What is a Managed Service Provider (MSP)?

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Managed service providers (MSP) offer multiple managed information technology (IT) services to other businesses. MSPs today largely deliver their services remotely, over a network, although they may maintain other revenue streams that require onsite support.

Historically, managed IT service providers serve small to medium-sized businesses, but now the landscape is shifting to include those who work with mid-market companies and enterprises. This means that the services offered by MSPs depend on the clients they serve. For example, SMBs can engage managed service providers for basic IT needs (e.g., email solutions, data storage, hardware repair, software updates) and specialized offerings, like data protection. For growing or larger businesses, MSPs may be hired to augment in-house expertise — from vetting niche solutions and implementing them to reevaluating in-house IT needs and capacity as a company scales.

Of course, MSPs can specialize, too — offering only niche services, like cybersecurity.


How does an MSP work?

Businesses typically request MSP assistance when filling an IT system or staff gap.

Generally, communication between the MSP and the company starts with an assessment to determine the company's overall environment. The process aims to pinpoint how the company can efficiently improve and support business goals. As no unique approach fits all companies, the MSP should provide a wide variety of service options.

The two major approaches to MSP are tech support and a subscription service model.

Technical support focuses on remotely fixing issues or sending technicians to your offices. Usually, such MSPs charge you for the time spent troubleshooting and the needed parts to complete repairs.

The second model (subscription-based) aims to enhance the quality of a company's services and bills you monthly. If any issues arise, the MSP software providers will fix them as part of the service-level agreement (SLA) between you and MSP. Payment here is defined either per computer (device) or by equipment. Depending on your specific needs, your contract with an MSP can include infrastructure maintenance, cybersecurity, remote access monitoring, reporting and others. Advanced SLAs also include response time tracking, performance grading, and security specifications.

MSPs typically provide their own MSP software solutions. Some may offer other providers' services or go for a hybrid model. Some MSPs focus on a specific vendor or tech and often offer MSP software built in-house.

Additionally, MSPs deploy specialist software platforms to manage functions automatically. Such platforms consist of remote monitoring and management (RMM) tools and professional service automation (PSA) apps.

RMM enables off-site technicians to maintain networks, servers, desktops, and mobile devices. RMM allows the MSP software to apply patches and other critical system updates.

PSA enables MSPs to help the company's project management, manage assets, billing and inventory.

MSPs typically manage clients' networks under a customized SLA. The SLA defines the key features (performance and quality metrics) that a company should expect from the MSP. All companies should be precise when outlining the commitments of an SLA. This step is critical to optimizing costs, as the SLA is often linked to the MSP's pricing formula. In general, MSPs offer a wide range of SLA options for clients; companies will pay a higher fee for higher levels of services.

What are the primary MSP types?

MSP types differ depending on the chosen criteria to categorize them. If we organize them depending on the size of their target clients (and the responsibility they take on), we can divide them into three major categories:

  • Pure-play MSPs

These are smaller providers focused on network monitoring and application performance. They typically design their services in house, focusing significantly on alerts and reporting.

  • Staffing legacy MSPs

The second type usually targets midlevel and Fortune 500 companies. MSPs here offer a wide range of services, with a high focus on monitoring, software installation and upgrades, and reporting.

  • High-level MSPs

Members of the last type offer the widest range of services. They can be both small and large providers that enable their clients to outsource as much of their technical processes as needed.

The benefits of using an MSP

Contracting with an MSP provides many compelling advantages that include the following:

Minimizing downtime (or eliminating it altogether)

An MSP allows businesses to adopt a proactive approach to secure critical systems. Robust MSP software providers will monitor company systems continuously and fix issues before they turn into serious problems.

Even if a problem occurs, an MSP can conduct root cause analysis (RCA) to study the issue and prevent it from happening again.

In summary, an MSP can assist in maximizing uptime and minimizing downtime.

24/7 IT support across the globe (if needed)

If you rely on a remote-access MSP, it can monitor and manage company systems at all times, even outside work hours. This way, you ensure that business-process data and applications are protected around the clock.

As global providers take remote monitoring to an optimal level, you can rest assured that a dedicated specialist team will always look after your critical systems and resolve issues in real time, no matter where your offices reside.

Temporary or permanent IT staff augmentation

Businesses must continuously improve client experience to stay competitive. In a tech-driven business environment, companies need to invest in newer, better technology to stay ahead of the competition.

Nonetheless, modern technology requires dedicated teams to implement it properly. If your current teams don't have the expertise to fulfill that, you'd need to hire an additional workforce. However, finding the right IT professionals to join your team is challenging.

Software deployment, asset management, configuration management, network monitoring, and project management all depend on experts to see them through adequately until your systems are up to date.

Working with the help of an MSP can save you time, workforce and effort. The good thing is that you don't need to hire in-house experts permanently. Your company can hire the necessary specialists only until implementations are complete. That way, you'll optimize deployment costs and project deadlines and keep the revenue stream stable.

Access to IT experts across different technical disciplines

An MSP typically employs experts for every tech branch. They all have years of experience in their respective fields and have the knowledge to improve software deployment, patch management, configuration management, and even supply chain management.

Those can be done on-premises or via remote control MSP software solutions.

The ability to easily scale up or down

As your business evolves, you'll likely need to upgrade your technology. While some modern systems are built to scale easily, others need a bigger push to add or remove applications. Even with scalable systems, you'll still benefit from professional assistance during upgrades.

MSP software providers can offer advice during the planning stage. They can pinpoint the key features of an app, help enhance network security during implementation, and provide critical communication tools to streamline the process.

With the following setup, you can easily scale up or down, depending on the needs of your ongoing projects. Need to scale down? The MSP will advise on how to approach it sensibly. Need to scale up? The MSP will provide the experts to fill in the gaps in your teams.

Eliminating the need to hire internal IT experts

We've touched on that in some of the previous sections, but only because it's one of the most crucial benefits in today's tech environment.

In addition to IT specialists in multiple fields, you can easily hire cybersecurity specialists to secure your company networks. Such experts excel in patch management, remote access security, remote control protocols, specialist software platforms, cloud-based MSP software, enhanced security features, security threats, secure mobile access, remote support, automated remediation, and more.

Here, remote monitoring enables the experts to keep in touch with your systems 24/7 without the need to be on-premises. Combined with the best MSP software for your company, you'd get a complete service without the hassle of recruiting individual experts one by one.

Lastly, MSP expert teams can procure critical software to anticipate and negate data breaches before they even occur.

Freeing up the IT team

Unless your company specializes in cybersecurity, data protection and business-critical projects won't align in the same vertical.

That means your IT professionals would likely be focused on fixing issues across your systems, which relates to less time spent on the projects that drive your business forward (as a brand).

Working with an MSP can take the load off your in-house IT team. MSP services can safeguard complex networks, while your IT team can focus on expanding client networks, easing account management, refining user access accounts, and working to raise overall client satisfaction.

Improving business continuity with service level agreements (SLAs)

As we've mentioned, service-level agreements are plain-language agreements between you and the MSP. They define the services you'll receive, the expected responsiveness, and the performance measurement guidelines.

SLAs can help your in-house IT team strengthen the brand-client relationship, formalize communication, and improve productivity and morale.

The best MSP software will help you set up the best SLA practices. For example, you can rely on an SLA designed to stop time tracking to resolution while waiting on a client to reply. This way, you'll get realistic response time tracking related to the actual performance of your service desk team.

You can also go for remote-access patch management and remote monitoring so that the MSP software will become your data security expert, negating potential data breaches due to human error.

Mitigating data loss with managed backup and disaster recovery services

Managed service provider software can ease data protection on all levels. Having an MSP take care of automated data backup, encryption and disaster recovery will let you focus on business-critical tasks rather than constantly looking over your data.

In addition, you won't need to worry about cybersecurity infrastructure management as the MSP will cover it. A robust solution will manage network discovery, server monitoring, and client network monitoring and use instant alerts to mitigate service interruptions. As most robust MSP software relies on advanced reporting features based on machine learning, it can protect your IT system against all modern threats.

Moreover, you can customize the SLA to get custom reports, implement multifactor authentication for all company devices and accounts, and use cloud computing to process most business data.

For example, you can use the Acronis Cyber Protect Cloud as a central platform and create global dashboards to enable secure data access for multiple devices on multiple channels. This way, every responsible employee will have protected data access from any enabled device at any time. Lastly, this will give you complete visibility of the company's data traffic.

Better budget management with a pay-as-you-go service

Using an MSP instead of an in-house IT team is often cost-efficient. With an MSP, you don't need to recruit and train new staff to acquire higher expertise. In addition, you get 24/7 remote support and monitoring and, most often, ensure lower overhead costs.

With an MSP, you will only pay for the specific services your company needs while erasing all unnecessary expenses.

Easier patch management

Patch management is among the key features of any cybersecurity strategy. Applying patches as soon as they're issued ensures that no device or application falls victim to a known vulnerability. And while manual patching could take forever, robust MSP software can automate the process, saving you time and effort.

Modern MSPs monitor client networks with the utmost care; even when working with multiple clients, they ensure secure remote monitoring and encrypted, remote access to provide optimal patch management for your specific needs. The best MSP software enables longstanding access to security software vendors, so your company can receive continuous data protection.

Efficient remote monitoring

We've mentioned remote monitoring in some of the previous sections, so we will be quick here.

MSP software providers have spent years polishing their remote-access tools. A comprehensive solution can monitor data traffic, app performance, websites, servers and security threats in real time, without needing a dedicated onsite team.

It can secure all endpoints, including not only primary PCs but also mobile devices. As modern workplace environments evolve, it's common to have both Android and Apple devices in your offices. Hybrid solutions can cover any of those used by an employee and ensure they don't pose a security threat to the company.

The challenges with MSPs

Despite their advantages, managed service providers may also come with challenges. For example:

  • Many MSPs only offer partial data security services, such as firewalls and anti-malware. If you are looking for a cybersecurity service provider, consider a managed security service provider (MSSP)
  • Dependence on the SLA can put a business at risk if the MSP fails to meet the terms.
  • Most MSPs manage their clients' IT infrastructures remotely as they are not local to the business. A client will pay extra if they need onsite support.
  • Some MSPs use proprietary technology and tools, which can make it difficult for the client to access their data should they decide to terminate the engagement.
  • It can be expensive to start an engagement with an MSP, but the rate of return on the investment (ROI) can be reasonable, considering that the client does not have to purchase new technologies.
  • Not every MSP can support all technologies and applications, so you will need an alternative solution or service to support out-of-scope services.
  • Not all MSPs are fluent in cloud adoption. As the cloud is increasingly used to construct new platforms, improve client experience, and meet the digital needs of organizations, it is crucial for MSPs to up their cloud game to stay competitive. However, relying on MSPs experienced in cloud processes will raise your company's cloud awareness as well.

What types of services does an MSP offer?

The types of services MSPs can offer include the following:

What is a managed service provider (MSP) business model?

An excellent way to understand the IT managed services concept is by comparing it to break / fix services:

Rather than the break / fix model that results in a 'one off' fee-for-service approach, most MSPs today utilize a subscription model to establish recurring revenue streams and deepen client relationships that help reduce churn.

With a subscription service, MSPs take responsibility for specific systems, so they keep running. MSPs engage clients for a flat rate and then maintain IT services (detailed in SLAs) on a continuous, monthly basis. Pricing per month is typically determined using one of the following methods:

  • Per-device. MSPs charge a flat fee for each device that they help manage.
  • Per-user. MSPs charge a flat fee for each user whose IT needs they manage.
  • All-inclusive. MSPs charge a flat fee for all services delivered.

In addition, SLAs can be tied to fees. For more customized or hands-on services, for example, MSP pricing may be higher than for more basic services covered in a lower-tiered SLA.

Which companies are among the top 10 managed service providers?

Some of the leading managed service providers worldwide are well-known American companies, like IBM, Accenture and Cognizant. India is also a leader, with Tata Consultancy Services, Infosys, Wipro and HCL Technologies posting billion-dollar revenues.

Are there many managed service providers in the U.S.?

There are approximately 3,500 managed service providers in the United States. Here are the top ten global providers, according to Enterprise Management 360 magazine (2018):

  1. IBM
  2. Atos
  3. Infosys
  4. Cognizant
  5. Wipro
  6. Tata Consultancy Services
  7. HCL Technologies
  8. Capgemini
  9. Datapipe
  10. Accenture

Are there managed service provider tools? What do they do?

Yes, managed service providers must deliver numerous in-demand services that keep the business running — doing so effectively requires robust MSP software. MSP tools help providers do everything, from monitoring and managing systems remotely to keeping systems secure and sending invoices out for services rendered.

While use cases vary, today, all MSPs require tools that support the following:

  1. Financial and accounting, like QuickBooks, Microsoft Dynamics GP, and Freshbooks (automated invoicing).
  2. Professional services automation (PSA), like Autotask, ConnectWise Manage, and Kaseya BMS (client management, server monitoring).
  3. Remote monitoring and management (RMM), like ConnectWise Automate and Autotask Endpoint Management (advanced reporting tools).

The most sought-after tools within each of these categories naturally also deliver a high level of automation. This feature means managed service providers can work more efficiently.

Of course, while this list of go-to tools is essential for managing an MSP business, another key MSP tool is one that ensures MSP businesses keep running. That is, as the world has become more digitized, 87% of MSPs now offer backup and recovery services to clients. MSPs no longer view backup and disaster recovery (DR) as a beneficial add-on service. Instead, these solutions are critical to business continuity: MSPs with their own infrastructure are wise to leverage MSP software for backup and disaster recovery, too. Otherwise, everything is at risk — if a managed service provider's systems go down, their clients' businesses are also exposed.

PRO TIP: MSPs should prioritize backup and DR solutions that meet an important criterion — they should integrate anti-ransomware technology that guards systems, backups, and the backup agent itself from an attack.

What is a managed service provider program?

Sometimes called a "partner program," managed service provider programs are offered by software and hardware vendors to help channel partners (MSPs) build and grow their businesses. Benefits include marketing, sales, and technical support ranging from as little as adding drag-and-drop functionality to an app to marketing development funds (MDFs) and promotional opportunities that boost margins to research and development projects and product-specific training — anything an MSP may need to deliver services successfully.

PRO TIP: When you are vetting solutions that allow you to deliver vital in-demand services to clients, do not underestimate the value a robust partner program provides. A vendor that understands MSP needs makes it easier for you to deliver services — and grow.

About Acronis

A Swiss company founded in Singapore in 2003, Acronis has 15 offices worldwide and employees in 50+ countries. Acronis Cyber Protect Cloud is available in 26 languages in 150 countries and is used by over 20,000 service providers to protect over 750,000 businesses.