What Is a Managed Service Provider (MSP)?
At its core, a Managed Service Provider is an outsourced I.T. staff who will proactively keep your systems up and running. They can replace to subsidize your existing I.T. staff to help maintain your digital environment.
A managed service provider is a higher-end outsourced I.T. company. Anyone who runs a large or small business with dozens of computers knows it can get a little crazy managing everything and stay efficient. This is where an MSP would come in and manage your technology infrastructure. MSP's service offerings can range from break-fix up to a fully managed environment. If you hire a new employee, they will get you a new computer or workstation set up so that the new hire can perform the tasks that are needed. Many MSPs will also do project-type work. This can include system overhauls, upgrades, and anything in between. More extensive service providers can handle more complex projects, such as ensuring your entire system is HIPAA compliant and performing regular training. This allows you to show that you have met all the requirements needed to be secure. It's highly beneficial when a company needs to meet minimum regulatory requirements. Most MSPs are also equipped to do their research on industry-specific software to make recommendations and updates.
What are the benefits of an MSP?
There are several benefits of an MSP that most companies know about; however, there are also a few lesser-known benefits that aren't as clear to businesses.
Those benefits include:
- Businesses become more profitable
- Businesses stay more efficient
- Companies no longer need to worry about new regulatory rules link FINRA or HIPAA
- Removes the need for extra internal staff
- Can buy and receive technology much faster
- Keeps companies more secure from hackers and disgruntled employees
- Removes "guessing & what could work" for the companies technology needs
- 24/7 tech support
- Ability to work with large & small businesses
The list of benefits goes on for quite a while. You might be thinking there are some controversial bullets above. An MSP will allow employees to stay more productive because if something breaks, it removes the need to bother other employees or executives to fix the issue. When employees work with fewer interruptions, this keeps the business more efficient and more profitable. You aren't paying an employee to wait around while someone has time to fix the issue. The more efficient your employees become, the less of them you need, which drives revenue, profit, and a positive customer experience.
Regulatory agencies can be a real headache to most companies because rules are changing, and no one ever knows all the rules. MSPs typically deal with many other companies in the same vertical. It's much easier for them to stay up to date on what is going on and what needs to be done to meet those requirements. There are also reports an MPS can pull that can prove the system is safe and meets all the requirements necessary. Depending on the service level that the agencies or the company requires, the managed services can be modified to fit into your business.
Among those benefits, most companies don't fully understand all the not-so-popular benefits of having an MSP work with their company. MSP's have lots of other service offerings that are usually not so detailed in their managed plans. Typically, MSPs will have an inventory of computers they recommend for various tasks that remove the need for waiting days for computers to get to their facility. They can pull from their list and begin setting up the computer for the user in a much shorter period, and many will offer same-day or next-day delivery and set up so employees can begin working. They also will have a much better understanding of the requirements needed to run different software, and they can help remove the guessing game of "will a computer work for this job?" For example, if a computer is used for paperwork, it doesn't need to be the most powerful computer out there to get the job done. However, if someone uses a program such as CAD or the Adobe suite, they can recommend and set up the appropriate computer to get the job done. This is invaluable and removes the uncertainty of getting the right computer, knowing they can work right away.
Some MSPs also offer additional services that aren't always computer-related. Some MSPs will have staff in-house that have a variety of skill sets. Some many have programmers allowing them to offer application services. This can include mobile app development, website development, or custom-coded projects. Others may have computer engineers to enable them to build custom one-off machines designed for a specific service, and others will offer cloud consulting services. All of these are added benefits your company may need now or down the road.
Why should your business use an MSP?
If the benefits of an MSP aren't clear yet, let's dive deeper into why having an MPS might be the right decision for you and your company. I will also give you some real-world examples of how MSPs have helped save companies thousands of dollars with what they do. Many MSP services can have a tremendous benefit to all companies. Even if you're not ready to sign up for a Service Contract, there is always the option of hiring one for consulting. Typically a more negligible upfront cost, but having the proper guidance for your business can be invaluable. The managed service offerings can span an extensive range but getting an experts option will always help down the road.
Working with an MSP can help put your mind at rest as a business owner. This is because you know that employees work and use their computers both in the office or at home. When a company has a data breach, its chances of going out of business within 12 months is extremely high. Customers lose faith in the company, and employees are worried about their data being exposed online. As a company, it's your responsibility to keep employee and customer information safe 24/7/365.
While I was working with a company that wouldn't make a move to adopting an MSP, I got a call around noon. Come here now. We have a significant incident, and I need someone right this minute. I got in the car and raced to their facility. It turns out an employee signed in to their personal email to check for a package coming to their house. This was a Phishing email that was disguised to look like a FedEx email. The link brought the employee to a website and immediately began to lock up the computer and work its way over to the server. This company went from having 100+ people working to none in a matter of ten minutes.
By the time I had gotten there, the virus had spread to the server and halted operations immediately. We disconnected the server and thankfully had set up a backup to our facility several months earlier. They wanted off-site backup and nothing else at the time. Because the server was old and we had recommended upgrading it serval times. The system needed to be updated and secured because they were vulnerable to an attack, and many computers were not updated. The client refused to get on a contract to have us keep their entire system up and running and safe. Because the server was so old, it needed to be entirely rebuilt from software to hardware, and it took 24 hours to get the company up and running again. However, even though the servers were up and running, there was still an affected computer. The software running on many machines needed to be reconfigured because it was set up incorrectly initially. It took four days for them to be back to 100% again. There were nearly 100 employees that were all salary based that couldn't work. After everything was fixed, we had met with their accounting firm to access the damages and figure out lost revenue throughout the entire process. They guessed those four days cost them well over $400,000 in damages and lost work. The crazies part is the contract I had pitched them was for $30,000 per year. Luckily that company didn't have any of their clients or employee data on that specific server, but for the cost of $30,000 per year, this entire disaster could have been avoided as I had given them the contract two months prior. We had found tons of vulnerabilities with one of our scans, and it was recommended to start addressing them. To save money, it cost them more than 10x the original proposal, and shortly after, they had signed up. This is a real story, and it was sad and stressful for that company.
One of the many examples of how an MSP could have helped them avoid these problems, and they wouldn't have gotten stuck with a five-figure bill for dozens of hours of emergency work. This would have all been avoided had they signed up several months earlier.
This is one of the many benefits of hiring an MSP and how they can help you avoid costly mistakes. Simply locking that computer down and preventing employees from doing personal tasks on their company computers is one of the many things an MSP can help with.
Managed service providers can also deploy employee monitoring software and recommend software to increase internal productivity, such as a suite of Microsoft products or a program like ActivTrak to make sure employees are working instead of doing personal tasks or leaving their computers open and walking away. Chances are good if your company wishes you had a way to make sure employees are working and they have the necessary tools to be productive, an MSP can help recommend and deploy these options.
What do managed service providers offer?
An MSP can offer various a la cart services for most companies, but the companies that want to benefit the most from their technology partner should inquire about packages. Most managed service providers will have different packages such as bronze, silver, and gold with clear line items outline all the work that will be done month after month. These services typically will include everything from remote support (remoting into a computer in another location and fixing the issue) to going on-site and fixing the issue in person or picking up the machine and bringing it back to their office for further repairs. This may also include services such as Microsoft tools, antivirus, remote monitoring software, discounted project rates, and many other baked-in services. As always, if you bundle and get a monthly contract, it's usually cheaper. MSP's will typically charge per computer. If you have 125 employees but 100 computers, you will most likely be paying for 100 computers for services. Every MSP is going to be different but never hesitate to ask what the monthly packages are and ask how they might benefit your company.
There are also Managed Service Providers who Identify as Managed Security Service Providers. These companies provide many of the same services as a Managed Service Provider; however, they will offer more of a security focus. This could include but not be limited to access control, building monitoring, advanced levels of firewall security, security camera setup, and other services. This is great for when companies need to know their facility is safe and secure around the clock. These MSSP's have substantial experience in security work and can integrate all the technology in the building together.
Who are Managed I.T. Service Providers?
Managed IT service providers are usually the "older brothers" of I.T. companies. The main difference is an MSP will offer more monthly and proactive services to keep you safe and secure, where an I.T. company will be a break-fix type of work style. An MSP will get familiar with the software you are using and may take special training to learn how to set it up so they can be your one-stop for anything technology required. An I.T. company will typically look at computer requirements and may not help you set up and deploy the software to your company. Each company will vary in this, but for the most part, that is the determining factor between an MSP to an I.T. company. Just remember MSP = more proactive, IT = more reactive. If you're thinking about hiring either of them. Ask what they will do for you and how it works. They should be able to explain clearly where they will be a good fit for your business.
Size of business & industries best served by the MSP model
The size of business and industry that needs MSP's the most going to be companies typically between 10 employees up to 1000 employees will be the general sweet spot. Some companies have more than 1000 employees who would prefer to use an MSP, but at that point, it will be more cost-effective to hire internal resources to work on the companies technology. Small businesses can hire an MSP to help them; however, they typically don't have the budget available to hire an MSP. Especially if they are minimal (sub 10 people). A good MSP should work in almost any vertical; however, some specialize in specific areas such as making sure your system meets requirements such as HIPAA or FINRA. If your industry requires you to follow regulators, it's best to ask an MSP you're currently interviewing if they have experience working with that regulator. This can prevent headaches down the road, and you will have the confidence to know they are proactive on any new laws and regulations coming out for your industry.
How does an MSP drive positive change?
Companies change and develop over time. There is no doubt about it. A Managed Service Provider will drive positive change in the technology ecosystem you will build for your company. Most companies use technology because they have to. The few that embrace technology is usually significantly further ahead as far as systems, processes, and automation. Adopting an MSP to work with your company is going to be beneficial in all of the ways above. From developing systems that work symbiotically with technology to automating redundant tasks. Your MSP should be able to allow members of the business a smooth and seamless experience on a day-to-day basis. That's not to say things don't break, but with a proactive MSP, most issues can be addressed long before they become serious and hinder the workflow of employees. Behind able to have your entire staff work at or near 100% efficiency allows for more work to get done with a positive experience to follow.
What happens once you engage an MSP?
Every Managed service provider is going to have its onboarding process when you start to work with them. An onboarding process is going through the entire company and taking note of every piece of technology. This includes computers, monitors, printers, smart tv's servers, and any other device. It's critical to know because it allows the I.T. company to know who to call and when if a manufacturer needs to get involved. Onboarding doesn't just include computers but also the entire staff at a company. This is paramount to ensure the right people have access to the correct information. The last thing any company wants is having its entry-level employees accessing essential documents such as legal contracts or accounting information.
Along with that, if someone is using a specific type of computer, maybe a larger laptop, and it ends up dying or an accident happens, the MSP can order a similar computer that won't impact the user. From there, an MSP will typically deploy their software to all computers and internet-connected devices to allow them remote access. This will allow them to upload any and all software they use to help them have a smooth technology transition. Lastly are recommendations and proactive work. After onboarding is complete, your MSP should return to you after a couple of weeks and recommend any areas that need improvement. This could be upgrading old and outdated computers to upgrading the server. They do this for two reasons. One is to make sure any new computers added to the system can be handed in. Two to make sure there are no emergency-type issues that arise. Staying proactive will reduce the amount of downtime a company will experience and allow them to stay working longer.
What are the challenges of managed service providers?
The biggest challenge of working with an MSP is adopting technology. Large and small businesses that aren't abreast with technology will typically have a bumpy road with their MSP. This is because an MSP wants to make sure that every piece of technology is working the way it's supposed to, and nothing is going to break. When a technology provider makes recommendations about system changes and upgrades, it's important to understand why; it's not because they want to spend your money. Its because they want to limit the potential number of problems that can occur. Being proactive is the easiest way to prevent costly issues from happening and ensure good technology health.
What is the pricing model for managed service providers?
Most MSPs typically fall into two categories. Monthly service plans that clearly define what you will receive every month and the services it covers. A la cart and one-time services. This is more of a break-fix scenario or a project basis. Few MSPs will also offer one-off services such as technology or cloud consulting work. The overwhelming majority of businesses will prefer the monthly service plan as it allows for a tremendous amount of flexibility to do proactive work on a system. There are also many other benefits of a monthly service plan detailed in earlier paragraphs in this blog. Essentially an MSP will sell one of their different plans based on its need and perform those tasks and services each month until the contract is terminated. Contracts will usually vary; however, the standard contract will be a three-month, six-month, or one-year contract.
Along with that, most Managed Service Providers will also have a minimum cancelation request of 30 days to give them time to perform many tasks that need to be finished and remove all their software from the system. Contracts are usually based on a per-machine basis that is connected to the network. Some companies give quantity discounts of discount machines that are rarely in use as there is less chance for something to break.
For companies who charge an A La Carte type pricing, there will always be two documents you should be getting before any work is done. A statement of work with a brief outline of all the work to be done and a proposal. Typically these will go hand in hand, so the buyer knows what they will be getting and what will be done. There is usually no discount given; however, some companies will leverage an A La Carte menu to get their foot in the door to upsell a monthly retainer. This is usually a good thing. Being someone who has been in the I.T. and MSP space for years, it's generally in the customer's best interest to get on a monthly managed plan. The benefits far outweigh the price and headaches that can arise when someone wants to pay monthly.
What is a Managed Service Agreement?
A managed service agreement is the agreement between an MSP and the company purchasing a contract. This agreement will clearly define everything the purchasing company needs to know. What work will be done, what discounts they will receive, and include an essential document called the SLA. An SLA or a Service Level Agreement is the requirements an MSP needs to meet to uphold their end of the contract. This could be everything from response time for work that needs to be done to how long turnaround times should be for fixing computers. Every MSP should have a basic SLA that they will include with their proposal. If, for some reason, an MSP doesn't meet their SLA agreement that there are typically repercussions the MSP needs to take care of. This could be a partial refund, discounted services, or termination of the contract. Either way, it's essential for the business hiring to read through the SLA and understand that the original agreement between the two parties states so both can be held to the same standard.
A well made managed service agreement should include:
· A Service Level Agreement
· Clear Outlining of Monthly Services
· What technology is & Isn't Covered
· Additional Services That Can Be Purchased
Why do they do this?
It's an easy way to ensure that services are rendered, but it also removes finger-pointing. There are times where a business will make it difficult for an MSP to uphold the contract. That information will also be outlined in the MSP. This keeps everyone accountable and a smooth-running operation for everyone involved.
What are the significant software MSPs use?
Most Managed Service Providers will use a variety of software to do their work. This includes a CRM or Customer Relationship Manager, analytics software, phone system, antivirus, and many more.
- The industry staples are
- Microsoft Tools (I.E., Azure, O365, Teams, Yammer, and more)
- IT Glue
- A VoIP Phone System
- Rapid Fire Tools
These tools are tried and true to help Managed Service Providers on top of companies' systems. I will break down what tools MSPs use and what they all do in a future article on this blog. Each software does something different, and when they are combined, it allows MSPs to perform their tasks quickly and efficiently while keeping your systems safe and secure.
In-house I.T. Staff vs. MSP
Having an in-house team is excellent, depending on the size of your company. Most companies can't afford to hire the right qualified person. Challenges come up, such as does the interviewer has the skills necessary to ask the interviewee the right questions. It's another salary to pay, additional benefits to buy, and are they continuing their learning. There are just a few of the common problems with hiring internal I.T. Staff. What about if something goes wrong while that person is on vacation. This is something most companies seem to forget about. For the correct size company, it does make sense, though. Having internal staff working on your system 24/7 to ensure everything is going smoothly is the ultimate goal. This usually only makes sense at companies that have an employee count well into the hundreds.
MSP's are great, but they aren't cheap. Most companies typically charge 75-150 per managed computer. This can get expensive quickly, and most bootstrap startup companies can't afford that. That takes away from the margins they need to grow. Along with that, smaller companies are constantly testing out everything to see what will work, everything from software to hardware and everything in between. This can be difficult for them to manage, let also an MSP. After a company breaks the 5-10 employee mark is when an MSP starts to make sense. At ten employees, your overhead cost will be $1,500 per month, and at that point, it becomes more important to have your employees working efficiently and worrying less about profit margins.
Should you hire an MSP & Is It The Right Decision For Your Business
In conclusion, if you're thinking "is an MSP right for you," chances are good it is. This is the most detailed article available about what an MSP is and how it can help your business. If you're looking for a recommendation or have questions about hiring an MSP, feel free to reach out. We aren't an MSP, but they are our main clients, and we have a deep understanding of what they do and how they can help your business. Chances are good, we work with a partner local to you, and our clients are the best. Send us a message saying you're looking for a recommendation, and we will be happy to help! If you're an MSP struggling with your marketing, send us a message. We can help drive more customers to your business.
September 27, 2021
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