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What is an MSP?

You might have read the term ‘MSP’ and wondered what it means. The abbreviation stands for ‘managed service provider’. This is a concept in which businesses outsource certain services to specialist companies. Outsourcing has long been understood as a cost-cutting move. Find out why using MSPs is advantageous and how these types of businesses operate.

What functions does a Managed Service Provider (MSP) perform?


Overwhelmingly, the term MSP applies to outsourced IT services. Particularly, the following areas of business activity are regularly performed by MSPs:


  • Managing IT infrastructure
  • Adding cybersecurity hardening to IT systems
  • Offering technical support to staff
  • Managing user access accounts on clients’ systems
  • Offering fully managed hardware outsourcing


MSPs can offer remote storage or servers and provide Software-as-a-Service. Some managed service providers just supply hard-to-find IT expertise to prevent problems on a client’s system or assist users with usage difficulties.


MSP configurations


  • The difference between an MSP and the IT department
  • Located remotely
  • Pools expertise effectively by serving several clients
  • Can serve customers in many different countries

Remote Access Integration

Benefits of MSPs


Contracting in the services has a number of operational advantages and brings cost benefits, such as:


  • Provides staff on call around the clock at little extra charge
  • Clearly defines the work of IT support by definition in a binding contract
  • Can fill in for in-house staff shortages
  • Can cover for on premises disasters
  • Can include data backup management to avert data loss
  • Can be scalable, adding on extra resources incrementally or temporarily
  • Removes the danger of a company being held up by industrial action
  • Reduces the problem of companies competing for scarce qualified IT experts, driving up wages
  • Makes highly-qualified staff available to all parts of the world
  • Makes experts in lower-wage locations available to companies in high-cost place


An MSP can replace a company’s IT department entirely, or provide a single niche service. The industry is evolving to provide expertise to all points of the globe and makes cutting-edge technology available at a low price.


Management of an MSP


An MSP provides technical knowledge, but it can’t operate with just a pen, paper, and telephones. It is essential to deploy specialist software platforms to

automatically manage all functions:


  • RMM as a technician tool
  • PSA for business management


When a business depends entirely on the skills of its employees, it can’t leave anything to chance. RMM and PSA maximizes the profitability of expensive specialists and ensures that all obligations to clients are met.


About RMM


RMM means “remote monitoring and management.” The term describes a collection of tools that enables offsite technicians to maintain an IT system. These systems remove the need for site visits to install software and support users.


An RMM platform needs to enable the managed service provider to serve multiple clients and provide access tools to a bank of technicians simultaneously. A quality RMM system should also include automated processes that fulfill routine monitoring tasks, such as network performance status gathering.

About PSA


PSA means “professional services automation.” This group of tools enables the management of an MSP to supervise inhouse staff and service the staff of client companies. Tasks covered by PSA platforms cover the distribution of work to technicians, recording time spent, and resources used. This information flows through to billing.


The PSA also provides information to support bidding for work and the creation of service level agreements in contracts. The platform enables MSPs to ensure that contracts are being fulfilled. It also gathers and stores proof of performance under the terms of the contract in case clients dispute charges. Customer relationship functions, within a PSA, store customer details and contact event records to improve the MSP’s quality of service.


Most MSPs need to provide support to end users and so PSAs usually include Help Desk software and team management software. These modules should include self-service utilities to cut down recourse to human assistance. Help Desk platforms should also provide several channels for problem reporting, such as web form, email, phone, and online chat.


How to set up an MSP


One of the key characteristics of an MSP is that it provides services offsite over the Internet. This means that your MSP can be located anywhere in the world, avoiding the high rents of the major business centers where your potential customer base is located.


All the resources you will need to run a successful MSP fall into two categories: personnel and technology. You need to address the following factors in order to create an MSP:


  • Availability of experienced technical experts
  • The need for premises
  • IT infrastructure
  • Outsourced infrastructure
  • Legal expertise for contract creation and management
  • MSP support software


These five factors are interlinked and so it is impossible to fulfill each requirement individually. You need to define your overall approach in a strategy before you start buying equipment and hiring staff.


Staffing strategies for MSPs


You cannot create an MSP without employing expert technicians. The term ‘MSP’ applies to a wide range of enterprise sizes.
A single freelance technical expert can operate as an MSP. If you are an expert and you just want to break the chains of employment and become independent, then your staffing strategy is taken care of. However, if your skills lie in marketing or finance and you have identified service provision as a good niche to get into, then you are going to need to hire qualified staff.


To operate an MSP profitably, you need to get expert staff at the lowest possible price and sell their services into locations where such expertise would normally attain very high wages. So, your staffing strategy will be very closely tied to the planned location of your premises


Business Location


The location of your business has a very important impact on your staffing strategy. On the one hand, being located in a low-cost country, in the Third World, or an emerging economy gains you lower wage expectations. On the other hand, very underdeveloped countries are unlikely to have universities that educate young people in the high-value skills needed in the developed world. It might also be very difficult to find employees that speak the languages of the client companies that you hope to sell to.


Getting fast Internet speeds and cutting-edge equipment might also be difficult in some locations. So, your staffing strategy will be very closely linked to your infrastructure provision because both factors are highly dependent on the location you choose for your business premises.


Virtual Office MSP


Use cloud services for all hardware and software. This infrastructure strategy will solve a great many of the location-related problems that you will encounter when setting up your MSP. However, it will make you highly dependent on the availability of a reliable, high-speed internet service. Taking the cloud route immediately rules out locations where the Internet is not constantly available.


A virtual office approach will also help you source expert staff at lower cost. You might not need to reach out to the poorer nations in the world in the hope that you will find first-world skills there. If you recruit online, you automatically rule out candidates who cannot access the Internet. Opting for home-based staff means that you won’t need to struggle to find a single location that is home to a large pool of unemployed, low-wage experts.


An MSP is the ultimate in “back office” provision. You don’t need a showroom, and you won’t even need sales staff to visit potential customers. Online marketing and a good sales website should be enough to gain you customers.


What is MSP image 3


Outsourced Hardware


Keen pricing is another factor that attracts clients. Eliminating the expense of buying and maintaining hardware will enable you to slash costs. You will need servers in order to run an MSP, but you don’t need to own them. Renting space on cloud servers gives you lower costs and flexibility. These services are easy to expend at little cost.


Using a cloud infrastructure for your MSP also provides solutions for your staffing problems. Cloud hardware is accessible from anywhere, so it can be accessed by home-based technicians just as readily as it would be available to any staff, in an office.


If you prefer to have your technicians in one place, cloud infrastructure will also help you. You don’t need to travel far from major business centers to encounter small towns in rural areas that have much lower commercial rents, a lower cost of living, and fewer employment options for highly-qualified locals.


Another staffing cost saving brought by cloud infrastructure lies in the elimination of the need to employ your own in-house technicians to maintain the hardware and software that your MSP needs


Contracts and SLAs


One operational factor that could make or break your startup MSP lies in the area of contracts. You need to be very precise about the commitments you make in the contracts that you get your clients to sign.


Working online gives you a lot of advantages because you can get a standard contract written with the terms and conditions posted on your company’s website. You don’t need to staff a legal department in your company in order to get tight contracts. Legal services are other outsourced facilities that are available on the Web. As long as you locate a legal expert who specializes in international IT, then you can properly define your services in a contract.


Keeping compliant to those obligations is your next legal hurdle. The contract will include “service level agreements (SLAs), which define the volume of work that you will provide and the standards of service that you will need to attain. Proving conformance to SLAs used to be a headache and a source of contention between a managed service provider and their clients.


Fortunately, PSA platforms make SLA goal achievement much easier to demonstrate, so deploying specialist software to monitor work as it is carried out is an essential strategy to avoid contractual complications


Specialist MSP platforms


No matter what your business strategy evolves into, specialist software is a fundamental need for an MSP. Remember that you will need an RMM platform and a PSA system in order to function successfully.


These two important platforms won’t cover all of your business needs. You will also need to acquire accounting software, for example. So, make sure that your PSAS and your accounting software are compatible. Data flows can be channeled from some PSA systems directly into your accounting software. That eliminates the risk of human error when transposing figures form one system to another.


Look for a combined RMM and PSA platform to ensure that all of your supporting software works in synch. Opt for a cloud-based software service to remove the need for hardware and the cost of technicians to maintain your business infrastructure.