If you have been researching how to outsource your small organization’s IT, you might have come across the term “managed service provider.” But what does it mean, and is it a suitable option for your small to medium-sized business (SMB)? Knowing the answer to this question can lead to better operations and faster growth for your business.
Watch Now
In a CompTIA survey of SMBs (fewer than 250 employees) 53% said they used a managed IT services provider (MSP), and another 34% said they’ve considered doing so.
The reason why is clear, according to the survey:
- 64% of those surveyed said that technology (e.g., computing devices, software, Web sites, e-commerce platforms and operational tools) is a primary factor in reaching their business objectives.
- 3 in 10 consider technology a secondary factor in helping to meet those goals.
- Only 6% of people consider technology to have no impact.
It’s clear that managed service providers are an important part of the SMB ecosystem. However, not all managed services models are the same, and every company has unique IT needs.
In this article, we’re going to explore what managed IT services are and how to choose the right one for your organization (and help you save money from accidentally investing in the wrong provider).
Plus, if managed IT services sound right for your small business, you can download our managed service provider checklist to help you ask the right questions when interviewing potential partners.
Let’s dive right in!
Table of Contents
What is Managed IT Services?
Managed IT Services deliver IT services to businesses. They use a managed service model (also known as a fully outsourced model) and are often referred to as managed service providers (MSPs).
In 2020, the global MSP market was valued at $152.05 billion. At that time, the figure was expected to reach $274.20 billion by 2026. However, by the end of 2022, the global managed services market had nearly reached the $256 billion mark. That means it nearly doubled in just two years!
This massive growth is driven by the increasing adoption of modern business technologies and practices – including cloud computing, big data analytics, and hybrid work.
IT Managed Services Example
In this model, the provider assumes responsibility for delivering services. They might offer network security to you all while providing ongoing help desk support and consulting to address any issues that may arise.
If you have little or no in-house IT expertise, you can use this type of vendor as your IT department. MSPs remotely monitor and manage your IT infrastructure, and/or the devices and applications used by employees (as well as other end-users).
One of the most significant advantages of using managed IT services is that they proactively identify potential issues before they can cause any significant problems – which slows down your business.
This is in contrast to the traditional break/fix or on-demand outsourcing model, where the provider simply reacts to issues as they arise. With managed IT services, the provider is able to anticipate your needs and offer a proactive approach to prevent problems from occurring – helping you avoid business disruption.
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. This type of service is often referred to as co-managed (and it can save you money too).
Watch Now
You will encounter two common billing options when you research companies – services delivered on a yearly contract or a monthly subscription.
Why Partner with a Managed IT Services Provider?
According to a 2019 survey report by Clutch, a professional services rating firm, IT services and accounting services are the two most commonly outsourced tasks for small businesses. Both were outsourced by 37% of the small businesses surveyed.
The top reasons the survey respondents gave for outsourcing tasks were to:
- Increase efficiency
- Gain access to expertise
When we speak with SMB owners about why they’re outsourcing IT to a managed service provider, they often tell us some variation of:
“Hey, when it comes to IT stuff – we just need it to work.”
That is one step toward being more efficient…but it’s just the first step.
A better reason to work with an MSP is to make every dollar you spend on IT work harder. Your IT investment should improve customer service, enhance customer trust, enhance your ability to find and serve new markets, and grow faster.
Understanding the basic managed services models is an important starting point to finding the right provider that can cater to your needs.
Two Basic IT Service Models: Proactive and Reactive
Some firms that offer outsourced IT to SMBs focus on reactive services. This is where when 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 service 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
- Network/server outage repair
- Equipment repair and maintenance
- Data backups
- Hardware/software installations
- Disaster recovery
- Data breach recovery
- Help desk
Proactive Managed IT Services
- 24/7 network/server monitoring (outage prevention)
- Equipment lifecycle management (rotating component purchases to prevent failures and degraded performance)
- Data backup design and monitoring, including testing whether the client’s business can run on its backup data
- IT infrastructure strategy and budgeting assistance, project planning and consulting
- Disaster recovery planning and testing
- Anti-spam and anti-virus management; cybersecurity management; employee training
- Employee training for applications, devices, cybersecurity, etc.
Let’s take a deeper dive into just one of the above IT services quickly 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 (e.g., 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 we 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 some firms call themselves managed services providers when they only offer reactive services.
So, let’s look at how you can find the MSP that’s right for you.
How to Choose the Right IT Managed Services Provider
What You Should Do
Communication
Insist on providers that communicate how they’ll help you succeed, not just which tech solutions they offer.
Cybersecurity Awareness Training
Insist on providers that communicate how they’ll help you succeed, not just which tech solutions they offer.
Regular Collaboration
Ask how a prospective provider can actively participate in your strategy for continuous improvement and growth.
Payment Options
Ask for a contract.
What You Shouldn’t Do
Communication
Don’t buy IT services you don’t understand.
Cybersecurity Awareness Training
Don’t accept a cybersecurity program that doesn’t include employee training.
Regular Collaboration
Don’t accept a one-time, up-front assessment of your IT issues.
Payment Options
Don’t get locked into a cookie-cutter service package that can’t adapt to your needs.
Get Examples of the MSPs Long-term Strategy Capabilities
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).
Be sure to ask them to provide specific examples of how they participate in these activities.
Learn more about choosing an MSP that’s right for your organization and use the guide below to vet them.
Use this checklist to make choosing the right managed service provider for your organization easy and stress-free.
How to Assess Your MSP’s 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.
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.
As the co-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 over 30 years of combined experience in the business, here are some outcomes that indicate your MSP is providing you with good value.
1. 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.
2. 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.
3. 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.
4. Your staff is nimble.
They have the equipment and knowledge to work in their home, on the road, and anywhere in your office.
5. 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.).
6. 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 has been resolved and before it caused business disruption.
Use an MSP So You Can Do What You Need 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, our CPA proactively helps us manage our 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 just have to turn it over – either to in-house staff or to a vendor. Your energy is way better spent on your customers, your staff, and your strategy for growth.
