Managed IT Services is the practice of outsourcing day-to-day technology management responsibilities to an expert, third-party organization that specializes in handling these responsibilities. These third-party organizations, known as Managed Service Providers (MSPs), are responsible for the entirety or portions of a business' IT systems as agreed upon in a Service Level Agreement (SLA). Depending on the SLA, Managed Service Providers may provide 24/7 monitoring, issue resolution, reporting, and more. The SLA is a critical component of any outsourcing and technology vendor contract. It clearly defines responsibilities, what services will be provided, the degree they will be offered, metrics for measuring the success of these services, and penalties should the services agreed upon not be met.
The Managed Services Support Model, in accordance with the SLA, allows MSPs to provide the delivery of these services for a flat monthly fee over a period of time. SLA's can also vary greatly case by case. The adoption of Software as a Service (SaaS) technologies, Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) via cloud computing has allowed Managed IT Services to scale at a larger and faster rate than In-House IT or Break-Fix Support.
In the late 1990's, computers quickly became the undisputed darling of business communications. Tech issues were very different 20 years ago and were often remedied by the skill sets of a local "tech geek". Businesses rarely employed specialized, in-house tech support because of the expense. Many relied on an internal resource that knew enough to be dangerous, pitching in when needed. The unfortunate cause and effect of innocently missing or ignoring a simple issue that was triaged instead of diagnosed led to growing complications. Undocumented workarounds only compounded matters and often resulted in a system failure with a difficult to trace root cause.
The evolution of MSPs began in the 1990s with the emergence of application service providers (ASPs), which offered remote application hosting services. ASPs helped pave the way for companies that would provide remote support for customers' IT infrastructure. Managed Service Providers, at this time were primarily focused on the Remote Monitoring & Management (RMM)of servers and networks.
Over time, Managed Service Providers have expanded the scope of their services in a bid to differentiate themselves from other IT support providers. Now, MSPs often remotely support a client's endpoint devices and build offerings around mobile device management (MDM).
At this point in time, the only viable solution for smaller companies was to call a professional who could fix the problem. Outsourcing IT services was not a common practice and was reserved for the deep pockets of Fortune 1000 companies. This era marks the dawn of the Break/Fix IT Service Model. The moniker is literal. If the equipment or system was compromised, an expert had to be called in to fix it and the company was billed each time for services and materials rendered.
The Break-Fix Era
A big hurdle for Managed Services at this time was that modern bandwidth and remote access capabilities were not fully established to facilitate efficient remote management by Managed Service Providers. The Break/Fix Model, as an IT support methodology, fulfilled the client needs by fixing issues after they occurred. If a service or upgrade was needed, they were called and charged for time and materials.
This wasn't the ideal situation, but the break/fix model, by its very nature, didn't exist to provide proactive support. It was born of necessity and therefore became the standard way of managing technology for small and mid size businesses.
The complexity that is inherent in modern network systems simply didn't exist, so proactive support was perceived as an unnecessary insurance policy for less sophisticated network systems. Usually, SMBs had someone on the payroll who understood the existing network enough to tend to smaller admin issues until they became too complex to handle. In a small span of time, the cracks in the foundation of this support model would soon become obvious.
The rapid ascent of technology, sophisticated systems, and large-scale adoption of information technology services meant that the smaller "fix-it-guys" were not able to keep up with the demand for the expert skill sets employed by those who understood complex network systems. Similarly, many businesses simply couldn't adapt or scale operations with technology.
The deeply-engrained mentality of "If it's not broke, don't fix it" would serve as an albatross around the collective neck of SMBs that impeded progress and threatened business continuity.
For business owners, it was difficult to rationalize alternative means of support when it could be weeks or even months without an issue occurring. However, the business impact of lost data and productivity (stemming from one random episode of downtime) was substantial enough to eliminate their budget instantly and that was a sobering reality.
This reactive approach to managing technology became a brutal cycle of wasted time and resources that put businesses in great jeopardy. Suddenly, the once prosperous "fix-it-guy" was also in peril of becoming obsolete as he could not afford the massive investment in labor, specialization, and infrastructure. It was a huge gamble that left many businesses feeling extremely vulnerable and a once prominent player, played.
Managed IT Services: The New Model
Managed IT services emerged as the proactive answer to the reactive break/fix model and created a fundamental shift in how organizations manage their technology. The goal of the Managed IT Service Provider was to keep the vital systems within the environment running efficiently by circumventing issues before they could become a problem. Managed IT Services went a step further by solving the problem of fluctuating, unpredictable IT costs by offering a stable monthly cost determined by a Service Level Agreement which laid out very clear terms. Now businesses could budget for technology that once seemed unattainable.
Modern Managed Services
Technology continues to rapidly advance and change, but the service delivery model of Managed IT Services has stayed the same. Modern organizations of all sizes understand the need to invest in a solid IT Infrastructure and more importantly, the right partner to help manage it.
Today’s Managed IT Services combine every aspect of technology management needed into one fixed price. The ability to streamline operations via virtualization, best-in-class service levels, true round the clock support, incident response and resolution management, vendor management, disaster recovery, and more-for a flat monthly fee-has really helped businesses scale in a way that makes sense.
Managed services take efficiency, speed and agility to the next level. After decades where traditional outsourcing either wasn’t managed properly or client control thwarted some of the key reasons to outsource, managed services enables the focus on outcomes by leveraging the managed service provider’s core competencies and specialization with assurance that the services will be delivered as agreed.
The managed services model is a form of outsourcing that involves contracting with a third party Managed Services Provider, or MSP, to handle one or more of your company’s IT services, such as email, help desk, security, etc. The MSP is tasked with remotely monitoring, updating and managing your IT services as part of a contractual arrangement that typically spans one to three years.
IT drives all modern business operations, but unlike the reactive break/fix support model, Managed Service Providers utilize a diverse range of IT expertise to resolve issues proactively and efficiently. The Managed Services Model works best with a defined scope, budget, and duration. The MSP accepts risk and takes control of managing the delivery model; including governance, processes, and tools.
When done right, Managed IT Service Providers deliver great value to an organization by delivering a holistic and predictable business IT experience that optimizes operations, mitigates risk, and aligns with your business objectives to drive reliable growth and innovation.
The client must define their requirements for the desired outcomes, applicable service levels and key performance indicators Pricing is directly related to this array of outcomes, and a key focus will be the delivery of benefits and outcomes the client wants to achieve. Since the MSP assumes the delivery risk, they are highly motivated to establish productivity control measures to ensure achievement of outcome and service commitments.
By outsourcing the management, operations, and delivery of processes organizations can lower the total cost business. A clear advantage is predictable monthly billing (with guaranteed service levels) for accurate budgeting.
A Service Level Agreement (SLA) is the contract of terms that guarantees the work of the MSP. All contracts and services covered vary, but they traditionally cover performance expectations and metrics like Internet uptime and 24/7 support as well as remediation steps and remuneration should something go wrong. Intelligence from the data and reporting collected will allow a managed service provider to proactively and remotely manage the client IT infrastructure and/or end-user systems successfully and under the terms of the SLA.
The MSP subscription model provides businesses the advantage of predictable IT support costs and thanks to a proactive approach to managing technology, they can prevent IT problems from occurring and disrupting business operations.
A Managed Service Provider often provides its service offering under a service-level agreement (SLA), a contractual arrangement between the MSP and the customer that spells out the performance and quality metrics that will govern the relationship. SLAs may correspond to specific Managed Service Provider pricing formulas. For example, an MSP may offer a range of SLAs to clients, with the customer paying a graduated fee for higher levels of service in a tiered pricing structure.
Under this subscription model, the client has direct oversight of the organization or system being managed whereas the Managed Service Provider (MSP) is responsible for delivering the managed services. Managed Service Providers have access to the latest processes and software to proactively monitor endpoints, keeping systems up-to-date and preventing issues before they happen. The services are also available around the clock, allowing end users to experience a peace of mind when taking time off.
Managed IT Services becomes an essential operating expense to maintain core functionality and operational efficiency rather than incurring additional expenses when resolving issues with break/fix models. MSPs enable stable and efficient business operations through the power of well managed technology and are held accountable by the SLA contact.
Collaborative Support with Existing IT Staff
Managed IT Services often work in concert with IT professionals. In-house tech teams have a nuanced understanding of their mission and products but may only offer broad know-how. This is fine for day-to-day operations but could prove to be problematic when a more specialized skill set is required. In this arrangement, MSPs assume management of the more mundane or routine processes, such as monitoring and maintenance, and provide valuable reporting and performance metrics, which allows the IT professional to achieve greater efficiency and bandwidth to focus on strategic initiatives and more complex projects they didn't have the capacity to accomplish before. Click here for a quick crash course on co-managed IT support.
How Are Managed IT Services Delivered?
At the end of the day, Managed Service Providers must differentiate themselves and their value proposition by reinforcing their commitment to customer service. Regardless of the services provided, the value of going above-and-beyond should always be the primary focus, but they must have standardized, scalable, and repeatable processes to survive.
Imagine it like this; Service delivery is the vascular system of the MSP and the delivery platforms (such as the technology and tools employed) is the heart.
MSPs often use their own data centers for remote monitoring, contract with a hosting center, or increasingly take advantage of the cheap compute available via the major cloud infrastructure providers such as Amazon and Microsoft. They are managing not only their client's on-premises infrastructure, but also those workloads and applications that reside in the cloud.
Here are the 3 primary methods for managed service delivery:
1. Remote Monitoring of your on-premises network and applications.
To do this, MSPs often install a system of electronic “agents” that collect trending data, monitor for problems and report performance back to the MSP’s data center. Many providers also use specialized professional services automation (PSA) and remote monitoring and management (RMM) platforms to manage your services and their own internal operations.
2. Cloud-based infrastructure and application hosting.
This type of hosting can include a turnkey IT solution or services from their own data center or by reselling services of cloud services provider. Typical services include 24/7 support, infrastructure management, operating system administration, and disaster recovery.
3. A mix of both on-premises monitoring and cloud delivery.
In today's global economy, businesses of all sizes rely on different degrees of IT to support operations. Depending upon the size, budget, and general management opinion of varying IT support models, each role within an IT support system or department contributes a multitude of functional responsibilities, technical knowledge, and support.
The impact of insufficient resources for any IT function will cause systemic problems throughout the entire organization. The consequences can be many, but the lack of business continuity, productivity, and compromised security are major problems that a business will face and can't afford to suffer the outcomes.
In order to better understand what kind of IT support model suits your organization's needs best, we’ve broken down the pros and cons three basic models for IT support – each of which employs a different approach to IT management and aims to achieve a more stable, predictable, and efficient process to keep your business running at peak performance.
All business IT operations are handled by a Managed Service Provider (MSP). Outsourcing your IT with an MSP eliminates the challenges of daily IT management, so the company can stay focused on the core functions of their business.
Proactive Monitoring & Maintenance: Managed Services Providers employ a wide range of monitoring tools and automation to gain more insight into the environment, proactively circumvent issues, consistently maintain the technology according to best practices, and proficiently troubleshoot and resolve issues. Hiring an internal IT resource does not bring with it the host of monitoring tools and automation that help more effectively manage your technology.
Coverage: An established managed services provider of a certain size typically has a deep bench of engineers meaning that no individual’s absence has to throw a wrench in your technology support.
Capacity: A managed services provider can ensure that, no matter the issue or project, and the skillset required, you can have the right types of technical resources at your disposal. While an internal IT may struggle with multiple or complex issues, a managed services provider can address complicated or multiple issues with the same level of response and resolution times.
Agility & Scalability: Managed Service Provider support plans can scale up and down with your organization to best suit your changing needs. While doubling an internal IT staff is cumbersome, difficult, costly, and slow, doubling the support from a managed services provider is simple and immediate with no learning curve with expert and agile coverage of staff, offices, or technology. MSPs can scale up marginally as your team grows or scale back with ease if an organization experiences a decrease in size with no gaps in coverage or support.
Talent Acquisition & Subject Matter Expertise: Managed services providers have two key advantages when it comes to recruiting and retaining quality IT talent. First, the right managed services provider should have a deep bench of diversified expertise with demonstrated experience in proficiently assessing the true level of knowledge and capabilities a potential candidate may have.
Second, MSPs can offer more training, development and growth opportunities, and exposure to new technologies. This is an attractive benefit when recruiting and subsequently retaining talented human capital. Moreover, managed services providers can afford to hire subject matter experts across a multitude of specialized technologies as opposed to an IT generalist that may not have experience in certain critical areas. Subject matter expertise is vital to tackle highly complex issues efficiently and at the root-cause. By frequently leveraging expert teams across varied client environments, MSP employees gain a valuable and unique hands-on experience that in-house teams may never be exposed to.
Continuity: The MSP core business of running a professional IT services operation, have the processes, systems, and best practices to ensure that documentation is formally organized and kept up to date. This ensures accurate information is accessible to those who need it to manage the IT environment. If you employ internal IT staff in tandem with MSP support, this provides for IT service continuity and coverage when transitioning between IT personnel.
Best Practices & Planning: Managed Services Providers tend to be very driven by processes, systems, and best practices that provide for better IT governance, accountability, strategy, risk management, and planning. Many MSPs go a step further by providing CIO-level strategic resources to provide a holistic view of how well your technology is evolving and adapting to the changing IT landscape in regard to your business needs.
Accountability & Transparency: MSPs typically provide a variety of client portals, ticketing systems, monitoring tools, service reports, and other valuable resources that makes it easier to quickly assess the performance of your technology, potential risks, and the performance of your IT support itself. In-house teams can be deficient in certain accountability and transparency mechanisms that make it easier to measure the success (and ROI) of IT, the reporting on key performance indicators (KPIs), and the levels of accountability as a result.
Free Up Internal Resources: Typically, Managed services providers act as a single point of contact for your entire organization and handle issues that may arise with outside vendors. One of the biggest challenges internal IT staff face is finding the time to address time-intensive tasks that require very focused effort because of frequent day-to-day interruptive tech issues. A managed services provider can free up internal IT people to work on your highest valued initiatives that enhance how your organization utilizes critical technology tools. Combining internal IT staff, who have a close knowledge of the organization's processes and people, with supplemental managed service support, lends credence to how efficiently critical business applications are being used, what new technologies are available, and allows internal IT staff to focus on strategy instead of battling mundane tasks that stifle productivity.
Costs: In some cases, managed services providers may entail a higher explicit cost than retaining a full-time IT person or department. This is often not the case and other costs should be taken into consideration such as the soft costs and opportunity costs of interruptions in continuity, downtime, productivity loss, etc.
Familiarity: Everyone at the managed services provider may not have the same level of intimate, personal familiarity with your particular environment. Best in class managed services providers compensate for this though by having stellar documentation management processes, monitoring tools & systems, best practices and standard operating procedures.
Accessibility: Your staff may have to acclimate to not being able to walk up and ‘poke’ the IT person. The upshot is that most managed services providers view themselves as customer-service organizations as much as technology companies and so they go out of their way to make themselves accessible over a range of mediums such as live phone support, live chat portals, desktop agents, email, and ticketing systems and portals.
Comfort: Your staff may take longer to build personal comfort levels and camaraderie with the support staff at your managed services provider. Again, many managed services providers, viewing themselves as customer-service organizations first, tech companies second, go out of their way to ensure their staff is personable and understanding and can build friendly relationships with their clients.
The entire IT Department is in-house and is seen as a solution to the problems of control and sometimes hidden or confusing pricing models associated with outsourcing.
Cost: In-house IT people can be cheap in terms of hard cost to employ, at least for entry-level support personnel.
Familiarity: They can develop an intimate familiarity with your particular environment’s setup and nuances.
Accessibility: Other staff can walk up and ‘poke’ in-house IT staff.
Marginal Cost: You can add staff without a direct increase in IT staff or support cost, at least to a certain extent, before additional IT staff resources may be required.
Comfort: Your staff is immersed in company culture and may develop greater comfort or camaraderie with an internal IT person they can see, have lunch with, or chat with around the water cooler.
Control: You can dictate priorities and redirect their efforts and escalate problems them at a moment’s notice and know who is responsible within your staff for certain task management
Coverage: You may sleep easy because you have a full time IT person or department, but between holidays, vacations, illness, injuries, and personal lives, you may not be covered with the right resource when the worst-case scenario, or outage, happens.
Capacity: Internal IT staff may provide rapid response times when issues come in at an orderly pace/one-at-a-time. However, response and resolution times suffer significantly when multiple, simultaneous, or complicated issues occur at once.
Scalability: Technology is a primary factor in regard to how effectively your organization will scale. Hiring a few people may not increase the marginal cost of IT but hiring a lot of additional staff, opening new offices, or expanding the complexity of the tech environment may all necessitate hiring additional IT staff. These fluctuations may not require a full-expansion of IT staff at the moment, but there is really no way to predict the actual need. Difficulties, like downtime and business continuity can occur when downsizing IT staff due to gaps in coverage or skill.
Recruiting: Hiring competent IT staff at a fair market wage is no easy task considering the exceptionally high demand for quality IT talent in the market. It’s a real challenge for the non-technical executive and HR staff to recruit, assess, and decide on appropriate compensation for IT support staff because technology isn't likely their native tongue. This is a dual-edged sword. Failing to properly assess a candidate's true ability and experience makes it difficult to determine a fair market offer. As a result, IT staff are often poorly vetted before hiring and may not possess the level of competency and experience anticipated and can lead to security and operational risks.
Maintaining Expertise: Internal IT staff face a challenging reality when it comes to keeping their skills up to date. When an internal IT resources joins a company, they inherit a technology environment setup by someone else with the purpose of maintaining the environment while making improvements. Technology marches forward at warp speed, so upgrades to the environment, migrations to the cloud, and deploying new technologies are inevitable. This is where troubles become apparent.
Maintaining the existing systems up to this point may have been smooth, but what happens when the ability to proficiently deploy the new technologies and upgrades isn't up to par? The knowledge gap that develops is a big reason why, despite having internal IT staff, many companies are forced to outsource big projects and initiatives to managed IT service providers or consultants with the requisite expertise and experience. Very few SMBs have the budget or need for a robust internal IT department that can bridge the gaps.
Continuity: IT people crave getting their hands on new technologies for sport and for the advancement of their career. Unfortunately, working as internal IT, as highlighted above, doesn’t afford much of those opportunities. This stagnation leads to a lot of turnover in internal IT departments. Aside from the continual headache and challenges of recruiting for the role again and again, a far scarier challenge arises with the lack of continuity in system documentation and knowledge about the environment. Between these information and support gaps lies real risks and operational challenges can crop up quickly.
The break/fix support model refers to the fee-for-service method of providing IT services to businesses. As the name implies, IT services are performed when needed and the customer is then billed only for the time, materials, or extra labor required to accomplish the job.
Monthly Service Fees and Contracts: Some businesses don’t require robust IT support and can get by on the bare minimum without budgeting monthly IT costs or committing to a contact with a Managed Service Provider. However, if your business tends to rely on technology on a day to day basis, the Break-Fix can pose real threats to productivity and continuity.
Control: Some businesses prefer the Break-Fix model because of the perceived control they have over deciding when they need to explore their IT needs or how their needs will be addressed. In reality, businesses have very little control over issue resolution, what services were performed, and what they are paying for.
No Incentivized Alignment: All-Inclusive Managed Service Providers charge a flat monthly fee for a proactive approach to managing IT. Break/Fix is reactive in nature and a pay-as-you-go pricing model. Where the MSP prepares and takes the necessary actions to prevent issues from occurring or becoming bigger fires to extinguish, the Break/Fix approach does not. Providing proactive and efficient support means less time and company resources invested in resolving issues that directly impact their productivity and profitability. Reacting to issues as they occur fails to establish any predictable IT outcomes or budgeting.
The Break/Fix model doesn’t create an incentive structure, nor does it compensate the service provider in a way that allows them to take preventative or proactive measures, at their own discretion, to achieve the two desired outcomes of reducing the amount of issues and reducing the time it takes to resolve them. The Break/Fix vendor makes money every time you call and the more time they spend fixing problems, the more they make which is in opposition to the needs of the client.
Capacity: Response and resolution times may become very poor when confronted with multiple, simultaneous, or complicated issues at once.
Maintaining Expertise: Managed Service Providers stay on top of technology-investing time and money vetting what’s new and what works, and often make experienced recommendations about software, products, and applications that best suit your business, budget, and strategy. MSPs are accountable to keep their staff certified in the latest solutions, patches and backups aren’t forgotten, security is managed, and everything is tested and documented on an ongoing basis.
Lack of Strategy: No formal consulting, strategy, planning, or budgeting process means three is no expert guidance to help align technology with the needs and direction of the business; Subsequently, there is a fundamental lack of clarity in the planning or budgeting process.
Unpredictable Costs: There is no line of sight into how much the issue will cost and unpredictable fees can quickly destroy your budget. An increase in down time translates into lost business and revenue. IT contractors charge on an hourly billing basis and aren’t focused on ensuring your networks are stable in the long run.
Typically, they fix the immediate problem and rarely offer any preventative measures to avoid these problems from occurring again. There is no predictability for any billable hours because there is no way to predict when an issue will occur or what level of complexity the issue will be. In the short term, organizations may save a few dollars, however, when systems or networks are down your organization is losing money…and the longer the systems are down, the more money your organization loses.
Not Scalable: Ad-hoc vendors’ lack of strategic planning often leads to challenges down the road when it’s time for the client to scale their operations and technology. Also, many ad-hoc vendors are small, at this point, and therefore the service provider often struggles to keep up with clients’ service expectations as the client’s businesses grows.
Continuity: Lack of continuity in system documentation, reporting, and knowledge about the environment will create information gaps that quickly cause operational challenges and frustrations that become increasingly difficult to resolve.
Total Cost: Managed IT Service Support may cost more in explicit, hard costs than ad-hoc, however, once you start adding in soft costs (such as the useful life of IT assets, redundant or wasted investments from poor planning, the greater obligations on in-house staff’s time, lost productivity, lost revenue, etc.) it’s no longer a viable case that Managed Services cost more than Ad hoc support.
The IT management responsibilities are divided between in-house IT staff and outsourced IT support.
This approach typically allows an organization to maintain a centralized approach to IT governance, while relying on the experts to handle the functions considered out of reach for an in-house provider. A hybrid IT model requires internal and external IT professionals to support the business capabilities in a collaborative manner.
You can use your managed services provider to supplement your IT staff. For example, if you have a great hands-on person who does the day-to-day troubleshooting for your staff, you can bring in extra support for security and backup, general maintenance like patch management, or strategic decisions and planning.
Interested in learning more? Here are 3 Good Reasons to consider Co-Managed IT Services.
MSPs have the advantage of offering turnkey solutions that are tailored to your needs, mitigate significant business challenges and security risk across the organization, and scale with your business as you grow.
Mutually incentivized alignment: All-Inclusive Managed Service Providers charge a flat monthly fee for a proactive approach to managing IT. This makes sense to a business owner who simply wants a stable and high-performance IT experience with predictable pricing. The MSP prepares and takes the necessary actions to prevent issues from occurring or becoming bigger fires to extinguish. Providing holistic, proactive, and efficient support for a monthly, flat-fee means less time and company resources invested into resolving issues that directly impact their own productivity and profitability.
Proactive Monitoring & Maintenance: Managed Services Providers employ a range of monitoring tools and automation to gain more insight into the environment, proactively head off issues, consistently maintain the technology according to best practices, and proficiently troubleshoot and resolve issues. Hiring an internal IT resource does not bring with it the host of monitoring tools and automation that help more effectively manage your technology.
Coverage: An established managed services provider of a certain size typically has a deep bench of engineers meaning that no individual’s absence has to throw a wrench in your technology support.
Capacity: A managed services provider can ensure that, no matter the issue or project, and the skillset required, you can have the right types of technical resources at your disposal. While an internal IT may struggle with multiple or complex issues, a managed services provider can address complicated or multiple issues with the same level of response and resolution times.
Agility & Scalability: Managed services providers and their support plans can scale up and down with your organization and your changing needs. While doubling an internal IT staff is cumbersome, difficult, costly, and slow, doubling the support from a managed services provider is simple and immediate and there is no learning curve as the managed services provider covers more of your staff, offices, or technology. Also, the managed services plan can scale up marginally as your team grows while hiring IT people typically requires large increases in support capacity at a time since it’s very hard to get competent part-time IT people with how tight the labor market is for good IT people.
It's important to remember that technology architectures are a huge, upfront capital investment with no real protection from quickly becoming redundant. Also, if your organization experiences a decrease in size, scaling back coverage from a managed services provider is typically as simple as a billing change as opposed to figuring out how and when to terminate an internal IT resource and worrying about the implications such as lost knowledge, gaps in support, etc...
Talent Acquisition & Subject Matter Expertise: Managed services providers have two key advantages when it comes to recruiting, and retaining, great IT people as opposed to companies hiring internal IT staff
Managed services provider typically has enough broad expertise and experience to be able to proficiently assess candidates for their true level of knowledge and capabilities. Therefore, they’re more likely to hire the right people for the right roles.
Managed services providers can offer more training, development, exposure to new technologies, and other growth opportunities. This also helps them recruit and retain some of the best talent. Moreover, managed services providers can afford to hire subject matter experts on various aspects of technology as opposed to broad generalists in IT. Having knowledge in many general aspects of IT is good, but subject matter expertise is critical to tackle the most complex issues efficiently, at the root-cause, and ensure smooth transitions to new technologies.
Since managed services providers can leverage their experts across many client environments, they can afford the investment in expert human capital and their continued development of skill-sets and experience. That upgrade, migration, or new technology project that’s giving you a lot of worry? The managed services provider has performed the same (or a very similar) project dozens of times in the past few months and that’s what some of their team members do all day every day.
Continuity: Managed services providers, being in the core business of running a professional IT services operation, have the processes, systems, and best practices to ensure that documentation is formally organized and kept up to date. This ensures that information is accessible to those who need it to manage the IT environment, and if you still employ internal IT staff also, provides for IT service continuity when you’re transitioning between IT personnel.
Best Practices & Planning: Managed services provider tend to be very driven by processes, systems, and best practices that provide for better IT governance, accountability, strategy, risk management, and planning. Many Managed Services Providers even provide CIO-level strategic resources to provide a holistic level view of your technology and ensure that your technology is evolving and adapting to the changing technology landscape and your business needs.
Accountability & Transparency: Managed services providers typically provide range of client portals, ticketing systems, monitoring tools, service reports, and other information that makes it easier to quickly overview the performance of your technology, potential risks, and the performance of your IT support itself. Internal IT personnel and even full IT departments often lack the accountability and transparency mechanisms such as those highlighted above that make it easier to measure the success of IT, report on KPI’s, and hold them accountable. It’s no secret that people often wonder how the internal IT person spends their time. Are they hiding in the server room playing candy crush? On top of that, terminating a managed services provider is a much easier and less trepidations task than letting go of internal IT staff if your expectations are not being met.
Free Up Internal Resources: Typically, Managed services providers allow your team to bring all of their issues to them without the need for a gatekeeper to screen the issue and liaison with the outside vendor. Also, one of the biggest challenges internal IT staff can face is finding the time to do time-intensive tasks or ones that require very focused efforts as they’re constantly being interrupted with people’s day to day, and often mundane or trivial issues.
Choosing the right managed services provider transforms your business through well-managed technology.
Control & Trust: When a company outsources their information technology, it is placing its trust in a third-party - relying on their expertise, their resources, and their services. This can be a difficult hurdle for both parties since Managed Service Providers need an all-access pass to gain an intimate understanding of the network to properly manage the environment.
Familiarity & Accessibility: A Managed Service Provider doesn’t know your business like you and your employees do. However, an MSP can compensate for this by bringing industry knowledge and expertise, detailed documentation management processes, monitoring tools and systems, and best practices that have been learned by working with many small businesses that are similar to yours.
It can be challenging for your staff to acclimate to not having quick and familiar access when engaging IT support, but the upside is that most managed services providers view themselves as customer-service organizations as much as technology companies and ensure rapid accessibility via multiple communication channels like live phone support, live chat portals, desktop agents, email, and ticketing systems and portals.
Costs: In some cases, managed services providers may entail a higher explicit cost than retaining a full-time IT person or department. This is often not the case and other costs should be taken into consideration such as the soft costs and opportunity costs of interruptions in continuity, downtime, productivity loss, etc. Every time you increase the size of your environment or staff, the cost of your managed services provider’s services is likely to increase as well. An in-house staff has the potential to absorb some marginal additions without needing to hire more full-time IT staff.
Compatibility and Culture. Compatibility of IT services is a concern especially if a company is keeping some of the IT in-house and outsourcing part of the IT management responsibilities. Your staff may take longer to build personal comfort levels with the support staff at your managed services provider, but it’s important to keep in mind that good managed service providers are service driven and ensure that their staff is personable and capable of building strong partnerships.
As many SMBs shift away from break/fix to managed IT services, pricing models have grown increasingly varied and complex in recent years. Currently, there is no standard for pricing managed IT services, pricing can vary dramatically, and each MSP has a unique set of services and pricing models. In light of this, Managed IT Services is never a one-size-fits-all scenario. Choosing the right Managed Service Provider takes time; the best candidate will understand your challenges, your mission, and help align technology with your business objectives both now, and in the future. Here are some of the common pricing models and considerations for each when searching for Managed IT Services.
Per-Device Pricing Model
Users pay a flat fee for each device supported by a Managed Service Provider. Prices vary based on the type of device per network managed. (e.g., router, firewall, switch, server, PC/Laptop desktop, mobile device, etc.)
Simple and clear Pricing Model that is easy to understand.
Typically, the easiest model to price quickly
Easy to adjust for adds/changes of devices during an agreement.
Difficult to get the pricing right.
Difficult to predict future needs.
Changes in your network or server environment may suddenly increase the fees / charges associated with managed devices.
Multiple user devices can mean the costs for the client can become excessive.
A company-wide rollout of mobile devices will skyrocket pricing.
Commodity-driven style of pricing often adopted by low-touch MSPs
Does not address multiple users on the same device, so the user support costs could be much higher.
Fragmented, not holistic view of network performance and management.
MSPs offer different bundled packages, or tiered services that increase in price and level of services. These tiers are structured according to cost and resources.
For example, a "Bronze" package may include basic remote support, virus removal, and patch management for a lower standardized fee. The “Silver” package may include on-site support and other functionality for a higher price point, and the "Gold" package will offer services such as Rapid-Response, Back up and Disaster Recovery etc., outside of business hours.
Clients can choose a tier that aligns with their unique needs and suits their budget.
Typically provides clarity on pricing mechanics.
Can change support offering based on customer need(s).
The preset packages may not cover all needs of each specific client’s situation
Difficult to understand the discrepancies of services needed vs. what’s included in each package.
Lowest cost package but isn’t enough to meet most client’s needs
Leads to a lot of ad-hoc time, materials services, and unpredictable billing.
Per-user pricing has become an increasingly common model among MSPs because they can charge based on the number of users of the services provided. Per-user pricing can be based on a maximum number of concurrent users, or it can be based on the total number of users within the customer organization that can work with the service. The per-user pricing model is very similar to the per-device pricing structure. The core difference is that an MSP sets fixed pricing per user, no matter how many machines they use. This model can be a good option if device utilization is high or for growing SMBs that require 24/7 user support. Per-user pricing can be a challenge for MSPs that must be able to scale their own support services to properly serve the needs of their rapidly growing clients. Per-User pricing is often an advantageous choice for SMBs with employees using multiple devices thanks to its flexibility, constant service delivery, and easy to understand pricing and SLA.
Very clear and easy to plan and budget.
Easy to understand pricing and Service Level Agreement (SLA)
Easy to predict impact on MSP pricing of changes in the business.
Special consideration/accommodations for part-time or low tech-use staff needs to be clarified
Can cause pricing variations in seasonal businesses
Does the agreement they require all users be counted?
How do they count users? Does it pull directly from active directory?
How will it scale for rapidly growing entities? The answer of how growth impacts per-user-pricing must be clearly defined.
Are there additional charges for devices, locations, etc. or is it strictly a per user charge?
Is the price all-inclusive or are some other services itemized in a different fashion, such as per device, location etc.
Monitoring-Only Pricing Model
This model is a minimal offering that is cost-effective because the agreement sees MSPs remotely monitor specific aspects of a client’s IT infrastructure. Clients are alerted of issues, but depending on the agreement, extra fees may be incurred to resolve the issues. This scenario is common when working in conjunction with an In-House IT department.
Fairly easy to manage.
An option for companies with internal IT that want to outsource smaller tasks.
May provide opportunity for project work and outsourced support.
Difficult to provide differentiation.
Remote Monitoring and Management (RMM) is more commoditizedRemote and onsite support are charged at an additional hourly rate.
This pricing model can offer a perceived flexibility and customization for various client solutions, but this flexibility comes with a stern warning; a la carte pricing is the most difficult to sustain. Frequently, clients become flooded with choices that they may or may not fully understand, resulting in poorly designed packages that simply don't align with their business needs.
Structuring the Service Level Agreement is also a very complicated and time consuming process which leads to a longer and confusing process for the client.
Standardization across systems and applications is crucial, and while many companies may only need a few smaller services to supplement existing IT functionality, this creates problems with coverage gaps and doesn't align with the client’s business objectives.
Value-Based Pricing, often referred to as "all you can eat" or “cake” pricing, provides coverage for all services instead of individual components (as in each separate ingredient that goes into making a cake) and streamlines the IT managed experience for a monthly flat-fee.
The Value-Based model is more complex, varies from client to client, and requires determining an "all-in-seat-price" per user by the Managed Service Provider. The Process is longer because this pricing model can be the most challenging to do correctly. Establishing value based pricing requires gaining visibility into an organization through a discovery process. This can be complicated for various reasons, but essential in order to calculate the total cost of ownership of a function and the ROI of the service.
For instance, indirect costs (soft cost) such as downtime, loss of use, loss of productivity and loss of revenue, significantly impact these calculations and can be very hard to determine if a potential client isn't willing to disclose this type of information. It's also common that they may not know all the areas of their company impacted by indirect costs.
Costs for individual services aren't disclosed and are presented as one single cost. The sales cycle may be longer because the onus of responsibility is on the business owner to trust the MSPs ability to deliver ongoing service and advocate in their best interest. When done right, the client leverages all the expert specialization, functionality, sustainability, and agility of a robust Enterprise IT Department for one predictable cost per the SLA.
Let's face it, problems arise, and when they do, clients expect quick resolution. MSPs want the same. Spending time and resources on a problem reduces their profitability directly since it’s usually flat, all-inclusive monthly fee. This creates a working structure that incentivizes the MSP, the subject matter experts, to proactively take actions to prevent issues from occurring or becoming bigger fires.
Mutually Incentivized Alignment
Easiest type of model for a customer to budget.
More flexible in consideration to specific client nuances into pricing
Often includes vCIO strategic consulting
Provides the most competitive differentiation for MSPs because it is value-driven
When standardized, the MSP has full control of the IT environment, driving efficiency, productivity, and customer satisfaction.
More difficult to price up front.
Requires gaining visibility into the customer organization
Value can be "sold" but must be proved though process
Lack of transparency in the pricing model since there isn't an itemization of services.
Longer sales cycle
The “all-in” offering must be clearly defined to detail the value they are receiving for the price.
There is a lot to consider...
Small and Medium Business owners and their IT departments quickly become overwhelmed with day to day IT challenges that not only make it difficult to be in two places at once but make it impossible to focus on the core responsibilities and growth strategies for which they were hired. Realizing the epic cost of downtime and lost productivity, businesses turn to Managed Service Providers to help mitigate these challenges and provide high-performance, expert IT managed service support.
According research found in CompTIA’s 2016 Buying Guide for Managed Services, 64 percent of organizations are using some form of managed services. Even though Managed IT services have been around for a while, businesses are increasingly engaging MSPs to support network monitoring and security, cloud services, email hosting, storage, backup and recovery, and more. Traditionally, streamlining services for cost savings was the primary motivation, but now customers seek additional benefits.
The choice you make should be a well-informed one. You are the expert in knowing what your business requires and when it comes to the right fit for IT support, there are many options available to help you determine the perfect alignment. You should feel confident in the current management of your technology. Asking the right questions so you can establish trust in your partnership is key. If you are considering Managed IT Services, reach out to Framework Communications to discover how we help transform businesses like yours through the power well-managed technology.
Need a little help determining if Managed IT Services are right for you? Click here for a quick look at why businesses look to Managed Service Providers (MSPs) to support their business IT.
Sure, managed service providers are often measured by their ability to proactively streamline business technology and reduce costs, but what is the real value proposition that differentiates one MSP from the next? For example, can your MSP deliver tangible evidence that you have made the right choice? You know your business, the people, and the potential. Having the right conversation with the right Managed Service Provider means digging in and asking the right questions. Only then can you arrive at a fully informed decision about how valuable their support will be.
We have compiled our top questions to ask when embarking on this journey. If you're hungry for more answers, here is our expanded list of frequently asked questions.
Why: With over 90% of managed services providers having less than 10 employees total, this could mean they only have a handful of technical staff members, let alone full-time staff members. How do they provide specialized knowledge on so many various aspects of technology and how can they provide coverage 24x7 with so few technical people on staff?
Why: Since many managed services providers are mom and pop type of businesses, asking about the structure can be indicative of how mature their systems and processes actually are with the indication being how clearly they’re able to detail their functional organizational structure.
Why: Good managed services providers will have standard operating procedures, documentation systems, knowledge-base, monitoring tools, and rock-solid best practices that helps ensure that when there is turnover, the impact to the client isn't noticed or is negligible. Even in the absence of turnover, all these aspects need to be up to par with any managed services provider and particularly the smaller (average) sized managed services providers to minimize the impact on service levels when employees have time off, are ill, injured, or otherwise out for personal reasons.
Since many managed services providers are mom and pop operations, they often have a very short tenure providing these services and are still going through their own learning curve of establishing their systems, their processes & SOPs, best practices, etc...
Are you okay with being their guinea pig? Also, many other types of technology firms are entering the managed services space, such as internet service providers and managed print services providers. These may be well-established, sizable organizations in their core product set but their managed services operations are in the infantile stage of learning the managed services business.
Why: Most managed services providers are under 10 employees and so they often have a few dozen, or even less, true managed services clients.
Their answer to this question will contain hints to their true level of experience, tenure providing managed services, client retention, financial stability and viability, etc..
Someone with under 20 clients may be out of business quickly if they lose a few key clients.
Why: Most businesses, and particularly small businesses, don’t have the time, inclination, or aptitude to engage with, manage, and coordinate multiple, let alone many technology vendors. Many prefer to get the lion-share of their core technology services from one firm to provide simplicity, a single-point-of-contact, and to eliminate the blame-game possibility.
To take advantage of those benefits though, your managed services provider has to offer diverse solutions, in-house, and have core competency in several diverse lines of business such as: cloud services, VoIP/telephony, internet service, cyber-security, disaster recovery, etc.. While many managed services providers say they can offer all these services, too often they’re just brokering someone else’s solution and don’t have real ability to manage and control it, negating many of the benefits of the single-point-of-contact vendor.
Why: If they’ve never worked with a firm using technology like yours, or primarily serve enterprises and you’re a small business (or vice-versa) or most of their clients are in another geography, it doesn’t flat-out mean that they cannot service your organization well.
However, relevant experience should be given consideration and when there’s a lack of experience, a thorough discussion should detail how they envision covering that potential experience gap.
Why: Certifications demonstrate a certain level of expertise, and while certifications alone do not make someone a true subject matter expert on their own or indicate deep experience, it is still telling how many certifications an organization possesses. The reason certifications are important is they demonstrate a level of commitment and investment in developing expertise in a given area and also, certain levels and quantities of certifications, grant your provider greater access to resources and support from technology manufacturers/developers.
Why: More and more work is being performed on mobile devices, so you want your Managed services provider to have the right tools and expertise to address user need regardless of the device.
Why: Cyber threats are increasing at alarming rates, and it’s not just big name fortune 500’s being targeted. Even the smallest of businesses are experience increasing cyber threats that can be extremely harmful to their business and even put them out of business.
Ensure that your provider has a rich array of cyber-security solutions and experience to complement their managed services program.
Why: The SLA response time is the worst-case contractual guaranteed response time. The managed services provider’s average response time should be much, much better than their SLA maximum guaranteed response.
A poor response time will inhibit productivity, cause employees to waste their own time trying to address issues, undermine the staff’s faith in the provider and willingness to work with them, and completely degrades the value and trust of the partnership as a whole.
Why: Too many managed services providers operate with no transparency, no reporting, and a ‘just trust us’ mentality. That’s unfair to the clients and they deserve and need insight into the key performance indicators regarding support delivery, services levels, network performance and management.
A well run organization measures all aspects of their business and their IT should definitely not be the exception. If it’s not being measured, how do you even know it’s being delivered, meeting your expectations, and improving or maintaining satisfactory levels?
Why: Changing IT vendors is a trepidations decision for many since it involves changing who managed critical business systems. Unfortunately, managed services is not something you can touch, test drive, or trial easily. Also, since managed services involves a lot of upfront work on new clients, most managed services providers only offer 1 to 5 year agreements.
Entering a long-term agreement requires trust and transparency.
Why: Most managed services providers’ agreements require 50-100% of the remaining contract value be paid up front for early termination. There are of course, typically, some types of terms that allow a client to terminate ‘for cause’ without termination fees if the provider is in breach of their SLA or other agreement terms.
However, it takes an extreme failure, and lack of corrective action, before a client can leverage these for cause termination clauses usually. Even when client feel they’re terminating for very just causes, those often don’t meet the actual legal thresholds laid out in the provider’s agreement making it a very uphill battle to end the agreement without early termination fees.
Why: We have a helpful piece here: INSERT LINK about the different pricing models and typical costs, pros and cons of each model.
With the pros and cons of each pricing model in mind, is that model a good fit for your organization? Is their pricing model clearly articulated? Have they clearly laid out how the pricing scales up and down should the business’s size, technology, or needs change?
Why: What if your service needs change drastically? Maybe you come to a point where you want to in-house some IT support responsibilities, maybe you merge with a firm that has an IT person, or maybe you find out that you never really need onsite support but are paying for it as part of the plan, or what if you can no longer support the cost of the service plan as it stands today.
These are some common examples, but there are many others that may necessitate adjustments to the managed services plan. How flexible will the provider be? Will they let you scale services levels (and costs) down in addition to up? Will they just point to contracts based on your need months and years ago? Will they make you agree to a new multi-year engagement? Better to find these things out upfront then when the need for changes arise.
Why: Many managed services simply don’t have a process for this, despite frequently indicating that these services are provided as part of their plans with a CIO/CTO level resource.
If they have no process or systems in place to deliver on this type of service, how are these services delivered? In many cases, they are not, are delivered in a very reactive, haphazard fashion, or it’s via a very sales-focused engagement.
It’s worth drilling in here to get a better handle on what you can actually expect and whether that’s what you’re truly looking for.
“A predictable, affordable, and scalable technology experience isn’t enough anymore. We know what it takes to help organizations disrupt industries with powerful technology and security measures before technology disruptions take them out. Our specialized focus is helping organizations win. Period. We keep the recipe simple; We use technology, common sense, and a ridiculous amount of collaboration and hard work. We disrupt to deliver, and thanks to the dedication of our teams, nobody does it better.”
John Fakhoury CEO of Framework IT
“In a place as competitive as the Chicago metro area, companies must find a way to stand out. These companies demonstrated their excellence not only by providing top-notch services but also by exemplifying the highest standard of customer service. We are incredibly excited to have them onboard with Clutch.”
Sara Philibotte Clutch
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