The traditional role of IT has been to provide communications infrastructure, data processing, data management, and other systems-related services to their organizations. Outsourcing these services makes sense – under the right circumstances. Managed Service Providers (MSPs), properly vetted, can add capacity to IT staff and infrastructure, replace all or parts of an organization’s IT functionality, or add managed expertise to very specific IT functions.
Historically, MSPs fell into several categories which mirror IT’s aforementioned roles. An MSP organization may have developed expertise and market viability within all categories as a generalist, or it might specialize in one technology.
The broad brush of MSP categories breaks down into:
- IT service replacement organizations, where an MSP assumes responsibility for all current IT operations and negotiated growth
- Line-of-business MSPs, whose category now includes Software-as-a-Service (SaaS), providers of vertical specific applications expertise
- Organizations that replace or augment specific IT functions, such as telecommunications, security, printing, archiving, or server provisioning and management, and
- Web hosting, a commonly and historically outsourced activity, perhaps with e-commerce links—and “elastic” cloud resources.
Each of these categories have numbers of competitive MSPs whose business cultures must mesh with yours. Some MSP organizations will understand the ins-and outs of your business segments, and others may be clueless.
Key to a successful relationship between IT and MSP organizations are business culture and well-negotiated (and widely understood) Service Level Agreements (SLAs). SLAs define the interactivity between the IT organization and the contracted MSP at high levels (management to management) down to user levels. They do so in no uncertain or nebulous terms so that both parties know exactly what to expect. Remediation components of an SLA help restart relationships after difficulties or differences in expectations.
Selection of MSPs must also rely on referential integrity. MSP organizations that will handle an organizations IT data must adhere to the same practices, audit and compliance, and ethics standards needs. In the same vein, both IT department and MSP must have sufficient flexibility to weather changes, both expected and unexpected.
MSP IT-Replacement Organizations
IT replacement organizations are often viable during merger and acquisition activity, when capital and human capital investment hasn’t been forthcoming in a long time. In those circumstances, the company needs a large systems infrastructure change. These types of MSP are also called for when organizations find IT costs spiraling out of control, mandating an easier, single budgetary line item to deal with. Like most other MSP providers, replacement organizations aren’t for non-persistent contract work; rather, they’re in for the long term. The MSP must capitalize its own resources and have return for them over the lifetime of the term of the replacement.
Some businesses treat their IT departments from an accounting and management perspective as though they were managed service providers – small businesses within businesses – by making IT a cost center that charges other departments for their IT needs. Organizations with this model understand the undertaking needed to perform IT replacement and outsourcing. But other companies may be ill-prepared to watch integral functions transform into a contractor’s responsibility.
Replacing IT organizations with MSPs and converting IT infrastructure concurrently can often be a lurching move. The State of Indiana experienced just such a lurch when they contracted the outsourcing of Indiana’s Family Social Services Administration (FSSA) to IBM. According to Indiana government staff, the move failed, and litigation is still pending over the matter.
Yet IBM and other major IT industry providers have had many successes as well. They are just more rare when “replacing IT” is added to an enormous overall change in infrastructure and services rendered through the new and updated systems.
Line of Business MSPs
As industry-specific applications are at the heart of many businesses, and within many industry segments, MSPs have learned how to offer organizations applications expertise that can present high value. Many of these applications are built around accounting, reporting, and compliance applications that are difficult or expensive for organizations to develop, manage, and run themselves.
Often, a business and an MSP establish a line of demarcation between “general” IT infrastructure and line-of-business applications services. An MSP is given responsibility for identifying the application needs, where they must fit together to be useful, and what types of growth and changes can be expected over the term of the relationship. MSPs may combine a client’s processing needs with those of others, so as to combine efforts for expense savings. When this is done, an SLA approach can help take the mystery and suspense from relationships by adding reasonable performance expectations.
And once again, the cognizance of an organization’s business culture, ethics, compliance and audit needs help an MSP maintain a professional relationship for the portion of activities that they assume.
Process MSPs
Process MSPs usually are to serve a specific IT process or need. These processes can be as simple as taking over networked printing all the way to full telecommunications services. Often, the process involved has been commoditized through high market place competition or has a strong convenience factor that makes the MSP’s value proposition highly attractive.
As an example, printer/copier MSPs obviate the drudgery of maintaining and provisioning printers and copiers, while offering a high degree of consistent quality and availability at a very reasonable price. Expertise with volume printing and copying technology allows those MSPs to interface equipment to networks securely, with highly competitive per-print charges that can be, in turn, sent as costing figures to responsible organizational departments for billing purposes. The popularity of network printing MSPs has made them the number-one US and UK/EU “in-sourcing” type of organization.
Telecommunications MSPs provide a similar service by provisioning user phones and mobile devices, as well as managing least-cost-call routing capabilities. Customer premises equipment, including PBXs/key-switches, handsets, even wiring may be maintained by telecom MSPs, which in some regions are called “interconnects.”
Web Hosting MSPs
Rising from the day of online bulletin board systems, web hosting MSPs are competitive with the other MSPs discussed. Web hosting organizations now provide privately connected network extensions for organizations that may include a gradient of services that border on the boundaries that other MSP organizations serve.
One strong rationale for placing public-facing web services away from organizational resources is the amount of random traffic that web sites encounter. Hosted services are often performed in ISP/MSP data centers that are very well connected to Internet pathways for rapid response to queries.
These cloud resources often mean that an organization’s public- (and perhaps private)-facing web resources are developed and maintained by third parties. Web hosting MSPs often maintain comparatively vast systems hardware and networking resources, and a number of Web hosting MSPs have additional services.
As Web hosting ISPs/MSPs already know about hosting platforms, many have come to rent their excess infrastructure on a commodity basis, known as cloud services. Cloud services start atomically with a virtual machine instance, which is the analog of a server with operating system installed, a bit of storage, and network connectivity. Cloud vendors charge for this commodity service based on the type and power of the virtual instance, storage by the mega or gigabyte, networking I/O, and how long the whole combination service remains alive.
Cloud resources may also include virtual appliances, where the aforementioned virtual machine instance also contains an application, such as e-mail, web combinations for blogs, or online community support. Other Web Hosting MSPs may provide Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) applications using virtual appliances with public access or virtual private network access privileges. The offerings border on an older acronym, the applications service provider (ASPs).
These cloud appliance resources mime, on a smaller scale, larger Software-as-a-Service offerings from major organizations, such as SalesForce, Microsoft, IBM, SAP, and others, albeit on a scale generally targeted to small organizations.
Commonalities
No matter the service managed, MSPs as contractors must comply with the same legal and ethical requirements that their contracted organizations do. This means applying privacy rules, attention to archiving and data retention needs, and compliance with industry-specific and regional requirements. What works in the U.K. may not work in DE, the U.S., or Saudi Arabia. Similarly, workforces for MSPs must understand and abide by multinational and regional reporting requirements, as well.
Culture needs to be similar, too. Strict 9-to-5 organizations may not mesh well with those that don’t keep strict schedules, in the same way that law firms don’t mix with jeans and sandals. The culture needs to meet at management as well as user points, as well as the needs of the culture of multinational organizations. These may vary deeply from locale to locale.
MSP organizations are bound by professionalism, contractual requirement, and ethics to provide services that are matched to their agreements. Even the best MSPs have occasional unforeseen difficulties, but to stay in this competitive business, they must provide value for their compensation. Clear communication and planning pay off handsomely for MSPs and their contracted organizations. The devil, as always, is in the details.
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