What is an MSP?
The term “MSP” stands for “Managed Service Provider”. In a nutshell, an MSP is a company that provides IT services on behalf of its clients, but the company itself doesn’t employ them. They are in charge of the client’s IT needs or take care of those tasks that can be outsourced.
An MSP can be a variety of companies, so ask the right questions when determining which model is suitable.
What is the difference between outsourcing one IT service and when it should be in a house?
The significant cost difference between the two models results from overhead and overhead flexibility. When one outsources IT services, they have to pay for: every staff, including a CIO (Chief Information Officer) and a CSO (Chief Security Officer). House, it’s usually just the CTO (Chief Technology Officer). An administration team that runs the infrastructure and business processes that the IT staff is responsible for ensuring are in place.
Because of this, outsourcing IT services for the wrong reasons can be costly. When one keeps their IT team in-house, they only have to pay for: the CTO [Chief Technology Officer]all of the other staff needed to fulfill their job-related business processes.
When looking at keeping IT services in-house, companies should look at what will be saved due to outsourcing.
Another difference in cost between an MSP and a house IT team is extra costs to keep the infrastructure working at total capacity. When an MSP works with their client, they need to ensure that the servers run at total capacity. In the house, it’s their job to make sure this happens. This can be costly when the increased maintenance costs outweigh the cost savings from not having to hire a CIO and pay for additional staff.
Cost Evaluation to Determine Which Is The Best Route To Go?
This is a big question to answer. The cost of outsourcing IT services all depends on what they’re looking to outsource. Let’s take a deeper look at the prices of an MSP.
When an MSP works, they will charge one for different things, which may include:
- A monthly service fee includes support calls, license updates, and consulting fees. This can be more than one actual support cost.
- An annual service fee comes in the form of increasing one monthly bill. Some of the costs that may go up are:
- Hardware and software license costs
- Support and consulting fees
- When deciding on an MSP, one will have to determine if they will cover those extra costs that may come with having employees hired to do this work.
- Another cost evaluation factor is the amount of time they spend working with one MSP. This can be a costly factor as it indicates that problems need to be resolved, thus making one need to spend more time working with them. This can be an extra burden on top of an already large workload.
But there is also a benefit to outsourcing. When outsourcing, one will get access to:
- The knowledge of all the MSP’s staff – and not just their CEO (Chief Executive Officer)at a more reasonable rate than working in-house off-site hardware and software testing.
- Finding out all the costs involved can be difficult. The best way to find out how much it would cost to keep one IT service in house is to:
- Talk with the CIO (Chief Information Officer) of their company. The CIO usually knows the costs of technology and what it takes for a company to run. One may tell their CIO about the job they want outsourced and ask about the process for finding an MSP.
- Asking what it would cost to hire an extra staff member and then paying them a percentage of their wages.
- Take a look at what the house is, what IT staff are paid and how much it costs to pay them. This can provide good insight into how much money one must spend on someone who needs to be hired.
- Research all costs involved with the business process, such as Hardware and software licensing training.
Upsides and downsides of both models
In-house IT services
One has total control over their IT infrastructure and can control what gets done and when it gets done. They also have a lot of flexibility in how they do things and can assign work to whomever they wish, as long as the department head approves of it. However, an in-house IT dept does not come at a low price. As previously noted, hiring and paying staff is expensive.
Another problem is that one may have to pay for services and hardware not used.
For example, if a company has an in-house IT dept, they may need to purchase expensive server hardware regularly, but they may not use them. A solution to this would be hiring an MSP to take over their IT services so the company can cut down on the high price of employee salaries and the cost of hardware maintenance.
Outsourcing IT services
An MSP can handle many different tasks that one may need to be completed. They will be able to take things such as:
- Setting up new networks and equipment
- Maintaining what one has
- Creating design proposals for companies to use
They usually have security expertise within their ranks, meaning they will be able to create a secure environment for the clients who hire them.
They are also very flexible regarding what needs to be done and can make sure that their client’s business runs smoothly. This can help companies focus on specific tasks they need to get done within their business. However, one downside is that an MSP cannot customize certain aspects of a business’s IT infrastructure, as they have no control over it. Some infrastructure elements will have to stay the same way it was when one outsourced them.
What are the advantages of outsourcing IT services?
Companies can reduce their monthly expenses by more than they would with in-house staff when an MSP works. This can work in different ways depending on how one wants to run their business, doing advanced billing allows companies to select what services they want outsourced and when. This may prevent paying for unnecessary IT services that some clients don’t need.
One saves money by not paying for the CIO and CSO needed when one outsources IT services. This will also save on additional staff that would need to be hired if they were in the house. MSPs usually hire employees with a resume similar to one IT staff and once again only employ those who can solve their clients’ problems, leaving it up to the client to know what is required of them.
When an MSP works, clients get access to more powerful hardware and software at a higher management level. This includes clients taking advantage of new products and services before the manufacturers release them. Long-term relationships with hardware manufacturers allow manufacturers like Cisco Systems or Microsoft to increase their client base by marketing their products through MSPs.
What are the disadvantages of outsourcing IT services?
When an MSP works, companies who outsource will have more time to spend doing what they need to do with their clients, which may be different than going through their processes in-house. They will also not have to hire the extra staff required for the house to make sure everything runs smoothly.
IT knowledge level
When one has no idea of the amount of time and money it takes to run an IT infrastructure, one may not be able to know if outsourcing is the best route for them. If a company is unsure how to know if outsourcing is for them, they should read up on what it will take to outsource. This will help them understand what it means to have an IT department that one can rely on over the long run.