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What is a Managed IT Services Provider (and How to Choose the Right One)

What is a Managed IT services Provider?

What is a Managed IT Services Provider (and How to Choose the Right One)

If you’ve been researching how to outsource your small company’s IT, you’ve probably seen the term “managed services provider.” What does that mean, and is that model a good fit for your SMB? Answering that question correctly can help your business run better and grow faster.

In a CompTIA survey of SMBs (fewer than 250 employees) 53% said they used a managed IT services provider, and another 34% said they’ve considered doing so. The reason is clear, according to the survey:

  • 64% of respondents said that technology — from computing devices, software, Web sites, e-commerce platforms and operational tools — is a primary factor in reaching their business objectives.
  • Three in 10 consider technology a secondary factor in helping to meet those goals.
  • Just 6% describe technology as a non-factor.

Managed IT services providers are an important part of SMBs.

Clearly, managed IT services providers are an important part of the SMB ecosystem. However, not all managed services models are the same, and every company’s IT needs are different.

So, first I’ll outline the most common managed services arrangements you might choose for your business, and then walk you through how to find the right provider for your company.

What is a Managed IT Services Provider?

Managed services providers remotely monitor and manage their customers’ IT infrastructure, and/or the devices and applications used by employees (and other end-users). It’s a proactive approach to detecting issues before they cause problems, and it’s often a subscription service.

This short video is a good basic description of managed services providers and why small firms use them.

If your company has an in-house IT staff, you might use a managed services provider for specific IT functions that are outside of your staff’s expertise, such as cybersecurity. If you have little or no IT expertise in house, you might use this type of vendor as your de facto IT department.

Why Use an IT Managed Services Provider?

IT services are a common outsourced task.

IT services are tied with accounting services as the most commonly outsourced task for small businesses, according to a 2019 survey report by Clutch, a professional services rating firm.  Both were outsourced by 37% of the small businesses surveyed. 

The top reasons the survey respondents gave for outsourcing tasks were to increase efficiency and to have access to expertise. 

When I speak with SMB owners about why they’re outsourcing IT to a managed services provider, they often tell me some variation of: Hey, when it comes to IT stuff, we just need it to work. And that is one step toward being more efficient — but it’s just the first step.

A better reason to work with a managed services provider is to make every dollar you spend on IT work harder. Your IT investment should improve customer service, enhance your ability to find and serve new markets, and grow faster. 

To find a provider for those purposes, it will help to understand a bit about basic managed services models.

Two Basic IT Services Models: Proactive and Reactive 

Some firms that offer outsourced IT services to SMBs focus on reactive service. If you need something specific from that type of IT vendor, you ask for it and the vendor steps in. In the IT industry, we call that “below the bar” service.

Most managed services providers, on the other hand, offer proactive or “above the bar” services. At a minimum, this usually includes monitoring your IT network 24/7.

To show you what I mean, I’ve compared below a sample of both types of services.

Reactive Managed IT Services                                              

Proactive IT Managed Services

Network/server outage repair 24/7 network/server monitoring (outage prevention)
Equipment repair and maintenance Equipment lifecycle management (rotating component purchases to prevent failures and degraded performance)
Data backups Data backup design and monitoring, including testing whether the client’s business can run on its backup data
Hardware/software installations IT infrastructure strategy and budgeting assistance; project planning and consulting
Disaster recovery Disaster recovery planning and testing
Data breach recovery Anti-spam and anti-virus management; cybersecurity management; employee training
Help desk Employee training for applications, devices, cybersecurity, etc.

Take a deeper dive into just one of the above IT services to get a clearer view of the key difference between having reactive vs. proactive IT services:

  • Disaster recovery (reactive): You call in the experts when a disaster like a fire, tornado, lengthy power outage, etc., shuts down or otherwise disrupts your business. If it’s a widespread event, you may have to wait in line.
  • Disaster recovery planning and testing (proactive): When disaster strikes, you and your managed services provider should be able to enact a planned, documented and tested IT recovery procedure quickly, with minimal or no disruption to your business.

The proactive approach in this case is probably more expensive up-front, but it may be far, FAR less expensive in the long run. I’m sure it’s clear which approach I recommend, but of course, every business has its own needs, budget, and tolerance for risk.

Many managed services providers offer both levels of service. The problem for small businesses is seeing beyond the marketing lingo, because unfortunately, some firms call themselves managed services providers when they really only offer reactive services.

So let’s look at how you can find the managed IT services provider that’s right for you.

Four Do’s and Don’ts of Choosing an IT Managed Services Provider

DO’s DON’Ts
Communication Insist on providers that communicate how they’ll help you succeed, not just which tech solutions they offer Don’t buy IT services you don’t understand
Cybersecurity awareness training Make sure the provider’s cybersecurity service goes beyond a firewall and anti-spam/virus software Don’t accept a cybersecurity program that doesn’t include employee training
Regular collaboration Ask how a prospective provider can actively participate in your strategy for continuous improvement and growth Don’t accept a one-time, up-front assessment of your IT issues
Payment options Ask for a customized contract Don’t get locked into a cookie-cutter service package that can’t adapt to your needs

Get Concrete Examples of Potential Provider’s Long-Term Strategy Chops

To test whether a managed IT services provider is likely to be experienced with strategic planning for their clients, find out whether they’ve participated in these types of activities:

  • Projecting a five-year hardware/software replacement cycle, to protect you from too many unexpected capital expenses.
  • Defining a continually improving security strategy, to combat continually improving criminal techniques.
  • Creating a timeline to move your company toward the next generation of technology (such as cloud-based services).

How to Assess Results After the Sale

It’s tough to measure how well a managed services provider is performing, because when it comes to IT, the results often can’t be quantified. For example, what dollar amount do you attach to a data breach or frequent business interruptions that didn’t happen?

All you may be able to quantify for sure about your outsourced IT management is how much you’re spending on it. 

Read “How to get the most from a managed IT services provider” from CIO.com.

As the owner of a medium-sized business myself, I understand how critical it is to find good services within your budget. I also understand that paying more doesn’t always mean you’re getting better service. So how can you tell whether you’re getting what you pay for?

Based on 20 years in this business, here are some outcomes that indicate your managed IT services provider is providing good value: 

  • Your staff is happy (computer-wise). In other words, they’re not complaining about their computer equipment, and they’re not sitting on their hands waiting for their devices to respond.
  • Redundancy creates quick workarounds. If some device or network function temporarily isn’t working quite right, you have redundancy built into your IT operation. This allows you to access files or perform tasks in multiple ways.
  • Knowledge sets you free. Your staff isn’t frequently shut down waiting for tech support. Why? Because your managed services provider has helped train them on how to use and troubleshoot their devices and applications.
  • Your staff is nimble. They have the equipment and knowledge to work in their home, on the road, and anywhere in your office.
  • Your staff is connected. You and your staff routinely use collaboration tools that improve communication and productivity (such as MS Teams, scheduling tools, teleconferencing, etc.).
  • Security issues aren’t a surprise. If there’s a security issue or hardware/software failure, you learn exactly what happened very quickly — or even better — after it’s been found and fixed, and before it caused a business interruption.

Use a Managed IT Services Provider So You Can Do What You’re Supposed to be Doing

I don’t do my business taxes myself anymore. It no longer makes sense for me to take time away from my core responsibilities. Also, my CPA proactively helps me manage my business’s cash flow, billing, etc., securely and efficiently.

It’s the same with IT for most SMBs.

As your business grows, your technology needs become more complex, and eventually you have to turn it over, either to in-house staff or to a vendor. Your energy is better spent on your customers, your staff, and your strategy for growth.

 

SEC/FINRA Cybersecurity Compliance Guide