Managed service providers (MSPs) are in the limelight for helping businesses cope with the challenges of the pandemic over the past year and a half. With the transition to remote work putting many small and medium-sized companies in a tight spot, MSPs worked around the clock to make this transition as smooth as possible for their clients.
Managed service providers either take over their clients’ entire IT operations or select IT or business functions, and oversee their smooth functioning on a day-to-day basis in exchange for a fee. Companies, for their part, turn to managed service providers to manage functions they aren’t staffed to support. Many small businesses, like doctor’s offices and local gyms, for example, have no IT staff on the payroll.
What Are Managed Services?
A managed service is any business function that an MSP manages and executes for its customers. It is often a non-revenue generating function of an organization that runs in the background, such as workforce management, payroll, IT management, etc.
But more often than not, when we talk about managed services, we usually mean managed IT services. After all, IT infrastructure is the backbone of any organization, big or small. Administering an internal IT environment is not only costly but also a time-consuming job. It involves finding the right talent and regularly investing in tools and services to deliver and manage IT services.
MSPs remotely monitor and manage a company’s IT infrastructure, usually for a monthly subscription fee. Depending on the customer’s requirements, managed service providers can either oversee a single IT function, like network monitoring or cybersecurity, or oversee the entire IT environment. Think hardware, software, networks, communications systems, cybersecurity, help desk, problem resolution and even strategic planning for the future.
What Are the Benefits of Managed Services?
Modern and updated IT infrastructures ensure superior connectivity, higher productivity and top-notch security. Here are some of the benefits of managed IT services:
Improved Efficiencies: Managed service providers help their customers improve business efficiency by ensuring that their systems stay up and running. Not having to worry about keeping the IT systems functioning, businesses can channel their resources toward their core competencies that drive revenue growth. More uptime translates to topline growth.
Scalability: Another advantage of managed IT services is scalability. Small and medium-sized businesses often grow faster than larger companies and require the flexibility to scale as they expand. Managed service providers make scaling their IT infrastructure up or down a breeze. They manage IT using the latest tools and technologies and leverage cloud services to expand capacity as needed.
Reduced Stress: IT infrastructure management involves executing a number of technical tasks. It can include endpoint management (desktops, laptops, servers), network management, compliance, help desk, repairs, routine maintenance, etc. Businesses would have to expend considerable resources to manage all of this themselves.
Managed service providers have qualified staff and sophisticated tools to look after the upkeep of their customers’ infrastructure at all times of the day. It enables them to take preventive measures and fix potential issues before they snowball into a crisis.
Having an internal IT team means working with a bunch of IT vendors. However, vendor management can become an expensive and cumbersome task. Service providers manage these tasks for their clients, freeing up plenty of time and resources for those clients to manage their businesses.
Better Cybersecurity: Cyberattacks are dominating the headlines globally. Increasingly complex and sophisticated cyberthreats follow close on the heels of technological advancements and cost businesses more than just money. It costs them their reputation and the trust of their customers.
When it comes to cybersecurity, prevention is better than cure. Managed service providers have the technology and the capability to monitor an organization’s IT infrastructure 24/7, 365 days a year, and take preventive measures that nip security problems in the bud.
Global spending on information security, risk management technology and services is expected to grow 12.4% to reach $150.4 billion in 2021, according to a report from Gartner.
Since service providers cannot neutralize every single threat out there, businesses must still be vigilant to avoid falling prey to phishing and malware attacks. A managed IT services provider will keep an eye out for suspicious activity and immediately notify the stakeholders to take corrective action.
Why Are Managed Services Important?
Even with the pandemic seemingly abating in various parts of the world, more and more companies are opting to partner with managed service providers. The advantage is a myriad of cost and operational efficiencies such as:
- Cost Visibility: Managed service providers typically follow a subscription business model and charge a fixed monthly fee. A fixed operational cost makes it easy for customers to plan budgets and make financial forecasts for their business.
- Lower Operational Cost: Hiring an internal IT team equates to higher overhead costs like salaries, benefits, office space, IT management tools and much more. Organizations can reduce these overhead costs with managed service providers in tow.
- Higher ROI: Managed service providers give organizations more bang for their buck since they can offer more services, and potentially higher quality services, for the same price it takes to put together a basic in-house IT team.
- Faster and Proactive Response: For a fixed cost, service providers look after a company’s IT infrastructure needs round the clock. They also give their customers access to a dedicated service desk that accepts and resolves queries at all times of the day. Due to continuous monitoring, managed service providers can often fix IT incidents before they become a major problem. It means fewer and shorter downtime instances for their clients.
- Enhanced Competitiveness: Managed service providers are quick to adopt the latest improvements in technology. It gives their customers an edge over their competitors since they face less downtime, more productive hours and can accomplish more in less time.
Furthermore, service providers can help their customers adopt and safely transition to newer technologies.
Managed Services vs. Similar Models
Managed services may be confused or used interchangeably with other similar business models. Let’s demystify the confusion in this section.
What Is the Difference Between Managed Services and Outsourcing?
Often, people use the term managed IT services and outsourced IT services interchangeably. The confusion stems from the broadly similar structure of these business arrangements. In both cases, a company delegates some of its business or IT tasks to a third-party team to improve efficiency and increase productivity.
However, there is a subtle difference. An outsourcing company will typically take up only a part of an IT task and complete it by following a specific set of instructions. This task is usually time-bound and the outsourcing company gets paid for its services for that period. A managed service provider, on the other hand, usually looks after a company’s complete IT infrastructure, taking all strategic decisions and actively making recommendations to the client to improve business operations. They also charge a monthly subscription fee.
What Is the Difference Between Managed Services and Staff Augmentation?
Organizations often face the need to hire specialists or consultants to take projects ahead. The hiring of additional staff to meet temporary work requirements is called staff augmentation. People hired for specific tasks get paid by the hour for their services and leave after completing the project. When an organization partners with an IT services provider, it typically hires the entire team.
What Is the Difference Between Managed Services and Professional Services?
Managed service providers look after the day-to-day running of an organization’s IT needs. Professional services, on the other hand, help solve specific IT challenges. The difference lies in the scope of work and time spent as a partner. Professional services generally work on one-time projects while managed services are in it for the long haul.
Managed Service Providers (MSP)
Managed service providers remotely and proactively manage the IT infrastructure of their SMB clients. They are a boon to small and medium-sized enterprises that often lack the financial bandwidth to hire a full-time IT team.
How Do Managed Service Providers Work?
Managed services providers offer a host of IT services to their customers in exchange for a monthly subscription fee. It gives them a recurring source of revenue that they can leverage to expand their business and hire more employees.
The subscription model, with monthly recurring revenue (MRR), ensures a predictable cash flow for the business, unlike the break-fix model, where the revenue flows sporadically, limiting the ability to plan and make business investments.
Managed services providers offer a range of services, but the foundation is remote monitoring and management (RMM). With a whole list of services to their credit, they can tailor custom-designed packages for their customers.
MSPs vary in size from one-person shops to much larger enterprises with hundreds of employees. Service providers can automate many of their IT management tasks using an RMM solution and use professional services automation (PSA) software to help them run the business. These tools allow managed services providers to cater to multiple clients with only a limited workforce, resulting in lower operational costs and higher profit margins.
The days ahead look bright for managed service providers. Their recurring revenue stream offers visibility and insights into their business health, making them an attractive target for investors. Post-pandemic economic recovery means the industry is poised to register booming growth.
How Many Managed Service Providers Are There?
The demand for managed service providers is only going to increase in the foreseeable future.
According to a report by MSP Resources, the United States is the largest market for managed service providers by revenue. It is estimated that there are about 130,000 managed services providers globally.
APAC is the fastest-growing region in this segment, driven by growth in the managed services market in countries like India and China.
In 2020, the global managed services market size was valued at $215.14 billion. It is forecasted to expand at a compound annual growth rate (CAGR) of 12.7% from 2021 to 2028 according to Grand View Research.
Businesses pushing for lower IT budgets, increasing cyberattacks, high cost of data security, small and medium enterprises moving toward cloud adoption and less availability of skilled IT professionals are some of the factors driving growth in the sector.
Types of Managed Services
Most managed service providers start by offering endpoint and network management services. With time, they either expand their technology services or choose to specialize in a particular area of IT services such as security.
Endpoint and Network Management
MSPs manage their clients’ IT infrastructure including desktops, laptops, servers and network devices (routers, switches and printers). They frequently use an RMM solution to remotely monitor and manage these devices. Their services usually include software patch management to ensure that OSes and third-party applications are kept up to date. The overall objective is to maintain IT system and service uptime and availability for their clients.
IT Security Management
Data protection has become the top priority for companies due to increasing cyberattacks. Managed security providers remotely manage IT security for their clients. This may include antivirus and antimalware (AV/AM) deployment and management, advanced threat detection and prevention, managed firewalls, proactive remediation of a threat, log and compliance management and vulnerability scanning, among others.
MSPs focused on IT security (MSSPs) can leverage a managed Security Operations Center (SOC) to provide extensive security services to their clients.
Even the most highly managed IT environments experience glitches. That’s why managed service providers need to give their clients access to a service desk — a platform where customers can raise and track the progress of their tickets and service requests.
Cloud Infrastructure Management
It involves migrating, maintaining and optimizing a customer’s cloud infrastructure for public, private or hybrid cloud environments.
Managed print services cover all aspects of a company’s printing needs, including hardware requirements and scanning needs. They look at data and workflow management and optimize printing resources and energy usage to help reduce costs.
Backup and Disaster Recovery
The most valuable asset of many companies is data. Hence, it needs to be stored and backed up in the event of a system failure or cyberattack. Managed service providers offer backup and disaster recovery (BDR) services to help customers protect their data and recover gracefully in case of an accident or a cyberattack.
Organizations face a growing number of government regulations including HIPAA, GDPR, PCI, NY SHEILD, CCPA and many more. MSPs provide compliance management services to keep their customers in compliance with all relevant regulations. This minimizes the risk of non-compliance penalties to the business.
Elevate Your Managed Services Business With Kaseya
During the pandemic, many companies turned to managed service providers to help them quickly meet new challenges. Post-pandemic, the time is ripe for managed service providers to grow their businesses through new service offerings, improved sales and marketing, and other strategies.
Kaseya and Kaseya VSA will help them do just that. Kaseya VSA is a unified remote monitoring and management (uRMM) tool that enables MSPs to manage traditional endpoints as well as a new generation of “devices” including virtual machines and cloud. It gives managed service providers complete visibility into their clients’ IT environments and helps increase operational efficiency through IT automation.