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:
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 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 Managed IT Services
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
Cybersecurity Awareness Training
Cybersecurity Awareness Training
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:
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.
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:
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.