Managed Service Providers: How Do They Benefit Businesses?

Managed Service Providers: How Do They Benefit Businesses?

Patrick Hogan
Managed Service Providers: How Do They Benefit Businesses?

A managed service provider (MSP) is an organization that manages a company’s IT infrastructure and user systems from a remote location. An MSP is a network administrator, security consultant and disaster recovery expert rolled into one. These professionals handle information services, business-to-business integration, supply chain management, and all the tasks clients don’t want to carry out themselves.

MSP Providers Explained 

MSPs streamline a range of business services for clients in various industries, from healthcare to retail. These services include payroll management, human resources, systems operations, compliance and network monitoring. In a recent study, 77 percent of MSPs provided backup and disaster recovery — the most popular service offered by these professionals. Seventy-six percent specialized in remote monitoring and management, and 57 percent provided managed network security. Other popular MSP services include mobile device management, payment processing, and hosted and cloud video surveillance.

MSPs serve an important function. They execute functions that organizations don’t have the time — or the resources — to complete themselves. Fifty-six percent of companies with 100 or more employees who used managed IT services said they chose an MSP to improve the efficiency and reliability of their IT operations. Moreover, 38 percent of companies said enhanced security and compliance was a motivating factor for choosing an MSP. As more organizations worry about IT security — 60 percent of small brands go out of business within six months of a cyber attack, according to one study — it makes sense to choose an MSP that has experience and knowledge in this field.

MSPs date back to the 1990s. Back then, they were called Application Service Providers (ASPs) — companies that hosted and maintained applications for other businesses. Today, MSPs are used by more people than ever before. Research suggests that global managed IT services spending will reach $193 billion by 2019 — double the amount organizations spent on these services in 2014.

How an IT Managed Services Provider Works

Most MSPs operate on a subscription-based model. Clients pay monthly or annual fees for services, and costs vary depending on the MSP. One study suggests that MSPs in the United States charge clients $65 per desktop, on average, for IT support and maintenance. After agreeing on costs, the MSP and the client will come up with a service-level agreement (SLA) — a contract that defines the roles and the responsibilities of each party. The SLA will stipulate factors like performance benchmarks, availability, and uptime.

There are lots of customization options, too. Typically, clients just pay for the services they require — procurement or employee management, for example — instead of expensive packages that include services they don’t need. Communication between the MSP and the client is critical, however. “To fully take advantage of the available managed services options, an IT department must become adept at managing relationships, not only with external providers but also with internal users, who are increasingly being seen as customers,” says Danny Bradbury from CenturyLink, writing for Forbes magazine.

The Benefits of an MSP Managed Service Provider

MSP IT providers optimize various business processes. Clients relinquish control of their operations, but MSPs take care of all the time-consuming and repetitive tasks. This provides clients with more time to focus on other business-related duties. Outsourcing IT services to a third party suits organizations that have a small team of staff or want to drive business growth. They can reduce labor costs by delegating IT services to an MSP, for example.

MSPs save clients money, too. These professionals search for ways to cut spending and improve cost management. Forty-six percent of managed IT service users have reduced IT costs by 25 percent or more; 50 percent have reduced IT costs by between one and 24 percent.

Network security is one of the most popular managed services. MSPs upgrade IT services, manage IT infrastructure and ensure systems aren’t compromised by malicious parties. They often have specialist IT skills, providing the client with peace of mind.

Also, MSPs are familiar with federal and state legislation and PCI compliance standards. This reduces the likelihood of clients receiving hefty fines for non-compliance.

What are Cloud Managed Service Providers?

Cloud managed service providers are a type of MSP that deliver managed IT services via the cloud. These companies centralize network services and applications from a single data center, allowing users to access data quickly. Other benefits include data recovery: Cloud managed service providers store data in the cloud, so users have access to files after a natural disaster or another emergency. More than half of all MSPs now offer cloud managed services to clients.

Businesses are under pressure to provide customers with high-quality IT services. Thirty-six percent of brands want to deliver IT services faster, and 16 percent hope to increase the quality of IT services. Managed IT service providers offer a solution. Clients can deploy services these professionals to better manage their everyday business operations.

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Patrick Hogan

Patrick Hogan

Patrick is a Co-Founder & Chief Executive Officer of Tenfold.