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What is MSP? What Businesses Need to Know

what is msp

What is MSP?

Did you know that since 2005 there have been 10,323,848,439 records breached? You read that correctly, over 10 billion.

The number of data breaches grows each year. In the first three months of 2018, they are already at 259,704,415.

Ponemon Institute recently conducted the 2018 Study on Global Megatrends in Cybersecurity. 51% of top IT professionals say cyber warfare will rank as high risk in the next three years. 71% say the risk of breaches for high-value information will be very high.

So how does that affect you?

Maybe you’ll be one of the lucky ones, and it won’t. Or perhaps you’ll end up on the wrong side of a breach. To protect yourself, your best bet is an IT professional.

And that’s what this entire article is about: the IT solution for the modern world. Read on to discover the definition of MSP and why they’re essential.

What is MSP?

The acronym MSP stands for Managed Service Provider. It’s a company that remotely manages a customer’s IT needs. That includes infrastructure and end-user systems.

They manage the responsibilities of a defined set of day-to-day services.

Small businesses get the benefit of IT experts without hiring one in-house. Larger enterprises get the flexibility of scaling up or down. Both receive the benefits of hiring experts in any given area of IT.

Some MSPs offer services beyond IT. We’ll discuss those in a later section.

What They Do

MSPs track, supervise, and secure outsourced network application procedures. They work on behalf of the organizations using those services. They specialize in infrastructure, industry certifications, and human resources.

They also provide 24/7 monitoring and provisioning or services for customers. MSPs that offer cloud and network services own massive data-center facilities.

They manage communication services, such as frame relays and leased-line, wide-area networks. They also handle a variety of services:

  • Web hosting
  • Video networking
  • Unified messaging
  • Managed premises
  • Staffing management
  • Standard access and transport
  • Outsourced network administration

MSPs rely on vendor management systems (VMSs). These software programs offer efficiency and transparency of their contracted workforce.

Pricing Model

There is no single, set pricing model. Each MSP offers an array of available options. The models include categories for the following:

  • Per device
  • Per-user
  • All inclusive

With per-device pricing, the MSP charges a flat fee to the customer for each device they manage. In per-user pricing, the MSP charges a flat fee for every user. It’s cost-effective for businesses which require their employees to use many devices.

The all-inclusive model is like an all-you-can-eat buffet, and the entire family is invited. The MSP charges a flat rate for all its services (on every device, for every user).

In each of these pricing options, customers pay a scheduled flat fee. Usually, it’s monthly. Sometimes the MSP also requires an upfront fee as well.

This subscription model gives MSPs a monthly recurring revenue stream. It grants them more stability and promises them a steady stream of work.

Traditional IT companies operate off of many, one-time transactions. For example, companies using the break/fix model price their services based on time and materials. They bill customers an hourly rate for labor, plus parts for things like local computer repair.

The worldwide market for managed services is projected to be $189.1 billion in 2018. $229.59 billion in 2020.

Service-Level Agreements

MSPs often provide service offerings with a service-level agreement (SLA). It’s a contractual arrangement. It spells out performance and quality metrics which will govern their relationship.

MSPs include the SLAs in their tiered pricing structure. Customers can pay higher fees for a higher level of service.

Why SMBs Choose MSPs

The most common customers for MSPs are small- and medium-size businesses. Small companies have limited in-house IT capabilities. They pay MSPs to get their IT expertise.

The small business chooses the capacity of support they need. They can vary their selection according to their budget.

Larger companies also contract out MSPs. They usually do so to supplement their in-house staff. It’s a perfect solution for companies facing hiring limitations or budget cuts.

The subscription-based model gives customers of all sizes the advantage of expert IT support at predictable costs.

The MSPs may even prevent IT problems before they happen. MSPs focus on proactive approaches so that businesses can avoid disruptions.

A research firm, 451 Research, recently performed a survey of 451 large businesses. 45% plan to hire a managed security services provider. 42% plan to deploy more security software to protect their applications and data in the cloud.

Origin of MSPs

In the ’90s, application service providers (ASPs) emerged. They offered services for remote application hosting. They paved the way for future companies to provide remote support for customer IT infrastructure.

MSPs initially focused on remote monitoring and management (RMM).

MSPs expanded their services. Now they offer a wide assortment of options to differentiate themselves. Those include remotely supporting clients’ endpoint devices and providing mobile device management.

MSPs and RMM

Remote monitoring and management software helps MSPs keep tabs on clients’ IT functions. They can troubleshoot and remediate issues with client servers and endpoint devices.

Managed service providers can manage many customers simultaneously. They can use automated scripts. They focus on routine systems administration tasks, like checking hard disks for errors. They do not need human intervention.

Since MSPs pay close attention to operating costs, they watch the price of maintaining skilled employees. Labor is a MSPs most significant expense. RMM software reduces their overhead exponentially.

SaaS and the Cloud

Another challenge MSPs face is our mainstream adoption of the “Cloud.” They need to find ways to manage hybrid cloud environments. More IT infrastructure components are migrating to the cloud each year.

The cloud (or cloud computing) refers to the relocation of applications. That relocation happens from local, server-based technology to off-site, hosted technology. The data is then available from anywhere in the world.

The information is stored on multiple servers at many locations for quick transfer.

According to 451 Research, the future of IT is multi-cloud and hybrid. 69% of businesses plan to use some multi-cloud environment by next year, 2019.

Similarly, 75% of organizations are willing to pay a premium to receive enhanced hosting and cloud services.

To grow with the market, MSPs offer their cloud computing services. In the same one-stop shopping theme, some MSPs provide to resell other cloud providers services. They offer backup and disaster recovery a common point of entry.

Software-as-a-service (SaaS) is another term often heard when discussing MSPs. In essence, it refers to the subscription model for software. Instead of buying your software outright, you rent it at a monthly fixed price.

Why Should You Care?

In today’s cutthroat marketplace, you must set your company apart from your competitors. You must do that with your marketing, sales, and infrastructure.

Operating cost-effectively gives you extra resources to bolster the rest of your system. It thereby gives you a way to compete and succeed in the market.

Access to more funds isn’t the only benefit. When you outsource services, you can spend more of your focus on other cornerstones. Examples include your business’s strategies, growth, and direction.

You can concentrate on what’s important rather than getting bogged down by administrative work. Also, the increased savings, reduced liabilities, and enhanced accuracy will give you a lead over your competitors.

You and your staff can focus on tasks which drive profits and grow your business. You can outsource the minutia of day-to-day responsibilities. The MSP will act as an extension of your team, which you can increase or decrease according to your needs.

How MSPs Drive Change

Managed service providers begin at the beginning.

They review your current processes. This may include how you process payroll, store contracts, or manage supplier relationships. They look for opportunities that’ll boost your savings and reduce your spending.

Their goal is to help you discover how to increase your efficiency. They also look for liabilities. They focus on processes and challenges you might not be aware of, so they can reduce your risk.

First, they analyze your systems and uncover your liabilities and opportunities. Then they build you a custom solution based on your unique needs. Finally, they provide you with ongoing maintenance, and they support your new processes.

How Do I Find a Managed Service Provider?

First, you need to write up a list of IT services you require. Include the following:

  • What measure of support you require
  • How many people you need it to support
  • How many devices you need it to support
  • How large a budget you have to spend on IT each month

Be thorough, especially with the measure of support. What types of help do you need? How often? Write down any details you can.

When you’re ready, put down the pen and get ready for a conversation.

Ok, now it’s time to contact an MSP expert. Tell them exactly what you’re looking for, and what your price range is. Go on, do it now while the numbers are still fresh in your head.

So long and good luck!

P.S. “What is MSP” is one of many business articles we write about. If you have an insatiable drive for profits, also check out “How Does Marketing Online Grow Your Business?”

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