What Are Managed Services?

When a business outsources its Information Technology (or a portion thereof) for a set monthly price. This is probably most commonly seen in an organization that does not need a whole IT person. When a business finds that they need 10-20 hours per week of IT support, then this is the right time to start interviewing Managed Service Providers (MSPs). This does not mean that the solution will not work for an entire IT department. Many large publicly traded businesses outsource their Information Technology to firms like IBM and HP. They find it to be more cost-effective to outsource their IT even when it is dozens of people. 

There are two primary models for IT services:

Break/Fix IT Services

Break/Fix IT compares to appliance repair. When something goes wrong, you call the technician, and they come over and fix the problem. You pay them by the hour and for any parts you need and nothing more. Using this same model, you might also bring in an IT tech to handle upgrades, cybersecurity improvements, or train your employees on new software.

Under this model, you pay only for the services you specifically need. You pay for services you do not have the experience or knowledge to do. You also keep more control over your IT services spend, but your IT budget may be highly unpredictable. If you think about it, there is no incentive for an external technician to permanently fix the problem, mitigate risk, or even give you tips on keeping it from happening again. Break / Fix IT Service is reactive rather than proactive and leaves you treading water, trying to keep everything going.

Managed Services

Managed services are when you hire a third party to assume primary responsibility for your IT infrastructure. You pay a fixed monthly subscription for certain services, tools and technician time. The managed services provider will monitor your network infrastructure, provide a help desk, and do software updates and system maintenance all for a set price.

Although this model can seem more expensive month-to-month, having a fixed cost means you can budget for IT support and avoid service and repair surprises. You receive a proactive approach, and long-term issues are more likely to be fixed the first time. It is in the provider's best interest to keep your network running smoothly and use industry best practices. Today's IT professionals are measured by how little downtime their clients experience and a good managed provider will continuously check your network for minor issues and resolve them before they become major ones.

Break/Fix is often the option of first resort but moving to managed services as your company grows is a long-term solution that will help your company grow.

When Should You Consider Managed Services?

You should consider upgrading from Break/Fix to managed services when:

  • You generally need more than 10 hours of IT assistance in a typical week but cannot afford to hire a full-time IT specialist.
  • You have specific compliance issues that are hard to understand. This is often the case for healthcare companies that fall under HIPAA, but FINRA, SOX, and NIST 800-171 also require a lot of compliance.
  • You have IT systems that contain valuable information and you cannot do your job if you lose access. This goes for lawyers, CPAs, and financial advisors.
  • Your network infrastructure has become more complicated, which happens when your split between on premise and cloud.
  • You have one or more office or locations or have people working remotely.
  • You want to ensure that you have ongoing secure access to the most recent software and technology without doing upgrades that might turn into a problem.
  • You know you need a disaster recovery plan but do not know how to implement one.

If you feel you need a managed services provider, then you will want to take great care of finding the right provider for your business. You need to choose a managed services provider who covers your business' specific needs, has a good reputation, has expertise in cybersecurity, and has a wide range of knowledge.

Disadvantages of Managed Services

Possible Disadvantages of Managed Services:

  • You will not have the same level of control with an outsourced firm that you will with W2 employees.
  • Your primary application(s) will still require a “resident expert,” so Managed Service does not do 100% of what you need.
  • If you hire an employee, they will be your resident expert on all things technical, and you can probably just hand everything to them. Managed service providers are more of an IT department where you need to submit a ticket.
  •  Some Managed Service firms do not have Client Strategy Managers to discuss strategy or needs for the future- you might want to ask questions around this because you are going to need it.
  • Expect some turnover within with the Managed Service firm and the necessary learning curve.

Advantages of Managed Services

1. No PTO or Training Costs

Taking on a dedicated IT staff brings several added costs with it. Your company will be responsible for ensuring that individuals receives adequate training to meet your daily IT needs. Furthermore, hiring a full-time IT staff means you will have to allocate additional funds for paid time off, healthcare, and other employee benefits.

Such costs mount quickly and can instantly overcome the budgetary constraints of many businesses. Outsourcing to an MSP, by contrast, allows you to keep secondary expenses to a minimum. Instead, all training and benefits costs are covered by the MSP.

2. Larger Support Team

Even if your business is large enough to enable hiring a full-time IT staff, that still may not be the best option. Having a single IT person entails certain liabilities. If that individual gets sick, takes a vacation, or has to miss work for any reason, you may find yourself without anybody to meet pressing IT needs.

Hiring an MSP eliminates the kinds of worries that come along with a single
IT staff. Instead of just one person being familiar with your account, multiple qualified individuals will have access to the details about your IT needs. As a result, staffing blackouts will never hinder your day-to-day operations.

3. Broader Experience Range

Having just one dedicated IT staff brings other drawbacks, as well. No matter how intelligent and knowledgeable that person may be, they will naturally have certain limitations in terms of their overall experience. This may leave them without the skills necessary to identify and overcome IT problems that might arise as time goes on.

A managed service provider gives you the benefit of a far broader knowledge base. Not only is the MSP team itself much larger, but they have a wealth of experience from working for other clients. This gives MSPs a considerable advantage when it comes to solving problems — or even heading them off before they get too severe.

4. Better Toolkits

Experience is not the only asset separating an MSP from a small IT department. Just as importantly, MSPs bring with them far more advanced “toolkits.” These tools allow MSPs to tackle the types of problems most likely to arise while also helping them streamline your day-to-day IT operations

5. Variable Workforce

When things are running smoothly, one staff member may be more than enough to meet your IT needs. But in the event of a significant problem — one that can throw your entire organization into chaos — that one IT person might find themselves suddenly overwhelmed. Resolving the issue, in that case, may end up taking far longer than it should.

An MSP, by contrast, offers the best of both worlds by dynamically responding to your IT needs. During slow times, there is no need to pay to keep extra staff on hand. Yet when serious problems occur, an MSP can leverage its larger workforce to put extra hours into getting you back on track.

How to Find the Right Managed Service Provider

Data never sleeps or takes the weekend off, but many organizations simply do not have the resources to hire full-time IT staff to meet increasing IT demands, and that’s where the managed service provider (MSP) option comes into play.

Once the decision has been made to go with an MSP, choosing the right MSP best suited to your individual business needs is the next step. The MSP provides information technology solutions and an excellent MSP can enhance your IT operations with:

  • Security and data back-up
  • Disaster recovery planning
  • Network/server monitoring 
  • IT consulting in an increasingly complex IT world
  • Cloud computing and migration
  • Industry Experience 
  • Certified IT Support 

Security First

The ideal MSP will have expertise in firewall management, encryption, security training, and vulnerability detection and the ability to provide security options such as Virtual Private Networks and remote workstation protection. The MSP should provide data and disaster recovery to get applications back online with minimum downtime in the event of cyber-attack or natural disaster. Security programs should be tailored to suit the individual company requirements in terms of tolerable downtime and budget.

The Excellent MSP Offers a Wide Range of IT Expertise

Expertise is directly proportional to the available human knowledge resources the MSP brings to the table. Is the MSP a few individuals or a comprehensive team? The ideal MSP will be able to evaluate the enterprise’s IT landscape and help them make the best-informed business choices to enhance all operations with the most suitable computing infrastructure. Any MSP with a “one-size-fits-all” approach is an MSP to be avoided.

Cloud migration might be a viable option for some companies but another with a significant investment in on-premise hardware and legacy applications might not be a great candidate. The ideal MSP is a long-term partner with expertise in network architecture, hardware, and software, able to meet present IT demands as well as mapping out the IT future for the company. The excellent MSP measures their success by your success and should exhibit competence in:

  • Hosted Infrastructure
  • Network design and installation
  • Malware/virus removal
  • Internet Compliance monitoring
  • Support Desk
  • Security & Compliance 

How Much Does Managed Services Cost?

Managed Service Provider is a broad term, and so you want to ask a lot of questions to make sure you understand what is involved. Because MSP is used broadly, there are a variety of pricing models, each with their own advantages and disadvantages. Here is a general overview of the most common pricing models:

Monitoring-Only Pricing Model

This option is often the most inexpensive and commonly used if you have in-house IT expertise, which is sensible, considering this is the minimalist approach to managing services. MSPs will monitor some aspects of your IT infrastructure from a remote location. When they discover any issues, they will make them known to you, but providing resolution may cost additional money,
or the problem will be handed off to your team to resolve. The level of  monitoring can vary from watching over in-house equipment to a more advanced support system with incident resolution.

Tiered Pricing Model

This model lets clients decide how many services they want on a more granular level. Different tiers of products are created and associated with defined levels of service. You can buy services in small bundles, and this could be a better fit when you already have some of the pieces in place. The variety of choices is extensive, but can also lead to confusion if you can’t decide how much assistance you need. For the MSP, this tiered pricing model could stall customer acquisition or compel would-be clients to settle for the cheapest option.

A La Carte Pricing Model

This pricing model takes the features of the tiered system and makes them even more extreme. It is all about freedom. These packages are the most customizable, so clients can pay for the specific services that they want to have. The problem with a la carte pricing is that it is challenging to sustain profitability for the MSP in the long run. The plethora of choices is so high that clients often become frustrated or confused by the options and inadvertently design packages that don’t fully meet their needs. From the MSP’s perspective, every client is custom, and this makes their business model challenging and their clients more challenging to support.

Per-Device Pricing Model

Per-Device pricing is a lot simpler than the previously described models. Here, clients pay a flat fee for each device that is supported by the MSP. Devices are billed on a monthly schedule based on the type of device that is managed. This method seems straightforward in how it is priced, and it is easier to create quotes than others. Devices can be added or subtracted as needed, so clients are never paying for more services than they have. The downside for this model is trying to make sure all your devices are covered all of the time. With additions and deletions of devices happening on a regular basis, this can be difficult to keep current for both the client and the MSP. When a user calls for support and their device is not on the supported list, this can cause frustrations for the user.

Per-User Pricing Model

The per-user pricing model is based on the number of users that require managed IT services on the network, measured against the number of devices on the network. This can be a better deal for clients that have employees using multiple devices. Today most users have at least a computer and a phone, and many have a tablet as well. This means that the per-user price can often appear
high, but if you add all of the user’s devices into the pricing, you understand the reason.

Per-user pricing does adjust to account for multiple devices, and the client fee is based on the number of users. The per-user pricing model is the easiest for both the MSP and the client to maintain. The business does not need to communicate every device change that takes place, and the MSP is not concerned about the device, just the user. Per-user pricing is a smart model for
clients who need to be constantly connected to multiple devices. 

Valued-Based (Flat-Fee) Pricing Model

But the pricing model that we recommend is the value-based model. This strategy lets MSPs become the client’s outsourced IT department for one set price per month. Instead of paying for individual services, a flat fee is paid for a total experience involving multiple jobs. More and more MSPs are using this setup for a good reason.