Managed Service Providers (MSPs)

Business computing today is complex and critical, and becoming more so each day. Every modern business relies upon IT to survive and must leverage IT to succeed, grow, and evolve. And there can be no digital transformation without effective, business-enabling IT. Meanwhile, IT is evolving at breakneck speed, as new technologies change how everyone buys everything.

This confluence of trends and forces creates a nearly constant stream of familiar, new, and rapidly evolving challenges for IT leaders and their teams. Traditional premises-based IT resources are increasingly joined or supplanted by public, private, and hybrid cloud services. The commercial emergence and growth of technologies ranging from artificial intelligence (AI) and big data to Internet of Things (IoT) devices and services require new responses. Cybersecurity threats grow in sophistication and potential effects.

Beyond these challenges, even as demand for IT-powered business services grows, skilled, experienced IT people are difficult and expensive to find, recruit, hire, and retain. CompTIA is a leading IT industry trade association. In its 2018 IT Industry Outlook, “nearly 4 in 10 U.S. IT firms report having job openings and are actively recruiting candidates for technical positions.” “Fifteen percent [of hiring employers surveyed] believe hiring will be significantly more challenging in 2018, while 33% expect it will be moderately more challenging.”

The CompTIA report also cites five top reasons IT hiring will be more challenging in 2018.

• Competing with other tech firms for talent

• Finding workers with the right soft skills

• Finding workers with expertise in emerging tech fields

• Rising salary expectations

• Insufficient pool of talent in region/locale

Unless your business is lucky enough to possess extensive expertise in evaluating, selecting, implementing, managing, and integrating IT solutions, this set of dynamics is not someplace you want to go alone. This is why so many companies look to modern, capable managed service providers (MSPs) for help. The right MSP can provide the additional skills, experience, knowledge, and resources your business needs, even as those needs and cloud resources evolve. Herewith, some background about MSPs, and details and recommendations to help you work with MSPs successfully.

Almost every transformative technology has been shepherded into mainstream use by the equivalents of MSPs. The first humans to divert rivers and streams to support crops and settlements were MSPs. The earliest postal services and telephone network operators were MSPs as well. In the broadest sense, any entity that provides and manages shared access to a resource can be considered a managed service provider.

Today’s business technology MSPs share some aspects with their antecedents. MSPs can provide access to solutions difficult or impossible for your business to own and operate on its own. In addition, modern IT MSPs can help your business implement and manage those solutions and optimize their alignment with your business goals.

How MSPs Came to Be

In the early days of modern business IT, support was often focused on the break/fix cycle. When something breaks, someone contacts IT, and IT sends someone to fix it. As IT and IT people became more sophisticated, the focus began to shift to a more proactive and prescriptive approach. Support became more about avoiding breaks in the first place, then about identifying and pursuing proactive improvements of the IT estate. Companies began to negotiate subscription contracts with their IT solution and support providers, not just to fix what broke but to manage IT operations. And some of those support providers began to resell hardware to offer more complete, integrated solutions and augment their revenues. Modern MSPs evolved from these developments.

Other factors also contributed to the rise of true MSPs. During the 1990s, for example, management concepts such as “lean” and “just in time” operations came into vogue. While initiatives based on these concepts often targeted manufacturing and distribution, they caused greater restraint on IT budgets as well. In addition, the dot-com crash, which extended from 1995 through much of 2001, put a lot of skilled IT people out of work. 

In addition, throughout the 1990s, more types and sizes of businesses embraced IT. Technology solutions for business computing and for network and IT management became more capable, flexible, affordable, and easier to use. All of these factors combined to create and spur the continued growth of managed services and the MSPs that deliver them.

What MSPs Do

Unlike their earlier counterparts from other areas, modern business technology MSPs can tailor and fine-tune custom combinations of solutions for your business’ specific needs. This is a far cry from the days when so-called “service bureaus” provided “time-sharing,” or simple metered, shared access to mainframe computers. It’s even truer now when MSPs provide access to broad ranges of business technologies and relevant expertise. Examples include but are not limited to those listed below.

• 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

In addition, many modern MSPs still resell hardware, and still offer traditional break/fix support services. In CompTIA’s 2018 State of the Channel report, survey respondents were asked about their revenue streams. Some 38 percent cited break/fix services, second only to consulting (55 percent) and ahead of managed services (35 percent).

In many cases, the IT management tools MSPs use to deliver services are the same as or close variants of those used by the largest enterprises. In some cases, MSPs augment these tools with solutions they’ve created themselves, often to solve a specific client’s problem. A full-service MSP must at least have tools and processes sufficient to address the following needs for multiple clients.

• Remote access, monitoring, and management of client company IT resources
• Patch and update management
• Malware protection
• Endpoint and network security for each client’s extended environment 
• Data backup/disaster recovery/business continuity services
• Professional services automation software for consistent management of client accounts

The growing range of services and expertise MSPs can offer, the increasing business criticality of IT, and its apparently nonstop evolution have combined to spur demand for MSP 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.

This market growth is not without significant challenges, to MSPs and the client businesses they serve. The roiling changes taking place in IT, combined with growth in digital transformation efforts, affect all types of businesses. In addition, MSPs face challenges unique to their roles.

MSPs: Changing Roles and Definitions

It has even become challenging to define the term “MSP,” or for MSPs to decide on what mix of solutions to offer. The CompTIA 2018 State of the Channel report found “most channel firms, especially those coming from the more traditional ranks vs. newer entrants, remain hybrid in nature. They might identify as an MSP, but also conduct some hardware sales, integration services, cloud and SaaS work, and other activities.”

This may explain why “64% of firms [surveyed by CompTIA] expect their mix of offerings to change to new types in the next two years.” In comparison, “22% of firms expect no change in portfolio,” while “14% of firms do not yet know.”

The Future Is “Cloud-y” for MSPs

Whatever particular mix of solutions each MSP chooses to offer, all must contend with the transformative effects of cloud computing. The growth of cloud computing has been a major driver of digital transformation, for businesses that buy, use, or sell IT solutions. 

An April 2018 Grand View Research study forecasts a compound annual growth rate (CAGR) for cloud managed services of 15.4 percent through 2025. This could mean a market for such services larger than $80 billion by that year.

Cloud computing makes a variety of resources available as pay-as-you-go, pay-as-you-grow services. It can replace capital expenses with more manageable and predictable operating expenses. It can support critical workloads and integrate with incumbent premises-based IT. And cloud services platforms are more secure than almost any other commercial IT estate.

These and other benefits mean that every MSP must develop a credible cloud support strategy, and back it up with high performance. That strategy must also clearly and credibly address the many technological, operational, and managerial challenges created by multi-client, multi-cloud, multi-service situations.

Beyond the Cloud: Optimism and Caution for MSPs

Despite its challenges, cloud computing was cited by more than half (56 percent) of the CompTIA survey respondents as the top reason for optimism about their future. However, it was also cited as a potentially negative factor by nearly one-third (32 percent) of those same respondents. The survey highlighted an interesting mix of additional potentially positive and negative effects on the future of MSPs. These are summarized in the graphic below.

The right MSP can help to extend IT resources and capabilities at your business without the expense or difficulty of finding, hiring, and retaining new staff or retraining and reallocating the staff you have. In addition, MSP resources can help you to focus your internal resources on tasks and projects with greater urgency or higher business value. 

If your business is pursuing or considering any digital transformation initiatives, an MSP can provide significant help with those as well. MSPs often have more resources to devote than any individual business to tracking and learning about emerging technologies. MSPs also tend to have more direct experience with implementation, integration, and management of diverse technologies than most individual businesses. This means the right MSP can help guide you and your business through the technological, organizational, and cultural challenges that every significant IT-related initiative may face.

What to Look for in a Managed Service Provider

You and your colleagues have multiple options and choices to make concerning how best to evaluate, select, implement, manage, and orchestrate IT resources. Given the criticality of IT to the survival, growth, and evolution of your business, how well your business performs these tasks directly affects its other most critical assets – its people, its money, and its reputation. 

To ensure consistently effective implementation, management, and security of your cloud-based resources, your business should seriously consider working with an MSP.

To work with an MSP successfully, you need the right combination of technologies, skills, experience, and commitment. Your chosen MSP partner must demonstrate an understanding of your business’ unique needs, and credible evidence that they have the solutions, expertise, and ecosystem to get you to your goals. Certifications in specific technologies and solutions can help here. If they matter, you must ensure your contract guarantees that those assigned to work with you are among those who are actually certified.
 

The Service Level Agreement (SLA): An Essential Part of Any MSP Relationship

MSPs face multiple challenges, but offer multiple potential benefits to companies that engage them wisely and manage those relationships well. SLAs can be valuable assets to those companies.

Good SLAs talk about in specific detail the services the MSP is to provide, as well as any relevant services for which the MSP is not responsible. Solid SLAs also include specific service level objectives (SLOs), based on measurements or credible estimates of business needs related to each service.

In the past, many businesses acquired IT services based on the number of users or servers. Today, many IT decision-makers instead base their negotiations with MSPs on business-specific SLOs and SLAs. You should ask every candidate MSP partner to supply sample SLAs and SLOs for review by your IT and contractor management teams. In addition, you must ensure that the SLAs and SLOs you demand are based on the most accurate, complete, and timely information available about your IT environment and business needs.  

MSPs: Help For Today and the Future

You face multiple significant challenges in delivering the best possible IT-powered services for your business. Despite these, you must ensure all your chosen solutions meet business needs and desires. Those resources must also be cost-effective, secure, and easily integrated with your incumbent IT estate. To achieve and maintain all of this while planning for a highly unpredictable future, you could use some help. The right MSPs can provide the help you need.

Your IT management and digital transformation efforts require a high-level, long-term commitment. In addition to delivering the resources your business needs, your chosen MSP partners must be up to that level of commitment. You must ensure that they have the strength and relevant experience to deliver on the commitments they make to your business, now and in the future. SLAs and SLOs can help, but you must also learn all you can from customers, industry analysts, and other credible sources. Your MSP choices can ease and accelerate your IT management and improvement efforts if you make them with care.

Freshworks offers cloud-based solutions to help you achieve and sustain comprehensive, effective management of your IT assets, even as your business and IT estate grow and change. Freshworks would welcome the opportunity to discuss your cloud computing challenges and possibilities. Learn more about Freshworks and its solution for IT asset management and other business functions online, or contact Freshworks. Let us show you what we know, what we’ve done, and what we can do with and for you.

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