Running a business is a full-time job, and small-to-medium sized businesses (SMBs) in particular can often find their in-house IT resources stretched to capacity. As a result, it’s difficult to devote the necessary time and effort to deploying and managing the latest business technologies.
This is leading an increasing number of companies to outsource part or, in some cases most, of the day-to-day maintenance of their IT operations to third-party providers. Fueled by the growth of cloud computing, IT managed service providers (MSPs) can host and manage customers’ IT infrastructure more flexibly and more efficiently than ever.
But it’s not just SMBs that don’t have the time to manage their in-house IT operations, and so are opting to outsource–there are several reasons why companies are moving in this direction. Whether it’s to lower costs, improve security, scale their IT faster or get a greater return on their investments, an increasing number of organizations are turning to MSPs.
What Are IT Managed Services?
The MSP model is based on customers paying on a recurring basis for remote IT services, such as desktop and network management, applications management, remote help desk, and backup and disaster recovery. This means that as a customer, you only incur an operational expense based on your capacity and usage, as opposed to the large upfront capital investments associated with purchasing on-premises infrastructure.
It's an option that has gained traction in recent years, with smaller companies especially attracted to the model’s fluidity. An April 2018 survey of 1,116 U.S. SMBs by analyst firm Techaisle shows that 46 percent of SMBs currently outsource their IT, and another 29 percent plan to do so.
“SMBs are dealing with an ever-expanding portfolio of increasingly complex applications and platform technologies. At the same time, these firms are struggling to rein in IT-related expenditures, including staff-related costs,” Techaisle’s chief analyst and CEO, Anurag Agrawal, tells Tom’s Hardware.
“This combination of increased reliance on technology as a key element of business success, burgeoning complexity and cost constraint has created a ‘perfect storm’ for use of managed services.”
Growing Your Business
Enlisting an MSP takes pressure off your IT department, and by outsourcing the critical day-to-day support and maintenance of your IT estate to an expert, more resources can go toward growing your business. In fact, 46 percent of the SMBs Techaisle questioned said working with an MSP helps them grow their business.
“Many of our SMB customers are trying their best to get out of the IT business,” David Huseonica, president and CEO of Georgia-based MSP Cloud AG, tells Tom’s Hardware. “With the option of cloud applications and outsourced IT, their attitude on buying, managing and maintaining their own servers has changed in that it is no longer viewed as necessary.”
Larger SMBs, also known as mid-market firms, also often use managed services as a means of augmenting their current staff: for example, delivering on niche specialties or covering standard tasks so that in-house resources can move on to new initiatives.
Addressing IT Complexity
A business’ reasoning for hiring an MSP can be as simple as lacking an in-house IT department. Many small companies with just a handful of employees rely on the most ‘technically savvy’ ones to take on the role of help desk when problems arise with devices, software or the network.
But as Estelle Johannes, director of member communities at IT industry association CompTIA, points out, as your company grows and your IT needs become more complex, this won’t cut it. You will either need to look to hire an IT person internally or hire an MSP to take on the management of your network on contract, as you would with any other utility, such as electricity or water.
“Depending on the extent of your IT needs, a full-time, in-house person makes sense if they are utilized consistently with the wages they are being paid. But if your IT needs ebb and flow or are mostly low-grade with few major initiatives, an MSP that offers pricing commensurate with technology usage or consumption might be the more cost-effective way to go,” Johannes told Tom’s Hardware.
The push to cloud services can also be a factor in deciding to bring managed services to your organization. Cloud AG’s Huseonica tells us that while some companies choose to outsource their IT due to the initial cost savings, that’s not the only driver. Many value the fact outsourcing frees them up to concentrate on other revenue-generating activities for the business. Additionally, the cloud enables them to scale their IT as per their demands.
Offloading Day-to-Day IT Management
Another reason for adopting managed services is to offload routine IT tasks, such as system updates, user help desk and employee changes. These activities don’t necessarily require the highest skill level, but they are constant.
“You may find that your pet development projects seem to drag on and on because the IT department is always busy with keeping devices, networks and security running and up to date,” says Johannes, referencing the Gartner bimodal IT model.
According to Gartner, bimodal IT is the practice of managing two separate, coherent modes of IT delivery, one focused on stability and the other on agility.
“Rather than bring in more highly skilled and highly paid IT staff to take on Mode 1, you can offload the day-to-day tasks to the MSP, leaving in-house IT staff to take on Mode 2 and execute on the business-enabling and revenue-driving digital transformation projects stacking up in their queue,” Johannes explains.
Filling the Cybersecurity Skills Gap
IT security is another area where more businesses are turning to MSPs.
“Many companies can’t compete with today’s sophisticated cyber adversaries,” Susie Cummings, SVP of managed services at Chicago-based IT consulting firm, SWC Technology Partners, tells us. “To source and hire an in-house security team isn’t an option for many SMBs—it takes a lot of time, isn’t cheap and it’s nearly impossible to find the right combination of skills and expertise—this has led to an increase in outsourced security. As cyberattacks continue to rise, IT security management has become even more complex and expensive.”
Research by Kaseya, which makes software for MSPs, titled 2018 State of IT Operations for Midsize Enterprises, found that one in three SMBs has experienced a security breach in the last five years and more than one in 10 has experienced one within the last 12 months.
Cummings notes that by outsourcing IT, companies also gain an increased confidence in their ability to prevent or quickly detect and respond to cyber attacks at any time of day.
“Cybercriminals don’t work office hours on Monday to Friday, so having 24/7 / 365 support from security consultants who have expansive practical experience and access to advanced detection technologies helps close those security gaps to protect your customer data and keep your business moving forward.”
Aside from the operational advantages of outsourcing IT, the other big attractions are the financial benefits. With monthly subscription pricing, businesses avoid large upfront costs for new software and servers and move the cost of IT from a capital expense to an operating expense. By offering a predictable monthly subscription plan, organizations know exactly how much they are spending on IT each month and can plan their budgets accordingly.
Plus, you can scale your IT up or down depending on your business’ requirements, offering greater control over your company’s IT environment and reducing needless spend on IT.
Is Outsourcing for Everyone?
While the benefits of outsourcing your IT are clear, it may not necessarily be practical to offload the management of all your IT to an outside company.
You may work in an organization that, due to geographic or connectivity reasons, needs to retain at least some of its IT infrastructure on premises: for example, if there is a latency problem moving data between locations. Alternatively, your company’s policy requirements may have established rules around the management of data, often for regulatory and/or data sovereignty reasons, that would make it necessary to keep confidential data or systems on premises.
For these reasons, it’s not practical for most firms to outsource 100 percent of their IT. Many will adopt a hybrid approach to outsourcing, choosing to maintain some systems in-house.
Nevertheless, as an IT consumption model, outsourcing continues to prove popular, particularly for small companies. “A substantial and rapidly-growing segment of U.S. SMBs are using some combination of managed services to support IT and business requirements,” says Agrawal, who adds that “the ranks of managed services users are poised to swell further within the next 12-24 months.”