Why did we write this guide?
We’re currently living in the age of “subscriptions”. Everything seems to have an associated monthly cost. In business, this challenges us to evaluate those ongoing costs and look at the value of what we receive for what we’re spending. A perfect example of this is that when you buy a vehicle, the majority of new cars will have a remote start function that requires a monthly subscription to work.
Almost every type of business has or is looking to build a “recurring revenue” or subscription model somewhere within their operations. When these relationships are built and structured properly everyone involved benefits and prospers. At the same time, these relationships can become strained or overwhelming.
IT companies like Britec have ongoing costs for the ongoing delivery of critical business services including business accounting systems, private cloud services, and data security (to name just a few). Typically these services are called “Managed Services” and the IT company is known as a “Managed Service Provider” or “MSP”.
We wanted to break down everything we wish the organizations knew about IT companies offering managed services.
This guide breaks down into the following sections:
- What is the business justification for Managed Services?
- Should a business just have an internal IT team? Or a blend of external & internal IT?
- Pros and Cons of MSP relationships?
- Questions for choosing the right Managed Service Provider
Who are we?
Britec is an IT Systems, Business Accounting, Software, and Automation company based in Calgary, Alberta, Canada. We’ve been helping businesses with their IT needs since 1988 and pride ourselves on being both IT subject matter experts and a great partner to business interests. Britec works to support its IT clients both across Canada and around the world.
At Britec we’re here to help.
What is the business justification for Managed Services?
Managed Services are a bundle of products, services, and expertise. Including:
- Technical and customer service expertise
- Software (and/or development)
- Technical infrastructure (hardware, servers, etc.)
- Ongoing training (to stay on top of things)
- Long-term planning & strategic management
- Legal responsibility & liability (we’re on the hook to do our job right)
What is the timeframe of a managed services contract?
A managed service is typically provided over a 12 or 24+ month period. Within that period your managed service provider is planning and budgeting for daily, weekly, monthly, quarterly, and yearly tasks. The specific IT services a business needs will vary depending on a business needs analysis conducted by your prospective IT Managed Service Provider (MSP).
How do managed services provide better service and cost management?
From our point of view, being a Managed Service Provider (MSP) is an opportunity to account, plan, and execute for all your business IT needs through one powerful agreement. It keeps costs together, giving you a master budget for all the services, software, hardware, and the hours and expertise (human capital) to keep the digital aspect of your business running.
It is easy for many companies to just see an MSP as a monthly expense (and to a certain degree it is). What’s important is to be able to measure the value of that expense and ensure the results from your IT services justify the costs.
If you are unsure how to measure the value of your IT services and their impact on your business, stay tuned for a forthcoming article and worksheet. (If you need something right away, contact us and we’ll share it with you.)
What to look out for to ensure your MSP brings the best results?
At Britec, we’ve been in business long enough to know that our focus needs to be on the relentless and high-quality delivery of our services, not having to “prove” something. Here are 3 root reasons why we feel a Managed Service Provider is a great partner:
Proactive versus Reactive IT
At Britec, we talk about being “proactive” in how you structure data security and IT all the time, in cyber security training, or more recent articles about software supply chain attacks and endpoint detection and protection. The purpose of Proactive IT efforts is to avoid issues, make them easier to manage, or eliminate them before they become a problem.
The reality is that while “Reactive IT” is very important to be good at, “Proactive IT” is the foundation which any organization’s IT systems need to be built upon. To be proactive means that various issues, attacks, or disasters have been planned for (but generally avoided) – and then if they do happen… your business is ready.
Cost Management and Return on Investment with MSPs
When hiring a Managed Service Provider (MSP) you are paying for the results – not for an array of individual services. Everything your MSP does should be to maximize results for your organization, while minimizing risk to your organization. This requires constant effort and vigilance.
How to build strong ROI in your MSP relationship:
- Firstly, computers, software, and networks are consistently working (if an MSP can’t get that right, what are they doing!?)
- Auditing the business software services and subscriptions you currently have, reducing owned licenses, or eliminating unnecessary costs
- Relentless training and staying on top of computing trends and threats
- Proactive efforts to build IT management protocols and disaster plans
- Getting the best prices on hardware and software
- Even the simple stuff, like answering the phone or returning emails
Speaking of results: An MSP is frequently more cost-effective than hiring an internal team. The fees you pay are a business expense, there is no payroll, vacations, sick-days, or attrition related expenses. Your Managed Services Contract is a group of products and services which must be maintained for both parties to enjoy a successful relationship.
Legal Protections & Managing Liability
Something which is not frequently talked about is that an MSP gives your organization greater means of protecting your business. Here are two examples to illustrate our point:
- If your internal IT team doesn’t do their job, you can fire or layoff the team, but they are employees… At that point, you have to recover, re-hire, and move on.
- If an MSP doesn’t fulfill the terms of their contract, they are likely in violation of it. This leaves you with the ability to negotiate the next course of action and even if you decide to hire a new team – your current MSP still must continue to support you while the contract is in effect.
We would argue that an MSP relationship helps your business better manage liability and gives you legal protection that you wouldn’t have with a strictly internal team. It is also much easier to change your MSP than it is to rebuild an internal team.
Should a business just have an internal IT team? Or a blend of external & internal IT?
While we highlighted a few legal reasons an MSP relationship can be advantageous to a business, let’s further explore why one would hire an internal IT team versus an external managed service provider.
Here are the considerations we would make when choosing the blend of internal IT and MSP:
- Company Leadership Experience – An internal IT team is only as good as the technical skills of leader who runs it (even if the team is just 1 person). A lot of trust is invested in an IT Director or CTO role. Britec recommends making sure you have a plan in place to measure performance & outcomes, especially if the remaining company leadership doesn’t have a technical background.
- Cost – Hiring an internal IT team is typically more expensive than hiring a managed service provider. In addition to salaries, benefits, training, and equipment needs to be provided. An MSP has a fixed cost and term to their relationship which includes everything.
- Expertise – Not only must your company hire and retain the correct talent to do the job itself, it also needs to invest in the ongoing training of that team. A managed service provider typically has a multidisciplinary team who are experts in different areas. (Example: server & systems expertise, customer service expertise, programming & automation, etc).
- Scale – The size of a company is very important in making these decisions. A small enough company might not have full-time requirements for an on-site IT team, making it a simple decision to use an MSP with bundled services. A larger company might need a team on-site for day-to-day efforts but then use an MSP to run a lot of the more complex or specialized systems.
- Availability – While an internal IT team is readily available to address the needs of the company on-site during business hours, an MSP typically offers 24/7 support. With the rise of remote work and the need for our data to be accessible and ‘always-on’ businesses need to choose between an MSP or hiring a larger team to support 24/7 needs.
Pros and Cons of MSP relationships?
Let’s take a broader look at some compelling reasons why MSP relationships can succeed and fail. We’ll tell you right off the bat: there is no perfect answer. It is entirely about your business and balancing your preferences with results and risk-tolerance.
At Britec we always recommend asking yourself: What’s at stake?
- If all (or some) of your systems were to go down or files go missing, from email to accounting data… What is the cost to your organization of losing this for 1 day? 1 week? 1 month?
- If the cost is a small one, then you have less to worry about. If the cost is a large one, you have more.
- The general guideline is: the larger the team and the higher their dependency on network computing – the more valuable it is to have a strong Managed Service Provider in place.
Reasons to avoid having an MSP running your company’s IT
- You’re in a highly specialized field which requires very specific training for which there are no managed service providers. At this point your option is to build your own IT team and empower it to look after the needs of your organization.
- You’re in the startup phase (and don’t have a business yet). This depends on the size of your startup. If your startup is going to require advanced information security, or a large team using computers – talking to an MSP sooner rather than later can help things move much more smoothly (and even improve a valuation).
- You require complete control and strict adherence to internal policies or regulations. While there are many MSPs who can work within certain requirements, it may not be enough for your needs.
- In organizations which handle highly sensitive data and have extremely strict security requirements (like a government agency), an internal team can give you full control over the actions and directives of your IT team. (Specialized MSPs also exist for many industries, it just depends on the level of control your organization requires, blended with your available IT budget.)
Why should you have a Managed Service Provider (MSP) powering your IT?
- Wide range of expertise – An MSP has different teams focused on maintaining a high level of expertise around their core competencies. This increased level of knowledge and awareness greatly empowers your organization where an internal team might not.
- Scaled to the size of your business – The MSP agreement is built around the active needs of your business. If those needs grow, the MSP can grow with it, if those needs shrink, the MSP can shrink with it.
- Security. Security. Security – There are a lot of threats to your data, networks, devices, email systems… everything. While we wish there wasn’t, there is. An MSP can typically provide a higher level of security and security solutions due to the fact that their teams work with many different businesses (giving them the benefit of more perspectives).
- Core business focus – Working with an IT Managed Service Provider empowers a business owner or leadership team to dedicate their time and resources to the core reason their business exists. Having smart IT systems in place will remove distractions and help productivity.
Think on this: An MSP can help you avoid the trap of internal politics…
Control of IT systems affords an employee nearly unlimited access to an organization’s data. While strict regulations and systems can create rules around what an internal IT employee should access, the reality is that with the proper motivation they can access anything they want.
For example: An IT manager gets embroiled in a political situation and takes it upon themselves to access private HR information located on a network drive. Access to that privileged information is a violation of privacy, but as the popular phrase goes, “Who watches the watchmen?”
Working with an MSP avoids internal political entanglements. Your master services agreement has legal protections in place, and there is far less of a pull on your MSP team to be involved in day-to-day politics within an organization.
Questions for choosing the right Managed Service Provider
Everything we’ve said in this article is predicated upon hiring the ‘right’ IT Managed Service Provider for your business (regardless of whether you only have an MSP, or a blend of internal team + MSP). In a way, IT will function only as well as company leadership will allow it to.
While we’re not pushing for unreasonable or unlimited budgets, we do feel that the questions you ask an MSP as you pursue a relationship with one will help you make the best possible decision.
Here are a the questions we would ask an MSP:
- Tell me more about your experience with [specialized software]?
- If you use specialized software in your business, ensure your MSP has experience with it. This could be any software, for example, accounting & operational software such as Acumatica or Sage 300.
- Follow-up 1: How would you ensure there are no disruptions in its ongoing use?
- Follow-up 2: Are there any current security concerns we should be aware of?
- Please walk us through your process for creating operational IT disaster plans?
- Follow-up 1: Have you ever had to put one into practice?
- Follow-up 2: How does your team handle pressure when things go wrong?
- Tell us more about your SLA and the level service we can expect from your business?
- Follow-up: What is our recourse if you don’t follow through and deliver the services you are promising? How is that reflected in your SLA?
- Test their support systems:
- Call your MSP’s support line, listen and observe. How did it go?
- Email their support line. How long did it take for them to get back to you?
Here is an example email:
Hi, my name is Michael from XYZ Inc.
I am currently speaking to your sales team about hiring your company and wanted to test how long a response took from your support team. My salesperson’s name is Roger. All I am looking for is a response to this email so I can gauge the time it took and compare it to what I’ve been told.
- How will you report on the outcomes that our MSP agreement will have? In other words, how will we ensure a long and lasting relationship and that you’ll be consistent? Do you have monthly reports and data on performance and security?
- How will you act on our behalf to save us money on IT?
- For example: What would you do if you audited our Office 365 subscriptions and found that we were paying for 10 licenses’ which we do not need?
Other suggestions and tips to help you think up more questions for your MSP
- Build protective clauses into your contracts to protect your business. The MSP agreement is key!
- Ask to interview or talk with a current client, or for them to mediate a call or meet and greet. Ask their client some specific questions about how it’s been to work with that MSP.
- Listen to your gut. How do you feel about this MSP? Are they organized? Disorganized? Timely? Be open about your concerns to that MSP and ensure they can overcome any objections you have. This is the time to take your time.
We enjoyed writing this guide. It reminded us why we love what we do, and the responsibility we hold on behalf of our clients.
We’d be lying if we didn’t hope that it might create a conversation or two. Maybe even some new business. Please contact us with questions or suggestions, or even consider us for your IT needs. We hope you got some valuable perspectives out of this guide.
The Britec Team