Managed Services

What are Managed Services?

Managed services refer to the outsourcing of IT operations to a third-party provider, such as a Managed Service Provider (MSP).

MSPs typically offer a range of services including network management, cybersecurity, data backup, and IT support. By outsourcing these functions, businesses can often reduce costs, improve efficiency, and focus on their core competencies.

Synonyms

• IT Outsourcing
• Managed IT Services
• IT Service Management
• Managed Support Services

Today’s MSP Profile

MSPs have existed since the early 2000s. This was possible because internet speeds and reliability improved, allowing companies to manage computer networks remotely. This change allowed tech resellers to start offering services like offsite help desk support and software updates, making their businesses more reliable and profitable.

As selling hardware became less profitable, moving to a model with steady, recurring revenue was a significant improvement. However, this transition took longer than expected. According to a CompTIA study, about 40% of tech companies today offer managed services. Of these, 37% make most of their money from ongoing service contracts. The rest, 64%, mix managed services with traditional business like one-time project work and product sales.

Managed Services Operating Model

The operating model for managed services is centered around a proactive approach to IT management. Managed service providers assume ongoing responsibility for their clients’ IT infrastructure. This includes everything from network monitoring and security to software updates and data backup. MSPs typically operate on a subscription business model, where clients pay a recurring fee for these services. This model ensures a predictable revenue stream for the MSP and offers clients cost transparency and reduced IT overhead.

Types of Managed Services

Understanding the different types of managed services helps businesses choose the right solutions for their IT needs. Here are a few types:

Network and Infrastructure Management

Network and infrastructure management involves overseeing and maintaining an organization’s entire IT setup, including servers, networks, and data centers. MSPs ensure that the company’s network operates efficiently and securely, with constant monitoring to prevent issues before they arise. MSPs handle the deployment, maintenance, and optimization of servers, continuous monitoring of network traffic to detect and resolve potential problems early, and data center management to oversee physical and virtual servers, ensuring data security and optimizing resources for cost-efficiency.

Security Management

Security management under managed services encompasses a comprehensive approach to protecting IT systems from cyber threats. This includes everything from firewalls and antivirus solutions to advanced security information and event management (SIEM) systems. MSPs use advanced tools to identify potential security threats in real time, provide immediate response in the event of a security breach to contain and resolve issues, and ensure that all security measures comply with industry regulations, helping businesses avoid legal and financial penalties.

Cloud Services

Managed cloud services involve the management of cloud infrastructure, including storage, computing power, and applications. MSPs ensure that cloud resources are scalable, secure, and optimized for performance. They manage cloud storage solutions to ensure data is securely stored and easily accessible, handle the deployment and management of applications in the cloud, and provide solutions to scale cloud resources up or down based on business needs.

Software and Application Management

Managed software and application management services focus on deploying, maintaining, and updating software applications. MSPs handle everything from initial installation to regular updates and troubleshooting. They manage the installation and configuration of new software applications, apply regular updates and patches to keep software running smoothly and securely and provide ongoing support to resolve any issues that arise.

Data Backup and Recovery

Data backup and recovery services ensure that a company’s critical data is regularly backed up and can be restored in case of data loss. MSPs implement robust backup strategies to protect against data breaches, accidental deletions, and system failures. They use advanced tools and techniques to back up data regularly, provide fast and efficient data recovery services in the event of data loss, and ensure that data backup and recovery processes comply with relevant regulations.

Other types of MSPs include Helpdesk/IT Support, Telecom/Videoconferencing, Print, IoT, etc., in addition to the ones mentioned earlier.

Benefits of Managed Services

Outsourcing IT functions to MSPs has major cost reduction benefits. Businesses can avoid expenses on hiring, training, equipment, and maintenance, enabling them to concentrate on core activities and strategic initiatives. MSPs offer specialized skills and knowledge, enhancing security and efficiency. Managed services provide flexibility in scaling IT resources as needed. They also ensure enhanced security measures, continuous monitoring, and regulatory compliance.

Managed Services and Related Terms

These terms are related to managed services but have distinct nuances that are important to understand.

IT Services

IT services are typically project-based and reactive, addressing specific issues or needs as they arise. This model focuses on solving immediate problems rather than providing ongoing maintenance and support.

Managed Services in ITIL

In the Information Technology Infrastructure Library (ITIL), managed services are defined as services managed by a provider. The customer focuses on outcomes, and the provider handles risks and responsibilities. This framework aligns IT services with business needs, ensuring efficient and effective service delivery.

Fully Managed Services

Fully managed services encompass the complete management of a company’s IT environment, including infrastructure, applications, security, and support. MSPs take full responsibility for all IT functions, providing comprehensive solutions tailored to the organization’s needs. These services offer reduced operational costs, access to specialized expertise, and improved system reliability. Businesses must consider the level of control they are willing to relinquish and ensure they choose an MSP that aligns with their strategic goals.

Common Managed Services Models

Understanding different managed services models helps businesses choose the best approach for their IT support needs. Here are some of the most common models:

Break/Fix Model

The break/fix model is a traditional IT support approach, providing services only when something breaks or malfunctions. Customers pay for services on an as-needed basis, leading to unpredictable costs and reactive problem-solving. For example, if a company’s server crashes, they contact their IT provider to fix the issue, incurring costs for the specific repair and any additional labor required. This model can lead to higher downtime and unexpected expenses, as problems are addressed only after they arise.

Proactive Managed Services

Proactive managed services involve continuous monitoring and maintenance of IT systems to prevent problems before they occur. MSPs use advanced tools to identify and address potential problems proactively, ensuring minimal downtime and enhanced system performance. For instance, an MSP might monitor network traffic to detect unusual activity indicating a security threat, addressing it before it can cause significant harm. This model helps maintain smooth operation and reduces the risk of major IT failures, offering predictable costs through regular maintenance fees.

Co-Managed IT Services

Co-managed IT services allow businesses to collaborate with MSPs while retaining some level of control over their IT operations. This model provides additional support and expertise, complementing the in-house IT team and enhancing overall IT management. For example, a company might handle day-to-day IT tasks internally but rely on an MSP for specialized services like cybersecurity or cloud management. This partnership allows businesses to leverage external expertise without fully outsourcing their IT operations, providing flexibility and scalability.

Challenges in Managed Services

Managed services offer numerous benefits, but they also come with their own set of challenges. Here are some common issues and their solutions:

Effective Communication

Ensuring effective communication between the MSP and the client is a frequent issue. Misunderstandings and misaligned expectations can lead to dissatisfaction and inefficiencies. Establishing clear communication channels and regular meetings can help. Implementing a dedicated account manager or a liaison who understands both the client’s business needs and the technical aspects can bridge the communication gap. Regular updates, progress reports, and feedback sessions ensure alignment between parties.

Data Security and Compliance

Managing data security and compliance is critical, especially with the increasing number of customer data cyber threats and stringent industry regulations. Ensuring that sensitive information is protected at all times can be daunting. MSPs should adopt comprehensive security measures like advanced encryption, multi-factor authentication, and regular security audits. Staying updated with industry regulations and conducting continuous staff training on data protection practices can further bolster security. Also, MSPs should develop and implement a robust incident response plan to quickly address security breaches.

Scalability

Scalability can be challenging as businesses grow and their IT needs evolve. Providing flexible solutions that can scale without incurring significant additional costs is required. MSPs should design their services with scalability in mind, offering modular solutions that can be easily expanded or contracted based on the client’s needs. Utilizing cloud-based services can also provide the necessary flexibility and scalability. Regularly reviewing and adjusting service agreements to reflect the current and future needs of the business ensures that the MSP can support growth effectively.

Cost Management

Controlling costs while maintaining high-quality service is a common concern. Unpredictable expenses can strain a business’s budget. Implementing a transparent pricing model with predictable costs can help manage this challenge. MSPs should offer clear service level agreements (SLAs) that outline what is included in the service package and what might incur additional costs. Regular financial reviews and cost-benefit analyses can help both the MSP and the client manage expenses more effectively.

Technology Integration

Marrying new tech with existing systems can be risky and complex. Ensuring compatibility and minimizing disruptions are key concerns. MSPs should thoroughly assess the client’s current IT environment before implementing new technologies. Developing a detailed integration plan, including testing phases and backup strategies, can mitigate risks. Providing client staff with training on latest technologies ensures smoother transitions and better adoption.

Best Practices for Implementing Managed Services

Implementing managed services can streamline your IT operations and improve efficiency. Here are some practical and actionable tips to ensure a smooth transition and successful adoption:

Start with a Clear Plan

Before diving in, outline your goals and what you hope to achieve with managed services. Identify the specific areas where you need help, such as network management, security, or cloud services. A clear plan will make communicating your needs to the MSP and ensure they understand your expectations easier.

Choose the Right MSP

Not all MSPs are the same. Take the time to research and find a provider that has experience in your industry and can meet your specific needs. Look for reviews, ask for references, and don’t hesitate to ask detailed questions about their services and expertise.

Communicate Openly and Often

The secret to a successful partnership is effective communication. Set up regular meetings with your MSP to discuss progress, address concerns, and make sure everyone is on the same page. Clear communication helps prevent misunderstandings and ensures that the MSP is aligned with your business goals.

Define Roles and Responsibilities

Make sure everyone knows their role. Clearly outline what tasks the MSP will handle and what will remain in-house. This will avoid confusion and guarantee that nothing falls through the cracks. A well-defined scope of work will keep both parties accountable.

Monitor Performance Regularly

Set up key performance indicators (KPIs) to track the success of the managed services. Regularly review these metrics with your MSP to ensure they are meeting your expectations. If something isn’t working, don’t wait – address it immediately.

Be Transparent About Your Needs

Don’t hold back any information that could help the MSP better understand your business. Share your challenges, goals, and any specific requirements you have. The more they know, the better they can tailor their services to meet your needs.

Build a Strong Relationship

Think of your MSP as a partner rather than just a service provider. Building a relationship based on trust and mutual respect can lead to better collaboration and more effective support. Take the time to get to know your MSP team and let them get to know your business.

Stay Involved

Even though the MSP is handling your IT needs, stay involved in the process. Regular check-ins and updates help you stay informed about what’s going on and allow you to provide feedback. Your involvement shows that you care about the outcomes and value the partnership.

Leverage Their Expertise

Take advantage of the MSP’s expertise. Ask for their recommendations on improving your IT infrastructure and staying ahead of potential issues. They can offer insights and solutions that you might not have considered.

Plan for the Future

Technology is constantly evolving, so make sure your managed services plan is flexible and future-proof. Work with your MSP to anticipate future needs and scale services as your business grows. Having a long-term strategy will help you adapt to changes smoothly.

By following these best practices, you can ensure a successful implementation of managed services, which will lead to improved efficiency, reduced costs, and a stronger IT foundation for your business.

Selling Managed Services: A Strategic Approach

Selling managed services requires a shift in mindset from selling individual products to selling solutions and outcomes. Instead of focusing on hardware or software, the emphasis should be on how your services can improve a client’s business operations, enhance security, and boost productivity.

To effectively sell managed services, consider the following:

• Build strong customer relationships: Understand your clients’ business goals and challenges. Position your services as solutions to their specific pain points.
• Develop compelling service packages: Create tiered service packages that cater to different customer needs and budgets. This allows for easier upselling and cross-selling opportunities.
• Leverage the power of CPQ: Configure, Price, Quote (CPQ) software is invaluable for selling managed services packages and bundles. It streamlines the sales process by automating quote generation, calculating pricing, and ensuring accuracy. CPQ also allows for easy customization of service packages based on customer requirements.

By adopting a customer-centric approach and utilizing the right tools, you can significantly improve your managed services sales performance.

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