Managed Service Providers: How Do They Benefit Businesses?

A managed service provider (MSP) is an organization that manages a company’s IT infrastructure and user systems from a remote location. An MSP is a network administrator, security consultant and disaster recovery expert rolled into one. These professionals handle information services, business-to-business integration, supply chain management, and all the tasks clients don’t want to carry out themselves.

MSP Providers Explained

MSPs streamline a range of business services for clients in various industries, from healthcare to retail. These services include payroll management, human resources, systems operations, compliance and network monitoring. In a recent study, 77 percent of MSPs provided backup and disaster recovery — the most popular service offered by these professionals. Seventy-six percent specialized in remote monitoring and management, and 57 percent provided managed network security. Other popular MSP services include mobile device management, payment processing, and hosted and cloud video surveillance.

MSPs serve an important function. They execute functions that organizations don’t have the time — or the resources — to complete themselves. Fifty-six percent of companies with 100 or more employees who used managed IT services said they chose an MSP to improve the efficiency and reliability of their IT operations. Moreover, 38 percent of companies said enhanced security and compliance was a motivating factor for choosing an MSP. As more organizations worry about IT security — 60 percent of small brands go out of business within six months of a cyber attack, according to one study — it makes sense to choose an MSP that has experience and knowledge in this field.

How an IT Managed Services Provider Works

Most MSPs operate on a subscription-based model. Clients pay monthly or annual fees for services, and costs vary depending on the MSP. One study suggests that MSPs in the United States charge clients $65 per desktop, on average, for IT support and maintenance. After agreeing on costs, the MSP and the client will come up with a service-level agreement (SLA) — a contract that defines the roles and the responsibilities of each party. The SLA will stipulate factors like performance benchmarks, availability, and uptime.

There are lots of customization options, too. Typically, clients just pay for the services they require — procurement or employee management, for example — instead of expensive packages that include services they don’t need. Communication between the MSP and the client is critical, however. “To fully take advantage of the available managed services options, an IT department must become adept at managing relationships, not only with external providers but also with internal users, who are increasingly being seen as customers,” says Danny Bradbury from CenturyLink, writing for Forbes magazine.