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What is an MSP?

What is an MSP?

This article will help introduce you to what an MSP (Managed Service Provider) is, why they matter, and (if you run one) how to introduce what you do to your prospect so they can understand the value of your offering.

MSP stands for Managed Service Provider which is an outsourced IT solution for businesses or individuals. This isn’t necessarily traditional “outsourcing” (with the associated negative connotation) and there’s a good bit of nuance to exactly how the business relationship works between an MSP and their client. Different MSPs have different ways of doing things, and that may or may not be compatible with your business or needs. If you run an MSP or work for one, you already know this, but how do you explain it to clients in a way that shows what you do and what the added value is? For businesses, how do you know what to look for when choosing an IT professional to augment your technical abilities.

Let’s go over what MSPs do, what makes them operate at the costs they do, why this matters to your business or your prospects, and how to choose an MSP.

What an MSP Does

While the term can define other types of businesses, it has largely grown to specify outsourced IT services. MSPs help clients scale their businesses by offloading the difficult tasks of building, maintaining, scaling, and supporting various IT services. They augment existing technical staff or even wholesale replace them depending on the nature of the business they’re supporting and its requirements.

Each MSP does things differently and what one does (or doesn’t do) can determine their feasibility as a primary technical provider for a given business. These arrangements can even include things such as equipment support (e.g. replacing equipment as part of their agreement), helping a business find the right SaaS or on-premise solution for their needs, etc. Some will have staff stationed at a client’s office. This has the effect of making the monthly cost higher, but without unexpected costs. Your monthly TCO (total cost of ownership) goes up on average, but is smoothed out to something consistent and easy to plan around (and can even go down overall with the right setup).

MSPs manage assets remotely using an RMM tool (Remote Monitoring and Management). This allows forms of automation and control which are difficult for smaller businesses to get access to on their own. Setup correctly, it can also function as a canary and provide proactive protection. Monitored alerts are the difference between an important file system going down and catching a drive before it goes bad.

Most MSPs will offer whatever is necessary for a business’ technical success (if they are able to). The business model works by the power of scale and by doing “one thing” (IT) and doing it well. Your success is their success whether you’re a business looking to use an MSP or an MSP looking at clients. The client worries about their business, the MSP worries about their IT.

How MSPs Work

It’s expensive to staff and maintain an IT department and exact costs are hard to predict. By outsourcing IT, a business can save money on staffing costs, get access to a greater depth of IT knowledge (for similar or even less than hiring a single employee), have a scalable IT department without the full cost (e.g. 24/7 staffing), and have more predictability for their billing (e.g. normalized cost for support). MSPs leverage the fact they support multiple clients to pool resources. Think of it as paid access to a technical co-op or similar rather than traditional outsourcing.

Most MSPs will leverage a PSA tool (Professional Service Automation) to track clients and their agreements. Different MSP agreements will also have different SLAs (Service Level Agreement) for the response time to a given issue (this doesn’t mean time to resolution in most agreements, just the time to begin work). This allows the MSP to better balance resources based on whether you have a minor issue or a major issue. A site down is usually going to have a tighter SLA than a trivial printer warning. Think of it as an IT ER protocol.

Capable MSPs tend to have more experience with IT than many businesses and more access to more efficient technical solutions (e.g. more competitive prices due to scale). If you’re a business, you typically work within your specific needs, but most MSPs have experience with many different scenarios and use cases. As your business grows, this specific experience can come in handy. Small businesses growing into larger businesses often struggle with the technical challenges of scaling their infrastructure and choosing solutions. Having someone who has seen the specific pitfalls of a given solution or knows the right answer can save you time, effort, and expenses, both short-term and long-term.

Why This Matters for Businesses

The right MSP can allow you room to grow without expending considerably more for IT costs. You don’t have to worry about the cost of staffing a 24/7 support desk, you just need to worry about the number of agents or scope of support. As you grow, you’ll need more employees, but a single employee has a certain, limited amount of work they can do and you can’t just reasonably schedule around what your business needs at their expense. But, an MSP allows exactly this with better resource allocation.

An MSP reduces the costs of hiring and training. They can also reduce the costs of migrating to new solutions (with the right contract). Most modern MSPs work off of a fixed cost per agent, user, or similar rather than traditional break-fix agreements. This means that if you have an hour of work or a hundred hours of work (that falls under contract), the rate is the same. A good MSP prefers this arrangement because it means once they get their client setup, they will have virtually no work for a fixed cost until something needs to change or something unexpectedly breaks (no matter how proactive, computers still break).

Even if you still want your own IT staff, an MSP can help offload work that is painful to manage. If you have 24/7 needs, an MSP can be used to offload the help desk functions so that your staff can focus on what is necessary for your business. If work has variable loads, an MSP agreement can allow temporary staffing or augmentation of your environment with a contract to protect both of your interests. No two MSPs are going to offer the exact same agreements so you need to shop around for what works for your specific needs.

How to Choose an MSP

Choosing an MSP is like choosing any other vendor: some are better than others. That being said, what makes any competently run and managed business “better” is going to depend on exactly what you need. You need to know what you do, why you do it, what you’re looking to do, and how you plan to accomplish it to get the right MSP for your needs.

What is the SLA of a prospective MSP and is it acceptable for your business? What does their contract allow them to do and where does it clash with your needs? What are they good at and does it work with your needs? Why are you outsourcing your IT and infrastructure in the first place? If you don’t understand what you’re getting into, you have a good chance of seeing a loss from the relationship. IT can be murky, but a good MSP will explain what they do, why it matters to you, and have the contracts to back it up for both of you. Rome wasn’t built in a day, and if your IT is lacking, it takes time to make everything work.

MSPs should also shop their prospects so they avoid getting in over their head (unless they have the ability to deliver). If your business specializes in traditional onsite work, why would you take a cloud-only customer unless you’re actively working to expand? The wrong client is more detrimental than skipping a bad prospect thanks to the legal headaches and contractual obligations.

Ultimately, the relationship between an MSP and their client is bidirectional. You need them as much as they need you (whichever side of the discussion you’re on). Make sure you understand what you’re getting into before you find out things aren’t going to work and you’re both stuck.