Sunday, April 21, 2013

Most "Managed Service Providers" Do Not Provide Managed Services

This may sound strange, but most companies that call themselves Managed Service Providers really aren't.

As I talk to technicians and prospects, I realize that most I.T. businesses use some of the tools of Managed Services but do not deliver Managed Services. The piece that's missing is the "Managed" component.

If you Google "Define Managed Service" you'll be amazed at how wrong the definitions are. Almost all of them simply define a service that is better described as "Outsourced IT." They say things like "A managed IT service is an information technology (IT) task provided by a third-party contractor."

I define Managed Services as technical support delivered under a service agreement that provides specified rates and guarantees the consultant a specific minimum income. Under Managed Services, the I.T. provider takes responsibility for the client's network and provides regular preventive maintenance of the client's systems.

If you don't do that maintenance part, if you don't manage the network, then you're an Outsourced I.T. Provider. That's cool. But that's not Managed Services.

The Tools of Managed Service

However they're packaged, there are certain tools you need to provide Managed Services. These are the modern tools of service delivery, which is why modern tech support is confused with true Managed Services. The core tools of Managed Services are:

1. Patch Management

2. Remote Access

3. Monitoring

4. Some level of Automated Response

In addition, most MSPs also use a PSA (professional services automation) tool such as Autotask or ConnectWise. A PSA provides a Ticketing System, which is absolutely essential to running your business efficiently. Ideally, it also provides a way to manage Service Agreements and keep track of technicians' labor.

But a PSA is not necessarily a Managed Service tool. It is a tool that pretty much any service business should have. You can use a PSA to manage a break/fix business just as well as a Managed Service business.

Managing and Maintenance

Beyond the tools is the most important part of delivering Managed Services. All of those tools could be used to provide basic monitoring and break/fix work. The thing that I see "Managed Service Providers" failing at is the true Maintenance of their clients' systems.

When I ask people whether they do a regular monthly maintenance, most (90%) say no. My Sample Monthly Maintenance Checklist is a very popular post. But even those who download it do not implement most of it. And when I drill down and ask about the single most important thing you should be doing for your clients - backups - I find that most companies are NOT testing client backups on a monthly basis.

In the big picture, one of the core components of Managed Service is that you take responsibility for the client's computer systems. That means that they literally turn it over to you and stop worrying about it. That means YOU are responsible when something goes wrong. That means you better be doing everything they assume you're doing.

If a system crashes and the Outsourced I.T. company that does break/fix is called in, they have no responsibility for the state of the backup or the health of the server. They are not, after all, managing the clients' systems.

If a system crashes and the Managed Service Provider is monitoring the network, that MSP has total responsibility for the state of the backup and the health of the server. They're supposed to be monitoring everything, patching everything, and making sure the backup is working. If you have a Managed Service Agreement and can't restore the system because you didn't do the maintenance and management you've been paid for, the client can hold you totally responsible - up to and including suing your for failing to provide the service you are contracted to provide.

No tools can make you a Managed Service Provider. Tools can make you far more efficient at providing monitoring, patching, remote support, and service delivery. But to be a real Managed Service Provider, you need to provide regular scheduled maintenance of every client system.

That's a policy and a regular schedule activity. No tool is going to make you do that. That's something you need to provide as part of your service.



  1. Yes the tool vendors love to make it sound like a business in a box. I provide a saas based PSA solution and also for the last 15 years been running a proactive IT services company. I totally agree with you. I get called into sites where an MSP has been managing the site and you can tell that the monthly fee is more like a retainer than anything else. Some MSP make the monthly fee to cheap just to make the sale and then wonder why they cannot afford to deliver on it. Your contract is critical to say what is included and what is not and you do have to be careful with that list. If it is to long you might only have one client. I have found having an RMM tool critical but recurring tickets to remind staff to test backups and review other things we promise even more essential.

  2. Good point, Greg. Our PSA auto-generates a new monthly maintenance service request for every client every month.

    Thanks for the comment.

  3. In regards to the maintenance automation and checklist; Most RMM packages will automate most, if not all, the items on the list nightly. Additional client reporting is provided by the larger packages and delivered to the client through either a RMM provided email address, or in the case of White Labeling / Re-branding, an MSP provided email address.

    Many of the clients that I work with now of in the past rarely review the reports. The reports do, however, have the added advantage of providing a good MSP with knowledge and tools to push forward with other managed sales; Managed Security for HIPAA compliance being a rapidly growing example.

    As for the backup and not testing; One cannot truly refer to themselves or their company as an MSP if they are not performing what should be a staple of any outsourced or managed provider. Unitrends provides routine verification reporting on the state of virtual fail over images with screen shots and HeroWare sells a fully managed package that an MSP can white label as their own and is really only responsible for payment and billing. The profit margins for certified techs and sales reps are very good and both offer a HIPAA compliant and verified cloud storage with encryption on the on premise appliance. The processes and reporting (both MSP and Client side) are automated and, in the case of the fully managed backup from HeroWare, the management, restore, fail over, etc. are performed by trained 3rd party staff, freeing up your internal staff for more profitable project deployments.

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  5. I definitely agree with the idea that Managed IT is a great resource for small and mid-sized businesses. They have a whole arsenal of the best minds IT can offer at the fraction it would cost to own it themselves as a sole department. Managed IT companies can spread the cost of IT services due to their specialization. It's best to wait to hire an IT team when the company becomes larger.

  6. I work for a vendor contractor in a state that is about to begin using a MSP. I am trying to do research to understand how this works in other states. Can anyone point me to a list of states that currently use MSP's

  7. Not entirely sure what your question is, Tim. Managed services are everywhere in every state.

  8. I am sorry that was not clear. The state government is about to stop dealing with vendors directly. As a vendor I was wanting to find out in some detail how MSPs are set up with other state governments. Indiana is the only one that I could find Thank you so much for taking the time to talk to me!

  9. How can i trust that Managed Services providers use the right tool to provide the services. Their is a lot of confusion when hiring the Managed Services providers.
    IT Managed Services Cleveland

  10. We've just assist a new client where their 'managed service provider' really wasn't doing much in terms of managed services, but is now legally enforcing a 5 year contract when the client wanted to cancel. They supplied inferior hardware using a desktop platform for a Small Business server, so the server was very unresponsive, and after weeks of struggling, we were called in and immediately spotted a number of concerns. The biggest one being that the backups hadn't been going through for weeks...

    What advice can I give this client, as the old provider is insisting on enforcing the very long and in my opinion, extortionist contract?

  11. The first thing for the client to do is contact a lawyer. Follow the lawyer's advice, but it seems like you could be hired to lock out the other folks and document that they are not fulfilling their contract. The lawyer will have lots of ideas, and some experience. The contract may be easier to get out of than the client thinks.

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