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What is a managed service provider?

Updated: Dec 25, 2023

A managed service provider (MSP) is a third-party business that remotely administers an end-IT user's infrastructure and applications. MSPs are employed by small and medium-sized companies (SMBs), charitable organizations, and governmental organizations to carry out a specific range of ongoing management tasks. Network and infrastructure management, security, and monitoring are a few of these services that may be offered.

For customer companies to concentrate on developing their services without being concerned about protracted system outages or service interruptions, MSPs frequently perform administration services regularly.

While some MSPs may focus on particular IT subfields, like data storage, others may concentrate on particular vertical industries, such as legal, financial, healthcare, or manufacturing. For instance, managed security service providers provide specialized services like remote firewall management and other security-as-a-service options. Managed print service companies offer consumables and printer maintenance. MSPs frequently carry out their duties online from a distance. Application service providers (ASPs), which provided a level of service for remote application hosting, first appeared in the 1990s and marked the beginning of the evolution of MSPs. ASPs paved the path for businesses that would offer remote assistance for clients' IT infrastructure and cloud computing. MSPs first concentrated on servers and networks' remote monitoring and management (RMM). They have widened the breadth of their offerings throughout time to set themselves apart from other service providers.

Nowadays, when a provider's service is supported by an SLA and delivered online, the terms cloud service provider and managed service provider are sometimes used interchangeably.

What purposes serve MSPs?

Employing a managed service provider can help a company optimize its processes.

MSP clients often include SMBs. Since many smaller businesses have limited internal IT resources, they may see an MSP's service offerings as a method to acquire IT knowledge. Larger businesses, however, could also work with MSPs. To support their internal IT employees, for instance, government organizations may enter into a contract with an MSP.

MSPs take care of the difficult, time-consuming, or monotonous tasks related to managing end-user systems or IT infrastructure. MSPs usually carry out the following: Manage user access accounts, add cybersecurity software to IT, handle contract administration, offer compliance and risk management, and offer payroll services. Handle the management of IT infrastructure.

How do MSPs function?

A managed service provider is frequently expected to fill a role or a gap in an IT system or workforce when asked to help a company achieve its business goals. An evaluation that assesses the organization's present environment usually marks the beginning of communication between the MSP and the organization. This evaluation may highlight areas that might want improvement and how best to meet corporate objectives. Since each business has a unique configuration, an MSP may provide a wide range of service alternatives. Technical assistance repair services and subscription services are two types of MSP offers.

MSP technical support repair services concentrate on sending professionals to a company's site or fixing any problems remotely. The time spent troubleshooting as well as any components required to fix the issue are both billed for by MSPs that provide this option to the business. MSPs with subscription service models focus on network quality of service and typically charge clients every month. As per the agreement between the organization and the MSP, if a problem occurs, the MSP will address it. The subscription model of payment uses set fees for each piece of equipment or computer.

An SLA outlines the maintenance, security, monitoring, reporting, and other services that the company may anticipate from the MSP. The service agreement also contains criteria for response times, performance, and security.

MSPs may offer their native services, those of other providers, or a hybrid combination of the two. Pure-play MSPs primarily offer their native services and concentrate on a single vendor or technology. MSPs concentrate on establishing specialized software platforms that carry out tasks automatically.

These platforms include professional services automation (PSA) apps and RMM tools

  • Off-site specialists can maintain IT systems including networks, servers, workstations, and mobile devices thanks to RMM software.

  • MSPs may upgrade systems by applying patches and other updates thanks to these tools.

  • An MSP can manage a company's projects, invoices, assets, and inventories thanks to PSA technologies.

  • A managed service provider frequently offers its services by an SLA, which is a binding agreement between the MSP and its client.

  • The performance and quality metrics that guide the partnership are spelled out in the SLA. When settling on the promises they make in SLA contracts, organizations must be exact.

The price structure of an MSP may be connected to an SLA. For instance, an MSP might provide customers with a variety of SLAs, with the customer paying more for higher levels of service under a tiered pricing structure.

What kinds of MSPs are there?

Depending on the classification criteria used, different managed service providers may fall under different categories. For instance, if a company decides to categorize MSPs according to the size of their target clients and the amount of responsibility they accept, MSPs can be arranged as follows:

  1. Purely digital MSPs, these are frequently more compact providers with a concentration on network and application performance tracking.

  2. They provide native services of their own that are mostly geared toward reporting and alerting.

  3. Manning the old MSPs, frequently provide a wide range of services, such as monitoring, reporting, and software installation and upgrades, and they typically target mid-level organizations and Fortune 500 companies.

MSPs can also be grouped according to the services they provide


These MSPs provide real-time monitoring software for various servers, network devices, apps, and websites.

Remote assistance

These MSPs provide cloud-based software, support remote devices, and do technical assistance remotely.

Proactive assistance

Preventative maintenance is carried out by these MSPs to keep ahead of any network or device faults.

Centralized administration

These MSPs offer security software, patch management, remote monitoring, a management console for complicated networks, and other services.

Planned maintenance

These MSPs provide planned network maintenance for businesses.

Streamlined billing

Through a billing management system, these MSPs manage billing, payments, and budgeting.

What advantages can managed service companies offer?

These are some advantages of managed service providers:

  • Help a company fill staffing gaps. A company might outsource part of its responsibilities to the MSP if it is short on personnel.

  • provide knowledge. A trustworthy MSP may provide business access to knowledgeable resources.

  • Maintain company operations. An SLA outlines the MSP's duties to the company in the event of a disaster or during recovery.

  • Maintain ongoing network surveillance. Utilizing network monitoring solutions that provide system visibility and cloud administration, several MSPs provide around-the-clock monitoring services.

  • Boost security. Some MSPs offer awareness programs and security software.

What difficulties do managed service providers face?

Despite their benefits, managed service providers may face difficulties, such as:

  • Not every MSP provides security precautions. A lot of MSPs do not place a strong emphasis on cybersecurity.

  • Reliant on external entities. Businesses that rely on an MSP to handle routine chores risk becoming dependent on them. System downtime may occur for the organization if the MSP does not adhere to the SLA.

  • I'm awaiting a reply. An MSP's response to a problem might be slow. conceivable upselling An MSP could attempt to upsell a company on products or services it doesn't require.

  • Unable to access information If an MSP manages and keeps track of its infrastructure using a proprietary tool, the information included in the organization could not be openly available.

What is the managed service providers' price structure?

One of the following pricing structures is frequently used by managed service providers:

the managed service providers' price structure

  1. Pricing per device. For each device it monitors, the MSP assesses a fixed price to the client.

  2. Pricing per user. Users that utilize several devices can be accommodated by the MSP, which levies a fixed rate for each user.

  3. All-inclusive cost. The MSP charges a flat rate for its IT infrastructure support and management services, sometimes known as the "all-you-can-eat" approach. In each of these pricing approaches, the customer pays the flat fee on a regularly scheduled basis, often monthly. Such pricing methods let MSPs sell services under a subscription model. This approach provides the MSP with a monthly recurring revenue (MRR) stream, in contrast to IT projects that tend to be one-time transactions. MRR differs from other business models, as providers pursuing the break/fix model, for example, usually price their services on a time and materials basis. They generally bill an hourly rate for repairing a customer's IT equipment and charge for parts or replacement gear.

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