The Benefits of Outsourced Managed Service Providers

Introduction

Managed services providers (MSP) are usually information technology (IT) service providers who manage and assume responsibility for providing a defined set of services to their clients either proactively or as they determine necessary. Most MSPs bill a flat or near-fixed monthly fee which benefits their clients with a predictable IT support cost. Typically, the service provider remains accountable for the functionality and performance of managed services and does not relinquish the overall management responsibility of the organization or system. 1

Outsourcing is the process of contracting with a third-party to provide a selective list of services. When it comes to IT infrastructure, almost all enterprises outsource at least some of the IT resources and activities necessary to support business operations. Thus, the cost of maintaining hardware (such as data centers, etc.) might become a huge task for companies.

Benefits of Outsourced Managed Service Providers 2

  • Reduced capital expense: One has to arrange for capital for not only purchasing the hardware and infrastructure, but maintaining and updating them as well. The cost of internally managing IT infrastructure is enormous. The cost for a small and medium enterprise to purchase, run, and maintain even a fraction of such an infrastructure can be just as expensive, relative to the size of the business. Further, the cost of supporting network infrastructure, switches, firewalls, rack equipment, and an appropriate facility for housing the systems along with the upfront capital costs required for IT projects can be challenging. Meanwhile, outsourcing such equipment will reduce setup cost.
  • Expert support: Getting an expert to maintain servers is often difficult since not all enterprises specialize in them.  Most of the times servers are not set up in a standard manner and the lack of expert personnel to manage it may mean a reduction in reliability and the ability to recover from failure. Outsourcing these means leaving it in the hands of experts. By outsourcing the network and servers, enterprises can introduce predictability into the acquisition, maintenance, and eventual replacement of key infrastructure components.
  • Reduced cost: Outsourcing enables cost reduction in terms of maintenance, cost on personnel training, etc. Outsourcing administrative services can reduce or eliminate the need to hire and train IT personnel, thereby transforming the costs into a predictable monthly service fee. Companies find it more economical to outsource the maintenance of IT infrastructure as compared to maintaining it in-house due to the high cost involved in terms of extensive security, redundant power and generator backup, fire suppression, automated backup systems, on-site spare parts, and 24/7 monitoring and response.
  • Quicker deployment and ability to upgrade: For most companies, designing, procuring, and implementing IT equipment and systems can consume a significant amount of time and effort. Many service providers can implement new projects in a short timeframe – often within 24 hours from the time of order.
  • Reduced personnel requirements and expertise: Maintaining IT infrastructure is not an easy task. It requires the right kind of personnel to maintain them. There is cost involved in training employees to efficiently install and maintain the IT infrastructure. By outsourcing their IT services requirements, companies reduce their personnel requirements thus reducing cost.
  • Higher reliability and performance: Housing infrastructure with a service provider who specializes in such equipment can offer higher performance and reliability compared to an enterprise handling the infrastructure on its own. For instance, most Tier 1 commercial data centers offer multiple redundant network providers, extensive security, redundant power and generator backup, fire suppression, automated backup systems, on-site spare parts, and 24/7 monitoring and response. For the small-to medium-size business, replicating such an environment is cost prohibitive. Even large companies could find it more economical to outsource the IT infrastructure than maintain it in-house.
  • Focus on Core Competency: While companies understand and know the application they need, they may not be an expert in server technology and maintenance. Such companies can leverage an expert’s assistance in server management, administration, and IT infrastructure which will help them invest time and resources in focusing on business innovation and software development.
  • Speed up Time to Market: Finding suitable IT vendors and choosing the right platforms requires time and resources, while setting up the platform and testing it is even more time consuming. By outsourcing the IT infrastructure, the company is able to obtain professional help in choosing a reliable platform with the appropriate computing power needed to deliver its software services quickly and efficiently.

Conclusion

Outsourcing the maintenance of IT resources to specialists might be an easy solution as economies of scale and expert involvement can reduce cost and increase efficiency, thereby saving time. The business will be able to manage the process at a much lower cost when the maintenance of IT infrastructure is outsourced. Moreover, it will be able to get expert support and speed up time to market.

1 en.wikipedia.org
2 An Insider’s Guide to ROI Analysis, Vendor Selection and More. Hostway