Why Are Companies Hiring Managed Service Providers?

Every Business Model struggles with finding the balance of managing their day-to-day operational needs with the revenue-generating goals and ambitions their business was built on.

The idea of allowing experts to handle your daily tasks while freeing up your specialized resources to focus their time and energy on more profitable projects is immediately appealing.

Retaining an expert Service Provider to handle your Business Operations and network is a strategy executives are using to predict and control costs while prioritizing their internal resources on the initiatives their company does best.

For many organizations, the fear of losing control, or the quality of service they receive from internally managing their operations is a primary concern.

This fear is frequently unfounded as most internal IT operator's job roles do not allow them to focus solely on security, or to be available 24/7.

In addition, the monthly cost of an internal IT professional is typically more than a managed team of experts monitoring your systems around the clock which has led us to a recurring discovery.

When organizations invest in Managed services, the investment is paid back in multiple ways.

We've found that the cost to business owners using a subscription model Managed Service increases their immediate revenue streams by allowing their staff to focus on other tasks, while also increasing the likelihood of avoiding the incredibly costly effects of data breaches.

What Are Managed Services?

At the root managed services are defined as a third-party organization managing and monitoring another organization’s system on a regular basis for a predetermined fee.

There are many benefits to an organization utilizing an MSP (Managed Service Provider) but the primary reason is the MSP continuous monitoring and maintenance of the organization’s systems.

This is seen as the primary benefit because it is in place to not only protect your business security but also prevent any interruptions of the system’s availability and minimize any downtime.

Preventing and minimizing downtime will lead to employees being able to be more productive, this leads to higher organization profitability.

The true value to an organization having an MSP is constant technicians monitoring the system foreseeing problems before they happen.

When a problem does occur the MSP is there to handle the situation and solve the problem based on the service agreement in place.

Characteristics Of Managed Services:

An MSP works as an extension of the organization’s internal IT team. The MSP will work within the Business objectives that are in place and design or improve the business continuity the organization operates on.

MSPs are performed remotely. They will frequent the organization’s site to meet with business owners, but the majority of the time the MSP is off-site.

Service Offerings range from; basic monitoring and maintenance to more extensive packages, which may include security, data storage and/or disaster recovery, software and technology updates and patches, document management, help desk response, firewall monitoring, intrusion detection, and restoration of operations.

All services and what is covered are spelled out based on the organization’s service agreement with the MSP.

With rapidly changing technology and the way, services are performed the MSP becomes an advisor in making recommendations for future technology needs and how to advert problems from using an older technology.

MSPs have fully trained staff in place to understand the organization’s needs, the ability to foresee problems, and the capability and resources to handle problems that may arise.

The Evolving World Of Managed Services

The definition of managed services has evolved from the basic root to a more complex one today and that is in part because organizations are demanding more sophisticated services be offered by MSPs.

The reason for this demand comes from technology becoming more embedded into every business function.

From this, the MSP’s functions have become a lot more intrinsic to the organization’s business. MSPs aren’t just keeping the system running but they now could be handling essential business functions as well.

Another factor that is leading to the evolution in managed services is how fast the modes of delivering IT services are evolving.

Right in front of our eyes, we have gone from hardware to virtualized servers to now cloud-based services. Everything is changing so fast it is like watching the clouds roll by, one minute it looks like a puppy but the next it is a racecar all while moving across the sky.

More and more organizations are blending these modes of delivery into their service offerings.

Despite the definition of managed services evolving and becoming more complex is still at the heart is about a third party managing another organization’s system on a regular basis for a predetermined fee.

Managed Services Are Expanding

The majority of service agreements today are expanding from the traditionally very basic requirements into very extensive offerings.

Managed services as demand services are about 20 years old now, organizations are moving past the previous anxiety that some business owners had while realizing their effectiveness.

Organizations are increasingly realizing that intrusting a quality third party to handle critical operations of their organization provides a much more stable level of security and confidence.

The idea of overlooking security issues is a leading concern for these organizations. For this reason, organizations list alleviating security concerns as a major reason they hire an MSP.

This actual cost associated with diverting IT staff from core business functions to attend to system maintenance has provided additional motivation beyond increased security.

Some organizations are wary to move to managed services as they have invested money and resources into big-ticket equipment deals.

These large pieces of equipment do not have a high resale value and many organizations feel the need to wait for these big-ticket items to reach their end of life.

Moving away from these items earlier than planned would mean the sunk cost would no longer be able to be spread across many years and a greater effect would be felt on their bottom line, however, when compared against the cost of business loss due to a breach or inefficient systems, the evaluation is much harder to perform reliably.

Despite few reservations, Industry research overwhelmingly supports the idea of more organizations moving to MSPs just as people have moved away from candlelight to the lightbulb for their main source of providing light.

The following statistics support this idea: By the end of 2020, businesses in the United States were spending over $215 billion on cloud computing and managed IT services. -Grandviewresearch

The estimate for end-user spending on cloud services is expected to expand at a compound annual growth rate (CAGR) of 12.7% from 2021 to 2028.

The success of a service agreement is in the details of the service level agreement in place between the MSP and the organization. The service level agreement spells out the details of all the services being provided and what level of service is to be expected by the organization.

The most critical service level agreement components are; response time, 24/7/365 support, and data and systems security.

Why Do Organizations Need Managed Services?

Think back to the days of DOS, desktop computers connected to a main-frame that took up a whole room, punch-tape backups, floppy disk storage, and IT departments of one person who was constantly reminding people that they need to constantly empty their files because they are using too much of the already limited memory.

This all sounds like technology from the first days of the computer but is actually in fact not that far back in the past, some being just a decade or so ago from being the norm.

Comparing what a computer can do today in terms of power, storage, and software sophistication to those of the early days is like comparing a model-T car to an electric car found on the road today.

The technology, funding, goals, policies, and politics have all changed so much, it is almost unfathomable to think that one event has led to another.

Just as the world of automobiles has evolved from a car that runs on gasoline but did not go very fast or very far could be the basis of the technology that now has cars that run on electricity that can go very far and fast on one charge.

The same can be said for the technology world. Today it demands a fleet of experts and specialists to not only maintain your system but to fully take advantage of all the benefits the system can provide.

This is why organizations need to utilize managed services.

The Drivers Of Change

Many trends can be found leading to the increase in the demand for managed services, they are:

The Complexity Of Business:

We all remember the days where technology was its own department within an organization and did not bleed over into many other departments.

Today, however, technology is an essential function within all departments, from billing, payroll, and human resource management. In today’s technology world organizations rely on such features as tracking systems for inventory, complex dashboards, and creating real-time reports.

All of these functions have become very important components to the everyday functions of an organization and even a slight disruption results in not only a monetary loss but upset customers.

Technological Evolution:

With technology constantly evolving it means today’s technology becomes obsolete tomorrow. It depreciates faster than a car the minute you drive it off the lot.

This means that most IT departments are constantly using systems that are no longer state of the art and should be serviced and upgraded to the newest version but due to the high investment into these systems, it is not always feasible to change your system to the newest system.

This has led more and more organizations to start utilizing cloud services even if they do not fully understand or trust them.

Most of these organizations are learning about the cloud's capabilities, advantages and disadvantages as they go along.

Accessibility:

Before Covid, more and more businesses were already operating around the clock, requiring them to be accessible at all times in all places.  Since 2020, it has become more important than ever.

No longer are employees tethered to their desks to perform their jobs. Most employees now conduct their business anywhere they can find a Wi-Fi connection or even right from their own smartphone.

In today’s business environment a desktop computer located inside an office is being replaced by a smartphone that can be utilized anywhere there is a signal.

The strongest indicator that people need to be accessible at all times is to watch people as they de-board a plane, watch as almost every passenger’s first action isn’t to undo their seatbelt but to turn on their phone and reply to any missed texts or emails, update their Facebook status or to send out a picture via Snapchat.

Accessibility at all times is not the way of the future, it is the way of the present.

Regulatory Compliance:

As more employees become mobile, more important information is now accessible in more areas at any time.

This has led to more regulation requirements being put in place. It now seems that every type of industry has a certain set of standards and regulations that must be followed when it comes to how customer information is accessed, how it is stored, who is allowed to access it, and how it is shared.

With all these new regulations being put in place most organizations find it hard to keep up with what is required to stay compliant, do not have the IT staff on hand to consistently keep up with these requirements, lack the required tools to stay compliant, or do not have the necessary systems to handle all the data.

If an organization does decide to perform the tasks required to stay compliant they will find it is a costly venture and in most cases, it is more cost-effective to seek out someone whose expertise is in this area.

Despite organizations need to find solutions to these security requirements, some organizations are still reluctant to turn over sensitive information to a third party for fear that information will not be properly secured, however, much like putting your money into a bank,  having a third party manage your data actually improves the integrity and security of your business data.

Financial Benefit:

One of the biggest reasons organizations turn to an MSP is the cost savings it provides. Finding any way that an organization can cut costs to improve the bottom line is a driving factor for every business regardless of what service or product they produce.

The financial advantages of using a Managed Service Provider are felt both instantly and as a hedge against potentially catastrophic losses.

The ability to free up staff to focus on strategic initiatives of the organization, allows the organization to have access to the newest and most improved technology and improves the overall security of the organization.

Also, having an MSP means the hardware, maintenance, keeping up with new compliance requirements, and the continuation of training staff, and obtaining certifications are the responsibility of the MSP.

For an organization to take on and maintain these tasks would be expensive endeavors.

Over the past few years, the move to cloud storage and computing has also helped organizations cut costs. The benefit of this move has changed technology from a capital expense to an operating expense.

Also, the computing capability increases allow the IT teams to concentrate on the strategic initiatives of the organization. Cloud services mixed in with what an MSP provides creates a perfect storm of cost savings for an organization.

Per Citrix.com:

• 61% of workers report working outside the office at least part of the time.
• The number of devices managed in the enterprise increased 72% from 2014 to 2015.
• Employees utilize at least 3 devices for work-related activities.
• 90% of organizations deploy passcode enforcement, the most common device-level policy.

Conclusion

The landscape of technology, and where and how we access it is changing every day, making it hard for most organizations to stay up to date.

With all these changes organizations are finding it increasingly difficult to focus their time on the strategic initiatives that drive their business while managing the daily tasks required for their organization to run smoothly.

The primary factors that have led organizations to MSPs include:

The increase in the complexity and erosion rate of today’s technology combined with finding more efficient ways to manage their resources while finding effective cost-savings.

Regulations and requirements have increased, requiring companies to stay compliant, which falls beyond the scope of most IT department's capabilities.

More emphasis on security and securing networks, especially when working within a cloud environment.

The necessity for in-house IT staff to focus more on revenue-generating functions instead of the daily required tasks.

Gaining access to dedicated experts in Cybersecurity Services who specialize in these areas.

Today, the choice is clear, organizations who require premium cybersecurity protection and digital asset management with detailed predictable budgets are turning to cloud and application service providers to manage tasks and allow them to focus on the profit-generating functions they do best.

For more information on managed on-premises and Cloud Computing Services or to set up a demonstration of Sath's centralized platform Identity Management System IDHub, contact one of our Security Specialists today.