In-Depth

Picking the Right MSP

Managed services providers (msps) can help a company take its business from zero to 60 -- if the fit is good and the relationship is handled properly. A few considerations can help IT ask the most important questions to find the right MSP.

• By Scott Bekker
• 05/10/2017

So, you’ve concluded that your business could use some outside help on the technology side and you’re thinking about bringing in a managed services provider (MSP).

Maybe you’re after efficiency. Sectioning off some IT duties and outsourcing them at a fixed monthly cost to an MSP could bring cost savings, presuming that through its repeatable processes and presumed scale, the MSP could do the tasks better than your internal department and still make a profit from the service. Perhaps you want to refocus your IT department on higher-order tasks, for example, driving business value by improving or creating line-of-business applications rather than patching servers and chasing down help desk tickets.

It’s possible you want to transition your IT infrastructure to a cloud-first approach and want professional help that can manage the move and administer those cloud services on your behalf. Or you’ve learned about an MSP with deep expertise in your industry that bundles high-value vertical solutions along with standard IT services, and that total package could give your company a competitive advantage in your geographical area.

When it comes to delivering IT products and services to businesses, the MSP business model is one of the hottest options these days. How hot? According to last year’s MSP business model survey conducted by tech industry association comptia, managed services are the second-most-popular business model among those delivering technology on behalf of system infrastructure vendors. "Three in 10 respondents ranked managed services as the leading generator of revenue in the last 12 months, second to the 44 percent that cited IT solutions (for example, projects with elements of hardware, software and services) as the No. 1 revenue source. This compares against a list of 12 other potential business model choices, including VAR/reselling, IT support, and help desk and consulting services," comptia stated in its "5th Annual Trends in Managed Services" report.

If you’ve worked with a Microsoft partner or another type of IT services provider before, working with an MSP is slightly different. While systems integrators are often engaged on a project-by-project basis -- and even many service contracts are a sort of break-fix retainer relationship -- msps ideally present a monthly bill for services that doesn’t vary depending on how many problems arise. Initiation of MSP relationships can result in an up-front service bill for some msps who require that customers come up to a certain infrastructure standard that they feel they can guarantee, but after that the risk falls on the MSP’s shoulders. The more smoothly your infrastructure runs, the more profitable the MSP is: a win-win. The rockier your experience -- and the more hands-on the MSP needs to be -- the less profitable it is for the MSP, meaning your pain is its pain, as well.

There’s a lot of internal due diligence to do before selecting an MSP. It requires deep evaluations of whether the costs of an MSP will really result in savings when the actual bill comes due if the move is about efficiency, whether the current IT staff has the ability to grow into higher-value roles if it’s about repurposing low-level IT spending into investing in business-growth IT, and whether those cloud or vertical bundles will be better or more efficient for your company, among other things.

On the MSP evaluation side, it’s impossible to tell an IT department which MSP to pick. Every IT department is at a different stage with unique requirements, and msps themselves are nearly as diverse as the companies that contract with them.

An understanding of some of the trends and market forces shaping the MSP field right now can help you ask the right questions to get a deeper insight into the capabilities and predilections of available msps to narrow the list to one that’s best aligned with your corporate goals.

Are we in this MSP’s sweet spot for customer size?
Characteristics of msps are radically different depending on what size customers they typically serve. The biggest group of msps serve small and midsize businesses (smbs) that are looking for a generalist to take care of all of their IT needs. This one-stop-shop style of MSP often emerges out of the Microsoft Windows Small Business Server market, and it tends to interact directly with the president or owner of the company, helping set overall technology strategy and then handling maintenance of IT systems. Msps that work directly with IT managers tend to be focused on midsize organizations. They can be general-purpose msps that stand in for much of the IT department. While those types of contracts tend to be for smaller midmarket companies, there are general-purpose IT services contracts that handle most technology needs for very large companies. More commonly, midmarket and enterprise shops might contract with one or more msps to meet specific needs -- for example, a managed security services provider (MSSP). For midsize organizations and larger, the use of msps ideally can free up the IT department for higher-order tasks.

While the MSP you’re engaging with may say it serves customers your size, it’s best to confirm that and understand where it excels. If you discover that its wheelhouse is serving customers much smaller than you, the MSP might shower you with attention but be unable to deliver on your needs despite its best efforts. Conversely, if your MSP has a customer base that averages many more seats or servers than you have, it might be focused on metrics that don’t apply to your company and you might always have to battle for attention.

Do you see eye to eye on cloud?
Integrating cloud services with IT infrastructure is a train that most observers think has left the station. Yet just as many IT departments haven’t gotten on that train, a surprising number of msps feel the same way. The issue is especially common among smbs, where small msps that got their start with Small Business Server still favor on-premises solutions.

As CEO of St. Petersburg, Fla.-based connectwise Inc., which provides a popular software toolkit that many msps use to run their business, Arnie Bellini often speaks to msps about the cloud. Microsoft’s pricing strategy on Office 365 is making the cloud productivity suite increasingly compelling for all businesses from small organizations to enterprises, according to Bellini. "If you look at the pricing strategy, it’s very difficult for any company to justify not going to Office 365," Bellini says. Yet, he sees a surprising lack of movement among msps that are actually taking customers to the cloud. "They’re sitting in the wings and saying, i’ll do this when I’m forced to," he says of msps.

Another ISV executive with a broad view of the MSP landscape is Geeman Yip, CEO of bittitan Inc., a provider of tools for msps with an emphasis on migrations to Office 365 and other cloud products.

Yip says modern msps are developing deep expertise in integrating a full set of cloud applications to maximize value for their customers. "A cloud-first approach is really important because organizations are already asking for these cloud/saas-type of applications," Yip says. "If you look at the buying cycle, it used to be a single ecosystem, like a Microsoft shop or a Linux shop. Now organizations are moving into what I call a cloud shop. It is a multi-ecosystem environment that can span Amazon, Azure, Office 365, Salesforce, etc."

No matter whether you’re on board with becoming a Yip-style "cloud shop" or you want to keep as much of your infrastructure on-premises for as long as possible, you’re best served by an MSP that understands the pitfalls and benefits of several approaches and can lay out a full menu of options. Figuring out an MSP’s philosophy on cloud will help you understand whether that MSP’s agenda fits with yours.

How committed is the MSP to providing managed services?
Just because a company bills itself as an MSP, doesn’t mean managed services make up the bulk of its business.

Demand for managed services, especially, is driving a lot of Microsoft-focused systems providers to add these services to their portfolios, but those services are in various states of development. A central issue among Microsoft’s hundreds of thousands of them is that upgrading Exchange Server every three years for a set of customers was a solid business. The blossoming of Office 365 has challenged that business model, causing those partners to look for other opportunities and causing Microsoft to try to steer them to the MSP model.

"Partners are getting hammered by Microsoft and others to become managed services providers and to evolve beyond project services," says Christopher Hertz, former president and founder of New Signature, a Washington, D.C.-based two-time Microsoft U.S. Partner of the Year award winner.

With his lens into that community, bittitan’s Yip says movement is relatively slow. "When we look at where they are today, about 80 percent of them really are professional services organizations and one-time project services. Less than 20 percent of them actually have any sort of recurring revenue or managed services type of offerings for their customers," Yip says.