by offering services around monitoring equipment and identifying future issues.
Like practically everything that relates to technology, MSPs have had to function in a state of flux, meaning that they have had to evolve through the years to avoid irrelevance.
The advent of cloud computing, for example, has added a great deal of complexity and challenges to the mix as MSPs now need to find ways to maintain complex hybrid environments. This has also given them great opportunities to grow cloud-based offerings, like cloud-based backup and disaster recovery.
>See also: 5 must-haves for managed service providers
But it’s not just the cloud that they’ve reacted to, some have made a beeline for regulatory compliance, cyber security and strategic consultancy.
MSPs are popular, according to the “2017 IDC Application Services Survey” 30% of executives are outsourcing management of their organisation’s infrastructure and application portfolio – this is expected to rise to 41% over the next five years.
However, taking into account how broad the MSP space is alongside the growing needs and expectations from IT infrastructures, CTOs and CIOs have a lot to consider when it comes to choosing the right provider for their organisations. Hopefully, this guide will be able to answer some key questions.
Why companies use managed service providers
Generally speaking, CTOs tend to consider MSPs when they want to have additional capabilities, or they wish to shift routine operational work away from their staff to free them for more strategic, value-adding work.
Technology grows in complexity by the day, internal IT departments with limited resources struggle to keep up with it all. Good MSPs can provide a steady level of support to meet challenging requirements.
MSPs increase efficiency in that they can offer working dynamics that internal teams may not be able to do, for example, 24×7 coverage. In today’s global business, the typical nine to five doesn’t fly anymore. Most organisations need to be available all the time.
Multi-language support is another valuable capability MSPs can provide to overcome language barriers.
Companies also look to MSPs to overcome the skills gap.
Despite the widespread adoption of digital technologies according to a recent research survey, the skills shortage in the UK costs businesses £1.5 billion a year in recruitment, temporary staffing, inflated salaries and additional training.
However, with outsourcing, there is the possibility that a business will not need to worry about filling the gap internally as they’ll be able to tap into an external pool of talent.
On top of this, outsourced IT business models often fair better at hiring new talent, as they can offer greater career potential and flexibility.
Another benefit, albeit for the finance department, a company gets to cut costs related to recruitment agency fees, training, benefits and pensions.
Develop a managed service provider strategy on your terms
Just because a managed service provider is outsourced, it does not mean they should act like they are.
In this day and age, it is common for MSPs to sit in on staff meetings, not only to keep in line with the strategy but to contribute and share experiences.
Given the apparent benefits, CTOs mustn’t be afraid to push the dynamic of the relationship in their favour.
Despite the technicality of being separate organisations, if something needs to get done working as a team is the best way to do it.
After all, if your using MSPs to deliver things that are mission-critical to your enterprise and it goes down, it’s still your job at risk.
> See also: How to make multi-sourcing work
From the beginning, you must define your goals relating to the kind of expertise, management and cost.
Good MSPs should meet your expectations
Expanding on bringing MSPs into staff meetings, companies need to make sure they are getting the most out of their services.
If you look around at the market, the expertise offered my MSPs has expanded dramatically through the years, such as data analytics, business intelligence (BI) and advanced application monitoring.
These new services have largely been driven by the expectations of their customers.
Managed Security Services and regulatory compliance
According to research by Horses for Sources, when it comes to having the talent to keep up with the security landscape, some providers are better than others. According to their research, most providers are following standard recruiting and retention best practices, while others are taking more creative approaches to ensure that they have enough talent to serve clients and mitigate future risks.
Another thing that customers are pushing for from their MSP is that they take on responsibility for regulatory compliance, such as the General Data Protection Regulation. This is a complicated issue, and arguably, it has some bad implications for MSPs – here is a link to an interesting article that expands on this issue.
However, for CTO’s regulatory compliance is a critical issue across most industries. Especially if engineers will be working with confidential data.
When it comes to security and regulatory compliance, the best thing you can do is to ask if the MSP has undergone a third-party accreditation, such as ISO 9001 (for quality management systems) or ISO 27001 (for information security management systems). You should also ask if the MSP has adopted any business continuity standards.
Service Level Agreements (SLAs)
Whatever expectations you set for an MSP, the best way to assess their commitment is to look at their service level agreement (SLA). The SLA sets out what the vendor will provide. If the vendor is unable to meet their obligations, the SLA will also offer a customer with recourse.
Service level agreements vary on a case by case basis. However, typical components usually contain:
- Warranties: These agreements should spell out legal fine points, such as compensation policies.
- Client Duties: It’s common that MSP users also agree to a code of conduct.
- Procedures for when problems arise: This should cover how problems are reported as well as distinguishing the various levels of severity of different problems. It should also indicate the MSPs response time.
- Performance agreement: Typically, an SLA should outline what metrics will be used to quantify and report on service levels.
- Termination: It is important that the agreement specifies under which circumstances the MSP or client can end the relationship.
CTOs should use the contracting process to build an understanding of what they want from their MSP. By setting clear expectations in black and white, clients can allow providers to build an understanding of their duties.
Pricing models for managed service providers
To differentiate themselves in a crowded marketplace, suppliers offer a diverse range of payment models, below is a quick explanation of some of the popular ones:
- Per-device monitoring: Customers are billed a flat fee for monitoring selected devices, for example, mobile devices and desktop systems. This is a very common payment structure, mainly because it offers predictability and flexibility as you can scale-up and down the number of devices as needed. One drawback with this structure is that it can get expensive as the number of devices used by workers multiplies.
- Per-user: This model is similar to the per-device pricing model, the difference being that the flat fee is billed per end-user on a monthly basis. This will cover support for all devices used by each user.
>See also: Outsource evolution
- Tiered pricing: This is perhaps one of the most popular pricing models. Essentially, the service offered will have different price points. The more you spend on a service package, the more services you get.
- Value-based pricing: This revolves around setting the price of a product or service based on the economic value it offers to customers. If a company wants to do this they need to be certain what value means to them.