How Managed Service Providers
Became Masters of Collaboration
Security gaps and disruptive system bugs are among every organization’s worst nightmare. They can cause expensive downtimes or total system shutdowns—as happened last year, when the Russia-based cybercrime group DarkSide hacked into Colonial Pipeline’s system. They used an unsecured VPN username and password to break in.
That incident ranks as one of the worst cyberattacks of 2021, disrupting almost half the fuel supply in the US Southeast for a week. It revealed how vulnerable infrastructure is to digital threats.
2021 was a bumper year for new CVEs (common vulnerabilities and exposures), too, putting more pressure on IT teams to identify new threats and patch them.
Industries increasingly depend on complex data flows needing secure, constant oversight. With this volume and complexity, outsourcing some of your IT services to a managed service provider may be an option to consider.
For example, a managed service provider specializing in security can test and safeguard your IT systems for you, relieving you of that constant, necessary responsibility.
Ways MSPs deliver value
MSPs can deliver value to organizations in five main ways. They can
- deliver a needed service economically by scaling labor and infrastructure costs across a large customer base,
- develop and recommend process improvements for greater efficiency,
- reduce risk through reliable delivery of specialized, highly skilled services,
- quickly scale up or down services to suit your changing business needs, and
- advise CIOs on digital transformation initiatives and emerging technologies.
How MSPs evolved
Managed service providers are third-party companies that remotely manage a customer’s IT infrastructure, systems and processes.
The forerunner to the MSP sector began in the 1980s with IT services firms calling themselves System Builders. Many sold what people called “white box” computers.
Over time, big firms like IBM and Dell built computers much cheaper. So, the IT services firms instead became Systems Resellers. They did a brisk business reselling other firms’ computers in the era before direct Internet sales.
In the 80s and 90s, they differentiated themselves by offering to do computer installs, some networking, and troubleshooting services as a value-add after purchase. They began calling themselves Value-Added Resellers or VARS.
By the mid-90s, almost all small businesses had internet, and needed switches, routers, and firewalls to make their IT work. VARS became Systems Integrators.
The late 90s saw IT services become the main source of profits. So, Systems Integrators morphed into IT Consultants, advising businesses on the best IT approaches.
New software, faster internet speeds, and centralized remote control of computers changed IT by the early 2000s. Remote helpdesks mushroomed. Consultants hired teams of computer engineers with diverse skills and transformed themselves into Managed Service Providers.
By the 2010s, the MSP market was already mature.
Today’s new MSP focus: Building relationships
Today, the industry is evolving again.
Forbes Technology Council member Tim Conkle commented that whereas a decade ago, a very small IT team could run all its client’s email, infrastructure and systems, today, it takes a large team—or the right tech stack—to do it, because of the explosion of apps, systems, and cloud integration options MSPs now must manage.
He says the new face of IT is being shaped by XaaS (the concept of anything as a service), and the trend of even small firms now being expected to provide 24/7/365 online services—and not just for email, but also for chat, collaboration, and sharing.
There are simply more things to do.
The nature of the MSP business is also changing. Says Conkle: “Sales and the human element of your support are going to become increasingly important… Managed IT has become a combination of technical work and a service job.”
Today, companies don’t base IT purchasing decisions solely on security and uptime, says Andrew Dunbar, General Manager, Europe, of the Canadian digital consultancy firm Appnovation. He says business owners want to see benefits for the organization too.
So, the new MSP must deliver technical services and solutions that enhance the business cost-effectively and strategically.
In a crowded IT services market where many products and services are similar, the customer experience is now paramount. MSPs are better positioned to perform more strategic roles when they gain a keen understanding of their client’s objectives, business needs, and organizational culture. Such roles may then extend beyond short-term consultancy contracts to become longer-term external support roles.
Innovative service models
The adoption of cloud services has had an enormous impact on MSPs.
“A hardware-based break/fix approach progressed into a demand for constant evolution of infrastructure based in the cloud; and a service-based fee structure turned into more of a capacity, insurance-like model.”
—Andrew Dunbar of Appnovation describes the shift in the MSP industry.
Dunbar has observed today’s businesses now expect MSPs to optimize IT services continually to meet customer demands. This has pushed MSPs to become more innovative in their service models.
He said the industry responded in two fundamental ways:
- developing low-cost, high-skill offshore support models, and
- using automation and machine-intelligence-based monitoring.
The COVID-19 pandemic drove further change by pushing businesses to reduce costs while rapidly innovating for remote work. Outsourcing IT functions to MSP experts enabled many organizations to achieve these goals.
More strategic roles
As more organizations digitalize operations, the role of many MSPs is becoming more strategic. MSPs are evolving from commodity vendors to longer-term consultants for specialized client needs. They’re developing close, supportive relationships with company executives, advising them on more reliable, efficient, compliant IT initiatives.
There’s a shift from the turnkey outsourcing of the past—aimed mainly at cost savings—to outsourcing for outcomes and innovation.
MSPs provide fresh insights to protect, streamline, and optimize IT operations in this expanded role. They take the time to learn about their client’s business needs, the stage of digital maturity of the business, and decision-making priorities within the company.
They don’t just sell IT services. They collaborate with management to resolve issues and streamline better business through innovations.
MSP market set to grow dramatically
The global managed services market was USD $152.02 billion in 2020, and will grow to USD $270 billion by 2026. North America remains the largest MSP market, while Asia Pacific has the fastest growth.
Reasons for growth of the MSP sector include
- the global shortage of skilled IT professionals, especially in cybersecurity,
- the rise in demand for secure IT infrastructure during the COVID-19 pandemic, with its push toward remote work and online business models—both of which involve more risk,
- the need to reduce costs and risks,
- increased requirements for regulatory compliance and security, and
- the massive uptake of hybrid cloud platforms supported by multicloud technologies, which reduces the need for large in-house IT teams to manage on-premise infrastructure.
MSPs as partners for skilled services
The modern MSP provides a tailored, customer-centric service based on an excellent client relationship nurtured over time. It will develop an in-depth understanding of the client’s business priorities, organizational culture, and IT strengths and weaknesses. And it will apply these insights to craft the right IT solution.
The right solution will depend on the specific client’s size, nature, and IT needs.
For example, an MSP may provide
- system monitoring software—for real-time, 24/7 system monitoring for a firm’s websites, servers, applications or network devices,
- IT Help Desk services for users of remote devices,
- cloud storage services, for managing a company’s hybrid or multiple cloud systems,
- managed backup services,
- disaster recovery services, and
- specialized security-related services such as identity management, multifactor authentication, or tools that combine data with behavioral analysis, such as endpoint detection and response (EDR)
Modern, competitive MSPs are fluid team players. They work with
- computer engineers of many backgrounds to produce hubs of diverse, superior technical skillsets,
- industry experts and other vendors, to create mutually beneficial partnerships for specific projects, and
- senior business executives such as Chief Digital Information Officers and CEOs, to help drive solutions, marrying business with technology benefits.
Today’s MSPs truly need to be master collaborators.
Pixentia is a full-service technology company dedicated to helping clients solve business problems, improve the capability of their people, and achieve better results.