Managed IT

Understanding Managed Services Providers (MSPs): Definition, Roles & Benefits

Alex Stewart
Alex Stewart
General Manager



Alex Stewart
Alex Stewart
General Manager

In this article

    In the modern digital era, technology has seeped into every aspect of businesses, from operations to marketing to customer service. The role of technology in a company’s success and as a point of competitive advantage has become more crucial than ever.

    However, at the same time, managing complex end user systems and ensuring they meet the ever-changing needs of a business whilst staying secure and ahead of competitors can be a daunting task.

    That’s where Managed Services Providers (MSPs) come into play. These IT businesses serve as a one-stop solution for managing, securing and enhancing a company’s IT infrastructure, helping business owners and managers to avoid service interruptions and focus on their core business functions instead.

    managed service provider, question bubble, thought bubble

    Definition of a Managed Services Provider (MSP)

    So what is the meaning of an MSP?

    Managed Services Providers (MSPs) are specialised firms that provide businesses with managed IT services on an ongoing basis. MSP stands for Managed Services Provider. These providers manage the IT infrastructure and systems of their clients, which can include services such as network management, cyber security, data backup and recovery, cloud services and more.

    MSPs work to proactively manage and maintain these systems, allowing businesses to focus on their primary operations while ensuring they have access to up-to-date information technology and high-quality IT support.

    MSPs operate under a subscription model where the client pays a regular fee for their services. The specific services provided are defined in a service-level agreement (SLA) between the MSP and the client.

    history of MSPs, 1980 to 2010

    Brief History & Evolution of MSPs

    Managed Service Providers (MSPs) didn’t emerge overnight. The precursor to today’s MSPs were the Application Service Providers (ASPs) that sprung up in the late 1990s. ASPs provided businesses with remote application hosting services. However, their offering was limited and reactive, mainly following the break/fix model where IT issues were addressed only when something broke down.

    The limitations and challenges of the break/fix model led to a demand for a more proactive approach to IT management. This resulted in the rise of early MSPs, primarily focused on Remote Monitoring and Management (RMM) of servers and networks. MSPs could identify potential issues and fix them before they resulted in system downtime or business disruption as well as provide the outsourced IT expertise to effectively guide an IT strategy.

    Over the years, technological advancements such as Cloud Computing, Internet of Things (IoT) and Artificial Intelligence (AI) have significantly impacted the evolution of MSPs. These technologies have expanded the scope of services MSPs offer and shifted the role MSP play into an even more strategic role, from managing infrastructure and applications to cyber security, data analytics, vCIO, vCSIO and more.

    infographic, managed IT service market, growth from 2014 to 2025

    The Role of an MSP in Business Operations

    In today’s business climate, the role of an MSP extends beyond mere problem-solving or troubleshooting; they are vital expertise in driving business operations. This is because most businesses, whether small or large corporations, startup or well-established, operate within a technological ecosystem that is complex, rapidly changing and essential to daily operations.

    An MSP provides comprehensive IT support tailored to the specific needs of a business. They function as a full-fledged IT department, handling everything from daily tech issues to strategic technological planning.

    A great MSPs relationship is that of a trusted partner, working alongside businesses to leverage technology in ways that align with their goals, improve their processes and ultimately, drive their success.

    Let’s delve into some of the critical roles that an MSP can play in facilitating seamless business operations:

    Infrastructure Management

    An MSP helps businesses build, manage and optimise IT infrastructure. This can include servers, networks, data storage, mobile device management and applications, ensuring they work cohesively to support business operations.

    Data Management

    Data is the lifeblood of modern businesses and MSPs play a crucial role in managing, backing up and ensuring the integrity of this data. They also help businesses leverage data analytics for informed decision-making.

    Cyber Security

    With cyber threats becoming increasingly sophisticated, managed security service providers add a vital line of defense, implementing robust security protocols, monitoring systems for threats and ensuring compliance with various regulatory requirements. They can also provide cyber awareness training to entrench more secure staff cyber habits or security as a service for an end-to-end cyber security solution.

    Technical Support & Troubleshooting

    MSPs can provide up to 24/7 help desk support to resolve any tech issues that might impede operations. This can range from software issues to hardware malfunctions, all addressed swiftly to minimise downtime.

    Support for Specialist Software Platforms

    Industry-specific needs, businesses often use specialist software platforms for their daily operations. These specialized systems could range from Enterprise Resource Planning (ERP) tools, Customer Relationship Management (CRM) software, to industry-specific solutions such as Electronic Health Records (EHR) for healthcare, or Learning Management Systems (LMS) for education.

    Cloud Services & Digital Transformation

    MSPs guide businesses through the often complex process of digital transformation, helping them migrate to the cloud, adopt new technologies and optimise their operations in the digital landscape.

    Remote Management

    MSPs also concentrate on implementing specialist software platforms designed to automate various functions. These platforms encompass Remote Monitoring and Management (RMM) tools, as well as Professional Services Automation (PSA) applications. RMM software allows technicians, even from remote locations to monitor, upkeep and patch IT systems – this includes networks, servers, desktop computers and mobile devices.

    Vendor Management

    MSPs manage relationships with various IT vendors, handle contract negotiations and ensure that businesses are getting the best value from their IT investments.

    Strategic IT Consulting

    Perhaps one of the most significant roles an MSP plays is that of a strategic advisor. They can help shape the technology roadmap of a business, making strategic recommendations that align with business objectives and future-proof the company’s tech infrastructure.

    Business Communications

    MSPs ensure the smooth running of a business’s communication platforms. This can involve managing email systems, facilitating remote work solutions, or integrating business phone solutions, all to enhance collaboration, connectivity and productivity.

    RMM dashboard, cybersecurity, threat classification
    SentinelOne RMM dashboard threat intelligence classification.

    The Benefits of Using an MSP

    Maintaining an up-to-date IT infrastructure, staying abreast of rapid technological advancements, mitigating cyber threats and managing a labyrinth of data and applications requires a level of expertise that many businesses struggle to build and maintain in-house.

    This is where Managed Services Providers (MSPs) step in, bridging the gap between the technological needs of a business and the resources available to meet those needs. By outsourcing IT management to an MSP, companies can harness specialised expertise and the latest technology, without the financial and logistical burdens of developing and maintaining a comprehensive IT department.

    More than just an outsourcing solution, MSPs act as strategic partners that can navigate the complex and ever-changing tech landscape on behalf of the business. Their role is to ensure the smooth operation of IT processes and business continuity, implement forward-thinking tech solutions and shield the business from emerging cyber threats.

    In terms of cost-effectiveness, MSPs provide a compelling proposition. With an IT managed service provider, businesses can significantly reduce or even eliminate the costs associated with recruiting, training and retaining a large in-house IT team. Add to this the advantage of predictable, regular expenses through a subscription-based model and the financial benefits of partnering with an MSP become clear.

    Let’s delve deeper into the benefits businesses can reap by engaging an MSP:


    Cost Savings/ Predictable IT Budget

    With their subscription-based model, MSPs allow businesses to predict their IT costs, avoiding unexpected expenses and helping them better plan and manage their budgets.

    Access to IT Expertise & Human Resources

    MSPs provide businesses with access to a team of IT professionals with a diverse range of skills and experience, without the overhead of hiring and maintaining an in-house IT team.

    Scalability and Flexibility

    As businesses grow and their IT needs evolve, MSPs can easily scale their services up or down to match.

    Productivity and Efficiency Gains

    By taking care of IT management, MSPs free up businesses to focus on their core operations, leading to productivity and efficiency gains.

    Proactive Approach to IT Management

    MSPs adopt a proactive approach, identifying and addressing IT issues before they can disrupt business operations.

    Enhanced Security and Compliance

    MSPs provide robust cyber security measures and ensure businesses comply with relevant industry regulations and standards such as the Australian Government’s Essential 8 cyber security guidelines.

    24/7 Monitoring and Support

    With MSPs, businesses have the assurance of round-the-clock IT monitoring and support, ensuring any issues are quickly identified and resolved.

    Access to Latest Technologies

    MSPs keep abreast of the latest technologies and can advise businesses on which ones could benefit their operations, often providing strategic recommendations and platform/process upgrades as part of their managed service offering.

    MSP Pricing Model & Cost Benefit Analysis

    Managed Services Providers (MSPs) typically use several pricing models depending on the services they offer, their market and their strategic goals. The choice of the pricing model also heavily relies on the Service Level Agreement (SLA) between the MSP and the client. Here are some common MSP pricing models:

    1. Per-Device Pricing Model: In this model, the client pays a flat fee for each device that’s managed. This model offers simplicity and easy understanding of costs for both the MSP and the client.
    2. Per-User Pricing Model: Here, the client pays a flat fee for each end-user in their business. This model covers all the IT needs of the user, regardless of the number of devices they use.
    3. All-Inclusive or Flat-Rate Pricing Model: In this model, the MSP charges a flat monthly fee for all their services, offering clients a simple, predictable billing process.
    4. Tiered Pricing Model: Different levels of service are offered for different prices. A basic level may include simple monitoring services, while higher levels could include issue resolution, security services and strategic consulting.

    it staff augmentation, cost inhouse vs outsourced it

    Pricing Comparison with In-house IT Teams

    Managing an in-house IT team can be a significant cost for a business. These costs include salaries, benefits, training, recruitment and overhead. In contrast, using an MSP can often provide a more cost-effective solution.

    In-house IT teams have a vested interest in the organiation and its success, as their job stability is directly tied to the company’s wellbeing. They are inherently familiar with the company’s IT infrastructure and the intricacies of its daily operations. This deep knowledge can be advantageous when dealing with complex issues.

    However, it may also create a risk of complacency or a lack of innovation, as these teams can sometimes become overly focused on maintaining the status quo and less open to new technologies or processes.

    Managed service providers typically have exposure to a wide range of IT environments due to their work with multiple clients. This allows them to bring a broader perspective, innovative solutions and experience with the latest technologies to the table.

    An MSP’s flat monthly fee is usually predictable and can be planned for in advance and brings a range of expertise that might be cost-prohibitive for a business to maintain or build in-house. They can also scale their services as needed, providing flexibility and responsiveness to it needs that might not be possible with an in-house team.

    Pricing Comparison with Traditional IT Break/Fix it Providers

    Traditional IT service providers charge on a per-incident basis. While this might seem cost-effective in the short term, in the long run, it can lead to unpredictable costs and budget overruns.

    MSPs, on the other hand, adopt a proactive approach, monitoring systems continuously and resolving issues before they cause significant problems. This not only reduces system downtime but also results in predictable, regular expenses that can be budgeted for. This predictability, combined with the broader range of services MSPs provide, often makes them a more cost-effective solution compared to traditional break/fix providers.

    Traditional IT models offer little to no incentive to improve efficiency in the long-run with profit tied firmly to the number of issues that arise, proactive solutions and processes tend to be dis-incentivised.

    it professional, holding audit board

    Selecting the Right Managed Services Provider (MSP) for Your Business

    Choosing the right MSP is a pivotal decision that can significantly influence the effectiveness of your IT operations and, by extension, the success of your entire business. It involves more than just comparing service offerings or prices. To make an informed decision, businesses should take into consideration several factors, including their specific IT needs, the MSP’s technical capabilities, customer service and their approach to security and innovation.

    Assess Your Specific Needs:

    The first step in choosing an MSP is understanding your business’s specific IT needs. This can involve identifying areas where your current IT setup falls short, the level of support you require, your business’s growth plans and any industry-specific technology requirements.

    Evaluate MSP’s Expertise and Resources

    Once you have a clear understanding of your needs, you can evaluate potential MSPs to see how well they align. This includes their technical expertise, the breadth and depth of their services, their experience in your industry and the human resources that they have to meet your needs.

    Examine Customer Service Quality or Net Promotor Score

    Strong customer service is a crucial factor to consider. This includes responsiveness, the availability of support (e.g., 24/7 support or remote support in your time zone), the MSP’s approach to problem-solving and their willingness to understand and adapt to your business needs.

    Scrutinise their Approach to Security:

    Given the growing complexity and sophistication of cyber threats, an MSP’s approach to security is a critical consideration. Ask potential MSPs about their security protocols, how they handle threats, the measures they take to ensure data privacy and compliance and how they plan to keep your business safe.

    Are they Current with the Latest Technology?:

    Technology is a field marked by rapid change and innovation. Your MSP should be able to stay ahead of the curve, offering you the latest and most efficient solutions. Ask potential MSPs about their commitment to innovation, how they stay updated with the latest technologies and how they plan to ensure your business benefits from these advancements.

    Handling a Potential IT Crisis:

    IT crises, such as data breaches or major system failures, can significantly disrupt the day to day operations of your business. Understanding how an MSP would manage such a crisis is important. Ask about their disaster recovery plans, their response times and their strategy to minimise the impact on your business operations.

    Planning the Transition:

    Finally, once you’ve chosen an MSP, the transition should be carefully planned to minimise disruption. This includes setting a timeline, outlining responsibilities, establishing communication channels and preparing staff for the change. A good MSP will be able to guide you through this process, ensuring a smooth and efficient transition.

    Choosing the right MSP is a comprehensive process that requires a clear understanding of your business needs and careful evaluation of potential providers. By considering these factors, you can ensure that you select an MSP that not only meets your current IT requirements but also supports your future business goals.

    As Technologies Evolve, So Does the MSP

    In an increasingly digital world, the importance and benefits of managed services providers cannot be overstated. MSPs enable businesses to leverage technology effectively, improve efficiency, secure their operations and focus on their core functions.

    By selecting the right MSP, businesses can transform their IT from a challenge into a strategic asset. Looking ahead, as technology continues to evolve, the role of MSPs in shaping the future of business operations is only set to increase and providers such as TechBrain are here to help you stay ahead.