Managed Let's Talk Management: A Close-Up on the MSP

The feature that makes MSPs most appealing to small businesses is their affordability.

For the small or medium-sized enterprise, IT technicians represent a major expense. Even when a small business can afford to hire one or two techies or developers, those employees are often spread so thinly that essential, specialized functions such as security get short shrift.

For this reason, MSPs, or managed service providers, have become extremely important; some of biggest MSPs, like Lucent, Checkpoint, and Nortel Networks, inhabit a very profitable niche. The market for MSPs seems to be growing; a recent research study (Feb. 2006) from Insight predicts that the US managed services market is expected to grow 22 percent (Compounded Annual Growth Rate) over the next five years.

In essence, MSPs are a subset of ASPs, or application service providers. However, instead of delivering focused payroll or sales tools over the Internet, MSPs offer Web-delivered network management, network monitoring or security services. The best MSPs are located in full-fledged NOCs, where they maintain their clients’ firewalls, messaging and call center, VoIP or VPN systems; they offer businesses around-the-clock attention and the ability to response promptly to any network crisis. Since MSPs address only very specific network functions, they also allow clients to retain control of their own networks and data centers.

The feature that makes MSPs most appealing to small businesses is their affordability: due to their economies of scale, managed service providers can supply even state-of-the-art technology at a reasonable price. Like other ASPs, managed service providers assume all financial responsibility for upgrading and updating their software.

Does your company need the services of an MSP? The answer may just be that it depends. Some of the services that MSPs provide are also offered by traditional hosting companies, and many large operations are capable of fulfilling these needs in-house. On the other hand, MSPs offer specialization; your host might supply you with network monitoring services, but an MSP whose core competency is network security might be more inclined to stay on top of upgrades and emerging technologies.