Managed services#Managed services provider

Managed services is the practice of outsourcing the responsibility for maintaining, and anticipating need for, a range of processes and functions, ostensibly for the purpose of improved operations and reduced budgetary expenditures through the reduction of directly-employed staff.{{cite web |title=Inside Outsourcing: More Bad News from Business Regulation? |url= https://www.brookings.edu/research/inside-outsourcing-more-bad-news-from-business-regulation/ |date=November 1996 |publisher=The Brookings Institution |archive-url=https://web.archive.org/web/20220131130043/https://www.brookings.edu/research/inside-outsourcing-more-bad-news-from-business-regulation/ |archive-date=31 January 2022 |url-status=dead}}{{cite web | title=Introduction to Managed Services |url= http://www.ca.com/us/~/media/Files/whitepapers/introduction-to-Managed-services-wp.pdf |date=September 2012 |publisher=CA Technologies }}{{cite book | title= Managed Services in a Month |url= https://hopla.online/about/managed-outsourcing/ |last=Palachuk |first =Karl | date =January 2013 | publisher =Great Little Book Publishing Co., Inc. |page=208 |isbn= 978-0981997858}} It is an alternative to the break/fix or on-demand outsourcing model where the service provider performs on-demand services and bills the customer only for the work done.{{cite web |title=An Insight Into IT Service Delivery: Traditional Break-Fix vs A Managed Service |url=http://www.oryxalign.com/wp-content/uploads/2015/05/An-insight-into-IT-Service-Delivery_Break-fix-vs-Managed-Services.pdf |author=OryxAlign |access-date=2016-03-28 |archive-date=2017-02-02 |archive-url=https://web.archive.org/web/20170202000758/http://www.oryxalign.com/wp-content/uploads/2015/05/An-insight-into-IT-Service-Delivery_Break-fix-vs-Managed-Services.pdf |url-status=dead }}{{cite web |title=How Break/Fix Can Break Your Managed Services Business |url=http://mspmentor.net/blog/how-breakfix-can-break-your-managed-services-business |date=5 March 2010 |author=Nimsoft Guest |publisher=MSPMentor |access-date=28 March 2016 |archive-date=7 July 2017 |archive-url=https://web.archive.org/web/20170707082519/http://mspmentor.net/blog/how-breakfix-can-break-your-managed-services-business |url-status=usurped }} The external organization is referred to as a managed service(s) provider (MSP).

Definitions

A managed IT services provider is a third-party service provider that proactively monitors & manages a customer's server/network/system infrastructure, cybersecurity and end-user systems against a clearly defined Service Level Agreement (SLA).{{Cite web |title=What is a Managed Service Provider (MSP)? |url=https://searchitchannel.techtarget.com/definition/managed-service-provider |access-date=2022-03-10 |website=SearchITChannel |language=en}} Small and medium-sized businesses (SMBs), nonprofits and government agencies hire MSPs to perform a defined set of day-to-day management services so they can focus on improving their services without worrying about extended system downtimes or service interruptions. These services may include network and infrastructure management, security and monitoring.{{cite web |title=managed service provider (MSP) |url=https://www.techtarget.com/searchitchannel/definition/managed-service-provider |author1=Alexander S. Gillis |author2=John Moore |access-date=15 July 2024 |publisher=TechTarget}}{{cite web | title=Top ten criteria for selecting a managed services provider |url= http://www.ibm.com/midmarket/it/it/att/pdf/Top_ten_criteria.pdf |date=2015 |publisher=IBM Global Technology Services }} Most MSPs bill an upfront setup or transition fee and an ongoing flat or near-fixed monthly fee, which benefits clients by providing them with predictable IT support costs. Sometimes, MSPs act as facilitators who manage and procure staffing services on behalf of the client. In such context, they use an online application called vendor management system (VMS) for transparency and efficiency. A managed service provider is also useful in creating disaster recovery plans, similar to a corporation's.{{Cite web |title=Cloud Data Backup & IT Disaster Recovery Solutions |url=https://axiomcan.com/services/network-recovery/ |access-date=2023-06-23 |language=en-US}}

The managed services model has been useful in the private sector, notably among Fortune 500 companies,{{cite web |title=60% of Fortune 500 Companies Running ManageEngine |url=http://mspmentor.net/managed-services/60-fortune-500-companies-running-manageengine |date=23 April 2012 |author=Joe Panettieri |publisher=MSPMentor |access-date=28 March 2016 |archive-date=2 February 2017 |archive-url=https://web.archive.org/web/20170202002706/http://mspmentor.net/managed-services/60-fortune-500-companies-running-manageengine |url-status=usurped }} with potential future applications in government.{{cite web |title=IT Managed Services in the Public Sector |url=http://www.storagecraft.com/blog/it-managed-services-in-the-public-sector/ |date=4 June 2015 |author=Casey Morgan |publisher=storagecraft |access-date=28 March 2016 |archive-date=2 February 2017 |archive-url=https://web.archive.org/web/20170202001012/http://www.storagecraft.com/blog/it-managed-services-in-the-public-sector/ |url-status=dead }}

History and evolution

The evolution of MSP started in the 1990s with the emergence of application service providers (ASPs) who helped pave the way for remote support for IT infrastructure. From the initial focus of remote monitoring and management of servers and networks, the scope of an MSP's services expanded to include mobile device management, managed security, remote firewall administration and security-as-a-service, and managed print services. Around 2005, Karl W. Palachuk, Amy Luby, Founder of Managed Service Provider Services Network acquired by High Street Technology Ventures, and Erick Simpson, founder of Managed Services Provider University, were the first advocates and the pioneers of the managed services business model.{{cite web | title=MSPmentor 250 List 2014: Honorees N to P | url=http://mspmentor.net/mspmentor-250/mspmentor-250-list-2014-honorees-n-p | date=2015 | publisher=MSPMentor | access-date=2016-03-28 | archive-date=2017-06-27 | archive-url=https://web.archive.org/web/20170627192521/http://mspmentor.net/mspmentor-250/mspmentor-250-list-2014-honorees-n-p | url-status=usurped }}{{cite web | title=MSP Partners Recognizes Outstanding Contributions in Managed Services |url=http://www.businesswire.com/news/home/20080807005757/en/MSP-Partners-Recognizes-Outstanding-Contributions-Managed-Services |date=7 August 2008 |publisher=BusinessWire}}

The first books on the topic of managed services: Service Agreements for SMB Consultants: A Quick-Start Guide to Managed Services{{cite book | title= Service Agreements for SMB Consultants |last=Palachuk |first =Karl | date = July 2011| publisher =Great Little Book Publishing Co., Inc. |isbn= 978-0976376026}} and The Guide to a Successful Managed Services Practice{{cite book|title=The Guide to a Successful Managed Services Practice|last=Simpson|first=Erick|date=15 August 2006|publisher=Intelligent Enterprise|isbn=978-0978894306|page=320}} were published in 2006 by Palachuk and Simpson, respectively. Since then, the managed services business model has gained ground among enterprise-level companies. As the value-added reseller (VAR) community evolved to a higher level of services, it adapted the managed service model and tailored it to SMB companies.

In the new economy, IT manufacturers are currently moving away from a "box-shifting" resale to a more customized, managed service offering. In this transition, the billing and sales processes of intangible managed services, appear as the main challenges for traditional resellers.

The global managed services market is expected to grow from an estimated $342.9 Billion in 2020 to $410.2 Billion by 2027, representing a CAGR of 2.6%.{{Cite web|date=April 2021|title=IT Outsourcing - Global Market Trajectory & Analytics|url=https://www.researchandmarkets.com/reports/5027960/it-outsourcing-global-market-trajectory-and|access-date=2021-09-21|website=www.researchandmarkets.com|publisher=Global Industry Analysts, Inc|language=english|quote=Amid the COVID-19 crisis, the global market for IT Outsourcing estimated at US$342.9 Billion in the year 2020, is projected to reach a revised size of US$410.2 Billion by 2027, growing at a CAGR of 2.6% over the analysis period 2020-2027.}}

Advantages and challenges

Adopting managed services is intended to be an efficient way to stay up-to-date on technology, have access to skills and address issues related to cost, quality of service and risk.{{cite web | title=Business Value of Managed Services |url=http://www.ibm.com/midmarket/de/de/att/pdf/IDC_Whitepaper_2013_Business_Value_of_Managed_Services.pdf |date=June 2013 |author=Randy Perry |publisher=IDC }}{{cite web | title= Top Five Functions Outsourced To Managed Services | url= http://www.crn.com/slide-shows/managed-services/300073018/top-five-functions-outsourced-to-managed-services.htm | date= 4 June 2014 | author= Sarah Kuranda | publisher= CRN Magazine | access-date= 28 March 2016 | archive-date= 16 July 2018 | archive-url= https://web.archive.org/web/20180716194814/https://www.crn.com/slide-shows/managed-services/300073018/top-five-functions-outsourced-to-managed-services.htm | url-status= dead }}{{cite web | title=Managed Services:The Win-Win Model for Your IT Support Success |url=http://www.mspbusinessmanagement.com/sites/default/files/whitepaper/WP0003-v1.0-EN-win-win-model-it-support.pdf |date=2011 |author=Robert Peretson |publisher=MSP Business Management}} As the IT infrastructure components of many SMB and large corporations are migrating to the cloud,{{cite book |last1=Wood |first1=J.B. |last2= Lah |first2= Thomas |title=Technology-as-a-Service Playbook |publisher=Technology Services Industry Association |chapter=The Case for Managed Services: A Stepping Stone to the Cloud }} with MSPs (managed services providers) increasingly facing the challenge of cloud computing, a number of MSPs are providing in-house cloud services or acting as brokers with cloud services providers.{{cite web | title=Managed services companies rethink their portfolios |url=http://searchitchannel.techtarget.com/feature/Managed-services-companies-rethink-their-portfolios |date=February 2016 |author=Spencer Smith |publisher=TechTarget }}{{cite web | title=The case for managed service providers in your cloud strategy |url=http://www.infoworld.com/article/2923441/cloud-computing/the-case-for-managed-service-providers-in-your-cloud-strategy.html |date=19 May 2015 |author= David Linthicum |publisher=InfoWorld }} A recent survey claims that a lack of knowledge and expertise in cloud computing rather than offerors' reluctance, appears to be the main obstacle to this transition.{{cite web | title=Making the Transition from VAR to MSP |url=http://www.ca.com/us/~/media/Files/whitepapers/making-the-transition-from-var-to-msp.PDF |date=October 2014 |publisher=CA Technologies }}{{cite web | title=Cloud-based service revenue lags among MSPs |url=http://searchitchannel.techtarget.com/feature/Cloud-based-service-revenue-lags-among-MSPs |date=May 2015 |author= John Moore |publisher=TechTarget }} For example, in transportation, many companies face a significant increase of fuel and carrier costs, driver shortages, customer service requests and global supply chain complexities. Managing day-to-day transportation processes and reducing related costs come as significant burdens that require the expertise of Transportation Managed Services (or managed transportation services) providers.{{cite web | title=A Holistic Approach to Transportation Managed Services |url= https://www.forbes.com/sites/stevebanker/2014/02/11/a-holistic-approach-to-transportation-managed-services/#11687f056e24 |date=11 February 2014 |author=Steve Banker |work=Forbes }}{{cite web | title=What are Managed Transportation Services? The Old Model vs. The New Model | url=http://cerasis.com/2014/09/22/managed-transportation/ | date=2 September 2014 | author=Adam Robinson | publisher=CERASIS | access-date=28 March 2016 | archive-date=22 March 2016 | archive-url=https://web.archive.org/web/20160322192320/http://cerasis.com/2014/09/22/managed-transportation/ | url-status=dead }}

Types

=General services=

class="wikitable" ! scope="col" style="text-align:center; width: 100px;" \| Name ! scope="col" style="text-align:center; width: 300px;" \| Functions ! scope="col" style="text-align:center; width: 100px;" \| Providers
Information services / Cloud	* Software – production support and maintenance * Authentication * Systems management * Data backup and recovery * Data storage, warehouse and management * Cloud transformation * Network monitoring, management and security * Human Resources and Payroll	managed IT services provider, managed security service provider, HCM software
Business-to-business integration	* Supply chain management * Communications services (mail, phone, VoIP) * Internet * Videoconferencing	Internet service provider, Video managed services provider
Supply chain managed services{{cite web \| title=Supply Chain Managed Services \|url=http://www2.deloitte.com/us/en/pages/operations/solutions/supply-chain-managed-services.html \|date=2015 \|publisher=Deloitte}}	* Supply chain planning, monitoring and control * Sourcing and procurement * Logistics and distribution	Supply chain managed services provider
Transportation{{cite web \| title=What are Managed Transportation Services? The Old Model vs. The New Model \| url=http://cerasis.com/2014/09/22/managed-transportation/ \| date=22 September 2014 \| author=Adam Robinson \| publisher=CERASIS \| access-date=28 March 2016 \| archive-date=22 March 2016 \| archive-url=https://web.archive.org/web/20160322192320/http://cerasis.com/2014/09/22/managed-transportation/ \| url-status=dead }}	* Daily transportation planning * Process execution and enforcement (freight audit/accounting & payment)	Managed transportation services provider
Marketing \|* Marketing strategy, planning * Integrated marketing / advertising agency services (graphic design, copywriting, PPC, social media, web design, SEO) \|Marketing managed services provider, outsourced marketing providers
Media	* Systems operation and support services * Broadcast managed services	Media managed services provider
Water{{cite web \| title=Managed services \|url= http://www.watercentric.com/#!managed-services/cix9 \|date=2015 \|publisher= Water Centric }}	* Water quality testing * Water storage and transfer systems management * Smart irrigation monitoring, scheduling	Water managed services provider
Power{{cite web \| title=The Growing Trend of Managed Services for Advanced Metering \|url=http://www.elp.com/articles/powergrid_international/print/volume-19/issue-7/features/the-growing-trend-of-managed-services-for-advanced-metering.html \|date=16 July 2014 \|author=Dan Pegan \|publisher=Electric Light and Power }}	* Advanced metering infrastructure * Smart grid deployments	Power managed services provider

=IT services=

In the IT industry, the most common managed services revolve around connectivity and bandwidth, network monitoring, security,{{cite web | title=How to use managed services to overcome the top 6 app security hurdles |url=http://www.information-age.com/technology/security/123461048/how-use-managed-services-overcome-top-6-app-security-hurdles |date= 7 March 2016 |author=Chloe Green |publisher=Information Age }} virtualization, and disaster recovery.