Managed Service Provider (MSP)

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IT infrastructure of customer and/or end-user systems is remotely managed by a Managed Service Provider (MSP), under a subscription model and typically on a proactive basis. Cloud service provider and managed service provider bot seems the same when the provider’s service is supported by a service level agreement (SLA) and is delivered over the internet.

MSP may specialize in different segments, some MSPs may specify segments of information technology (IT) such as data storage, others may focus on specific vertical markets, such as legal, financial services, healthcare and manufacturing.

Pricing model for managed service providers

The customer charged for each device under management, a flat fee by the MSP in per-device pricing. Each user charged a flat fee by the MSP, accommodating users who use multiple devices. A monthly recurring revenue (MRR) stream MSP provided by this approach, contrariwise to IT projects that tend to be one-time transactions.

Service-level agreements

An MSP mostly gives its services offering under a service-level agreement, the performance and quality metrics that will govern the relationship spelled out by a contractual arrangement between the MSP and its customer.

An SLA possibly linked to an MSP’s pricing formula. For instance, a range of SLAs to customers may be offered by MSP, for higher levels of service, customers have to pay a higher fee in a tiered pricing structure.

Challenges of managed service providers

It is a challenge for MSP business management that is to set the pricing model, to set prices low enough to entice customers to buy their services, but high enough to maintain an adequate profit margin is the biggest challenge.

MSP’s give more attention to operating costs and the cost of maintaining skilled employees, In addition to pricing. The greatest expense of MSP is typically labor. To make efficiency good and to keep labor costs in check, most MSPs employ remote monitoring and management (RMM) software to keep tabs on clients’ IT functions.RMM software remotely troubleshoot and remediate issues with servers and endpoint devices of MSP. MSPs can manage numerous customers’ IT systems with RMM simultaneously. Administration functions also handled by MSPs, such as checking hard disks for errors, without human intervention.

MSPs face another challenge is the mainstream adoption of cloud computing. IT infrastructure components of their many customers migrate to the cloud, MSPs have to find ways to manage hybrid cloud environments. MSP desires to deliver their own cloud computing services or resell other cloud providers’ capabilities, with disaster recovery (DR) a common entry point.

What MSPs are used for

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Typical MSP customers are small and medium-sized businesses (SMBs). There are limited in-house IT capabilities in many small companies, so that companies may optimize MSP’s service offering as a way to obtain IT expertise. However, big companies or enterprises may also contract with MSPs. Case in point, government agencies that are facing hiring limitations and budget pressure, may contract with an MSP to supplement in-house IT staff. 

Benefits of Managed Services :- There are main benefits of MS are as below :

  • Better Cost Control – MSP absorbs training, equipment and personnel, the typical cost components of an IT department
  • Improved Risk Management – There can be a reduction in risk by contributing their own proprietary methodologies and access to modern infrastructure and software, by an MSP.
  • High Availability, Efficiency and Productivity – Maximum uptime and minimal service interruptions can be ensured by an MSP.
  • Future Proofing IT Services – MSP’s will always have their staff trained on upcoming and new releases as well as new technologies with the ability to lock-in costs for a multi-year period.

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