The Evolution of Managed Service Providers (MSPs)

From the earliest days of commercial computing, businesses have faced a recurring set of challenges. Computing technologies are expensive to acquire and maintain. They also require expertise that is scarce, difficult, and expensive to find, recruit, hire, and retain.

Since time-sharing of mainframe computing resources was invented in the 1960s, companies have sought and found ways to make computing accessible and affordable to businesses unable to justify owning their own computers. The Computation Center at the Massachusetts Institute of Technology (M.I.T.) demonstrated the Compatible Time-Sharing System in 1961. And the Multics operating system, a predecessor of Unix, was modeled after utility services such as electricity and telephony.

Today, managed service providers (MSP) deliver a broad range of computing services to businesses of all types and sizes. Some estimate that 90 percent of Fortune 1000 companies use MSPs to provide at least part of their IT infrastructures or services. Estimates curated at Statisia .com place the 2018 MSP market at more than $189 billion, and project growth to more than $229 billion by 2020.

MSPs: From Yesterday to Today

In the early days of modern business computing, businesses often hired outside support providers, mostly to fix things when they broke. Over time, business computing expanded and both IT leaders and service providers began to shift their focus to more proactive and preventive activities. In addition to fixing what broke, service and support providers began looking for ways to avoid breaks and to improve the performance, reliability, and security of their clients’ IT estates. (The first international computer conference, held in London in 1971, included sessions on making those early time-sharing systems more secure.)

Soon, business technology decision makers began to negotiate “subscription” contracts with their outside providers, for consistent access to their solutions and services. Some providers became sophisticated enough to manage clients’ IT operations, in part or totally. Providers also began to resell hardware, which enabled them to offer more comprehensive solutions and generate additional revenues. Those providers were basically some of the first modern MSPs.

During the 1990s, business decision makers increasingly pursued so-called “lean” and “just-in-time” initiatives. These were largely focused on cutting manufacturing and distribution costs, but many businesses also used these initiatives to pare their IT staffs and costs. Then, the dot-com crash that began in 1995 accelerated the rate at which IT people found themselves unemployed. Meanwhile, IT use was growing, and IT solutions and management tools became more powerful, affordable, easier to use. All these factors led to the growth and evolution of modern MSPs and the services they provide.

Today, MSPs offer a wide range of IT solutions and services, including but not limited to those listed here.

  • Anti-virus/anti-spam/anti-phishing/anti-malware services
  • Data backup services
  • IT estate/network monitoring services
  • New software configuration and provisioning services
  • New hardware configuration and implementation services
  • Network infrastructure configuration, implementation, and enhancement services
  • Cloud computing services (applications, services, resources, management)
  • Patch/repair/update management services
  • On-demand augmentation of incumbent staff/expertise

The growth of business cloud computing has been a major contributor to the growth of the MSP market. An April 2018 Grand View Research study estimates the 2016 cloud managed services market to have been more than $23 billion. That same report predicts the cloud managed services market could be more than $80 billion by 2020.

Even as they focus on modern IT services, many MSPs still resell hardware and offer “break/fix” services. CompTIA is a leading technology industry membership association. Its 2018 State of the Channel report features results of a survey of MSPs. When asked about where their revenues came from, more than one-third (38 percent) cited break/fix services, second only to consulting (55 percent) and ahead of managed services (35 percent).

MSPs: Proven Partners for IT

Modern MSPs can augment the IT resources of almost any type or size of business. Whether your business needs more IT people, help with IT or even business processes, or technologies, there are MSPs with the skills and solutions to help you. With a bit of research, you can find MSPs who understand the unique needs of your business and have the solutions, expertise, and ecosystem to get you to your goals.

Freshservice is not a managed service provider. Freshservice is an ITSM tool that empowers IT teams of all sizes.