A guide to running a successful managed services business

IT has taken the driver’s seat in most businesses, and the level of focus it takes to manage IT infrastructure sometimes ends up swaying an organization from focusing on their business goals. This is where the concept of a managed services provider (MSP) comes into the picture. They handle the management of technologies along with core IT maintenance functions, such as break/fix and patching.

What is an MSP?

An MSP is a company that provides managed services to organizations, which usually involves remotely handling their entire IT infrastructure or a part of it as mentioned in the service-level agreement (SLA) between the two parties. Pricing models for MSPs may be tier-based, à la carte, value-based, etc. The subscription-based pricing model makes it easier for organizations that want expert services, the latest tools, and to only pay for the resources they use. Services such as 24x7 monitoring, issue resolution, network security, and IT asset management all come under the scope of MSPs.

Unlike traditional IT service providers, MSPs tend to take 360° responsibility for the services that are outsourced to them instead of just providing on-demand services. They act as IT consultants and provide expert advice when their clients need to make strategic IT decisions. More and more organizations are opting for MSPs in order to reduce their IT risks and be ready for any future technological disruptions.

When it comes to outsourcing, there are two types of service providers:

• Break-fix service providers
• Managed service providers (MSPs)

Break-fix service providers

Break-fix service providers are fine for organizations that do not need heavy IT assistance, but those that do will end up paying a lot more than what MSPs charge for the same services if they go with a break-fix service provider.

MSPs

Managed services are proving to be a boon to all organizations, especially for small and medium-sized businesses (SMBs). By 2018, about 39 percent of SMBs used managed services in some capacity while the entire MSP market stood at $180.5 billion. This number has only increased, standing at $223 billion in 2020.

Break-fix service providers deal with every issue as a separate case, and charges for on-site visits are their major source of revenue. Therefore, some break-fix service providers may take longer to fix an issue to drive up the number of on-site visits. On top of that, there are a few other issues with such service providers, such as:

• Unpredictable costs.
• Longer response and service time.
• Higher charges for emergency on-site visits.

Managed services are proving to be a boon to all organizations, especially for small and medium-sized businesses (SMBs). By 2018, about 39 percent of SMBs used managed services in some capacity while the entire MSP market stood at $180.5 billion. This number has only increased, standing at $223 billion in 2020. SMBs and large enterprises consider MSPs their trusted partners, as they have been interacting with them for all of their IT needs day in and day out.

The most successful MSPs:

Focus on efficiency

An MSP’s job is to ensure that their client’s business is functioning smoothly 24x7. To accomplish this, an MSP will perform routine hardware maintenance tasks to avoid downtime and outages, provide continuous help desk and remote IT support, automate security patches and software updates, and even help with IT consulting.

MSPs also provide expert advice whenever required, as they come with industry experience in putting the right tech in the right areas.

Make data security their priority

MSPs know that a client's data security is a top priority, as an MSP’s entire business depends on clients trusting them with their IT infrastructure and personal data. Any breach in security could potentially damage their client's image and subsequently their own. This is why MSPs go above and beyond to protect their clients’ data with fully managed and layered network security in order to avoid cybersecurity threats, preserve business continuity, and avoid any type of data loss. Apart from that, MSPs also play a huge role in data backup and disaster recovery.

Service delivery being the most important capability, MSPs design networks and data centers that will be resilient in the face of IT infrastructure problems. MSPs’ data centers are much more robust than a standard enterprise IT service provider’s, ensuring that even if there’s trouble in the MSP’s main offices, the flow of services will not stop. This acts as an added layer of security for an MSP’s clients.

Help clients meet their business needs

An MSP’s main objective is to prevent problems and maintain business continuity. To meet that goal, MSPs find, implement, and manage a solution that fits their client's business needs.

They help their clients with budgeting (understanding current expenditure in order to cut costs and allocate resources accordingly), planning (understanding long-term and short-term needs to find technology solutions that scale with their business), and implementing the latest solutions.

Help their clients innovate

In order to scale, every business needs to innovate. And on that path, organizations may need to perform certain time-consuming, stressful, and resource-intensive activities, such as migrating to the cloud or switching to different software.

An MSP can be a boon to an organization for such activities. They help organizations save precious time and resources by taking up IT projects (whether large or small), spending less money by implementing best practices, and providing cost-effective ways to implement new technologies.

So far, we've already established that organizations are drawn towards MSPs. A question arises here:

What is it exactly that organizations are expecting to get out of these services?

Research indicates that the services offered by MSPs are not necessarily the only reasons why organizations consider hiring an MSP. Organizations are looking for a wide range of benefits when they decide to invest in a managed services model. The following are the reasons organizations decide to go with an MSP (based on the research mentioned above):

• Improved security
• Proactive approach to IT problems
• Better uptime
• Gain access to newer technologies
• Cost savings over in-house IT
• Peace of mind
• Free internal staff for strategic work
• Tap into cloud solutions
• Lack of internal IT
• Handle remote office IT

Benefits of MSPs

Cost-effectiveness:

Outsourcing services to an MSP offers an organization the ability to significantly cut operational expenses thanks to the MSP’s constantly upgraded technology and expertise in the field, helping to control IT costs and saving the organization's resources from menial tasks and processes such as hardware issues and other general break-fix services.

MSPs adhere to an SLA that's shared with the client and includes the client’s precise requirements. An SLA helps ensure timely service delivery and efficient management of hardware and software, in turn boosting the client’s productivity.

Apart from that, subscription-based pricing (discussed in detail in the "Pricing models of managed IT services" chapter) makes an organization’s expenditure on outsourced business processes and functions predictable, which helps in keeping the organization’s budget in check.

Access to expertise

Apart from the latest tech, MSPs also come with well-qualified, trained, and experienced IT professionals who are equipped to handle certain tasks that an organization's resources are not built to handle, neither are they supposed to. This frees up IT teams to focus on strategic initiatives.

Sometimes an organization requires a specific ability once in a blue moon. In such cases, an MSP can help an organization avoid the expense of training internal staff for skills that are rarely required.

Be it day-to-day IT help desk activities, network monitoring, or management of IT assets, MSPs can expertly provide 360-degree management of outsourced business functions and processes.

Focus on core business

As a business grows, certain business functions and processes may become the responsibility of the IT team, swaying them from their original objectives or simply remaining incomplete because they’re beyond the team’s scope or capacity.

Capabilities such as updating and patching systems, backing up data, and generating reports on how well IT infrastructure is functioning can be outsourced to MSPs, shifting the focus of IT departments back to uplifting their business via innovation and revenue-generating activities.

Scalability

Businesses need to scale up or down as demand fluctuates. When a business expands, unexpected hurdles may arise. To deal with this internally, a business will need to add or remove a substantial amount of resources. Organizations aren’t typically ready to make these adjustments when it comes to IT requirements.

This is where an MSP’s ability to rapidly accommodate IT changes helps a business stay productive and avoid downtime. MSPs can provide the necessary amount of services and support as and when required and handle any IT issues that arise on the way.

MSPs proactively identify opportunities for improvement to support their clients' business objectives.

Minimizing risks

Millions of businesses fall victim to hacking due to poor network security. Many SMBs go out of business every year because of security breaches, as customers lose trust and shift to competitors. With the exception of huge conglomerates, implementing a separate IT team just to ensure data security can burn a big hole in a business’s pocket.

MSPs can offer proactive security solutions to help avoid security breaches. Their services include constant monitoring of servers and websites, performing data backups, and immediately alerting the organization upon noticing any suspicious activity.

Compliance

Staying technologically compliant is imperative for organizations to stay in business. There are rules and regulations set by certain governing bodies that organizations need to follow. For less established organizations, handling compliance on their own can be a nightmare.

MSPs are likely familiar with the compliance regulations that organizations are required to follow and can easily point out the areas that require work and help find solutions. An MSP will notify its clients of the expiration dates of their software licenses periodically, keep clients' payment information secure, and ensure that its clients’ security practices are compliant with the current rules and regulations.

Highly responsive: 24x7 availability

When an organization has a global business presence, working hours shift from 9-5 to 24x7, and so does the need to have a system in place to deal with all sorts of IT issues. MSPs offer 24/7 support, 365 days a year. With SLAs in place, MSPs ensure service continuity and remain highly responsive whenever required.