What Is a Managed Service Provider (MSP)? Learn the Basics

As the information technology (IT) landscape continues to evolve and become more complex, many organizations are facing challenges with effectively managing their IT infrastructure and operations using existing internal resources. To address these challenges, companies are increasingly turning to managed service providers (MSPs) to help support IT-related business objectives.

Determining whether a managed service provider is a fit for your organization and selecting the best partner based on your business needs is an in-depth process. Learn more about what MSPs are, how they work, key benefits of partnering with a managed service provider, and how to choose and implement the right one.

What is a managed service provider (MSP)?

A managed service provider is a third-party company that oversees and supports one or more business functions for an organization. MSPs are most commonly known for managing an organization’s IT infrastructure and maintaining business continuity from a technical standpoint. Some providers also offer other services, including human resources, sales, marketing, and project support.

Businesses often partner with IT managed service providers when they lack internal resources to effectively manage IT or need to access quality technical expertise while managing costs. Engaging an MSP enables organizations to focus on strategic business priorities, rather than spending a significant amount of time and resources overseeing day-to-day IT operations.

How MSPs work

Many managed service providers are available to choose from and the overall scope, service offerings, and focus area vary depending on the provider. While some MSPs specialize in specific functions, such as cloud computing, help desk support, or data security, others are experts in certain industries, such as financial services or healthcare.

Contracts and pricing models also vary based on the scope, service offerings, and level of expertise and may include:

• Fixed or flat-rate pricing
• Tiered pricing with multiple package options at different price points
• Project-based pricing for short-term partnerships
• Customized pricing for specialized business needs

Before engaging an MSP, having an understanding of your overall business needs, IT goals, existing IT infrastructure, and budget is important. With this information in mind, you can more effectively assess potential managed service providers and select a partner that can drive the most value for your business.

Benefits of using an MSP

Partnering with a managed service provider offers many benefits for businesses looking to streamline their IT operations and drive efficiencies without exhausting internal resources.

Some of the top benefits of using an MSP include:

• Cost savings. Compared to maintaining an extensive in-house IT team, leveraging a managed service provider can lead to significant cost savings. Engaging an MSP reduces overhead costs associated with hiring and training internal team members. MSPs also often offer flexible pricing models, enabling businesses to only pay for the services and technical support they need.
• Technical expertise. Leading managed service providers typically employ experienced technical professionals who specialize in specific areas of IT, such as cybersecurity, network management, and data backup. Partnering with an MSP can give organizations access to a high level of technical knowledge that likely would not be available on a small in-house team.
• Access to advanced technologies. In addition to technical expertise, forward-thinking MSPs also stay updated on the latest technology and infrastructure developments. Through a managed service provider partnership, organizations gain access to innovative technologies, tools, and best practices they may not otherwise have access to.
• Scalability and flexibility. Top MSPs partner closely with clients to offer scalable solutions that can easily adapt to evolving business needs. This may mean scaling services and solutions up to accommodate growth and new areas of business, or scaling down during slow business periods.
• Enhanced security and compliance. Best-in-class managed service providers earn certifications such as Service Organization Control 2 (SOC 2) and Information Technology Infrastructure Library (ITIL) to validate their expertise and underscore their commitment to offering customers enhanced security and compliance capabilities. MSPs possess expertise in the latest cyber threats and cybersecurity defenses and can help organizations maintain compliance with industry regulations and data protection standards while mitigating risks.
• Ongoing monitoring and support. Managed service providers typically offer around-the-clock monitoring, troubleshooting, and support for IT systems and infrastructure, which isn’t always possible with an in-house team. This approach enables MSPs to identify and address issues as they happen and before they evolve into major problems, which minimizes downtime and business disruption.
• Proactive maintenance and updates. MSPs oversee routine IT maintenance tasks, patch management, and software updates to keep IT systems running smoothly and securely while saving internal teams from needing to track the latest updates.

MSPs vs. traditional IT support

Before deciding to partner with an MSP, weigh the pros and cons of outsourcing to a managed service provider versus relying on your in-house IT department. This process can help you choose the best approach based on your specific business needs.

While the benefits are outlined above, some of the potential cons of partnering with an MSP can include loss of control over IT infrastructure and a lack of in-house technical knowledge. Pros of leveraging an in-house IT team include control and ownership over IT systems and infrastructure as well as immediate access to in-house IT professionals, but at the price of higher costs, limited resources for scalability, and skills gaps.

When determining whether to move forward with exploring an MSP partnership or expand your traditional IT staff, consider the following:

• What’s your total budget for investing in IT infrastructure and resources?
• What are the projected initial and ongoing costs associated with partnering with an MSP versus maintaining an in-house IT team?
• Does your company have the necessary expertise and skills in-house to efficiently and cost-effectively manage all aspects of IT?
• What specific IT skills, technical expertise, and technology systems are required to meet your organization’s current and future needs?
• Is your internal team capable of offering 24/7 support and monitoring?
• How quickly can your internal team respond to and resolve issues compared to a managed service provider?
• How efficiently could your IT team scale up or down to accommodate shifting priorities, new projects, or business growth?
• Would partnering with an MSP offer improved scalability and flexibility?
• How much control and ownership does your business need to have over your IT systems and infrastructure? Can you trust IT management to an external partner?
• Which option is likely to best support your organization's long-term growth, innovation, and business continuity?

Common services offered by MSPs

As you evaluate opportunities to partner with an MSP, think about the specific IT services most critical to your business that might be better handled by a team with focused resources and the most updated skills.

Managed service providers offer a wide range of services, with some being more specialized than others, such as a managed security service provider focused specifically on cybersecurity. Other MSPs offer a comprehensive list of services across various focus areas.

IT MSP services may include:

• Network and infrastructure management
• Security as a Service (SaaS)
• Mobile device management
• IT process automation
• Remote and hybrid workforce management
• Data analytics
• Cloud services and support
• Backup and disaster recovery
• IT consulting and strategy
• IT vendor management
• Compliance and regulatory support
• Help desk and end-user systems support

Choosing an MSP

Vetting and choosing a managed service provider requires thoughtful consideration. Your MSP will play a significant role in keeping your business up and running and you want to choose a partner you can trust to oversee your IT infrastructure.

To help you select a managed service provider with confidence, consider these tips:

• Identify MSPs with certifications that align with your business model and needs, such as Health Insurance Portability and Accountability Act (HIPAA) compliance certifications for the healthcare industry or Payment Card Industry Data Security Standard (PCI DSS) compliance for businesses that handle customer payment data
• Take inventory of service offerings
• Evaluate technical capabilities, including infrastructure and expertise
• Inquire about cybersecurity and compliance processes and procedures
• Learn about customer service and support capabilities
• Assess MSP performance metrics, including uptime, average response time, mean time to incident resolution, and customer satisfaction score
• Review customer case studies and reach out to references to hear first-hand feedback about each potential managed service provider
• Explore MSPs with different pricing and contract options to determine what works best for your business and IT needs and budget
• Consider conducting pilots or trial periods with your shortlist of MSPs to assess their capabilities directly  

How to implement MSP services

Whether you’re in the process of considering managed service providers for the first time or looking to switch to a new MSP, taking a proactive approach to implementing MSP services can help set the partnership up for success.

1. Preparing your business

Before making a final decision on a managed service provider and kicking off the partnership, understanding where your business stands from an IT perspective, as well as your short- and long-term business needs and objectives, is essential.

Consider the following tips to help prepare your business for a successful MSP partnership:

• Confirm your strategic business objectives
• Align with internal stakeholders on short- and long-term budget projections
• Identify business processes and procedures that rely on IT systems and infrastructure
• Understand industry-specific regulatory and compliance requirements
• Assess your existing internal IT resources and knowledge, along with gaps that can be filled by a managed service provider
• Evaluate the current state of your IT infrastructure and processes, as well as areas for improvement
• Outline clear objectives for what you aim to achieve by tapping into MSP services, such as cost savings, improved customer satisfaction, or enhanced security
• Determine the point of contact or team responsible for holding the managed service provider accountable for achieving objectives

2. Establishing clear communication and expectations

As you review the contract and negotiate terms with your selected managed service provider, establish clear communication guidelines and expectations before finalizing any agreements and beginning the engagement.

One of the most important steps you can take to ensure smooth communications and hold an MSP accountable is establishing a service level agreement (SLA), which is a formal document that defines the expectations and commitment for both the MSP and your business.

Some of the elements covered in an SLA include:

• Scope of services provided
• Responsibilities and expectations for both parties
• Communication channels and cadence
• Security protocols and standards
• Goals and performance metrics
• Details on the change management process to propose, approve, and implement IT infrastructure changes
• Termination clauses outlining the conditions in which either party can terminate the contract

3. Measuring success

Continually tracking metrics related to your MSP partnership can help your organization gauge whether the MSP is driving enough value for your organization.

When evaluating managed service providers, inquire about each potential partner’s process for measuring success. Some MSPs may share reports on a regular basis or maintain an active analytics dashboard that enables your team to review key performance indicators (KPIs) as-needed.

The most proactive and forward-thinking providers will also schedule recurring review sessions—such as monthly or quarterly—to discuss progress toward goals, evolve KPIs as business needs shift, and identify areas for improvement.

Relevant KPIs may include:

• Cost savings compared to in-house IT resources
• Uptime percentage, meaning the total time your IT infrastructure and systems are operational
• Average time to respond to support requests or reported incidents
• Mean time to resolve (MTTR) reported issues
• Change management effectiveness related to software upgrades, migrations, integrations, or other change initiatives
• Adherence to regulatory and compliance requirements, industry standards, and security best practices relevant to your business
• Risk mitigation effectiveness
• Help desk performance, including call wait time, call handle time, and first time resolution percentage
• Customer satisfaction (CSAT) score from customers who interact with your MSP’s services and solutions