Businesses of all sizes have outsourced information technology (I.T.) operations for over a decade. Initially, outsourcing meant transferring entire departments to distant locations like Bangalore, India, or Riga, Latvia. Today, outsourcing is much more strategic, often involving specific tasks such as data backups, email network management, and server maintenance. This shift has made outsourcing more accessible to smaller businesses that previously lacked the resources to hire a full tech-support team. Managed Service Providers (M.S.P.s) have emerged as key players in this new outsourcing landscape, offering tailored services from unexpected locations such as Portland, Oregon, Little Rock, Arkansas, and Madison, Wisconsin.
Contents
The Evolution of IT Outsourcing
Early Outsourcing Efforts
In the early days, I.T. outsourcing was a large-scale operation, often involving the transfer of entire departments to overseas locations. This approach was primarily driven by cost reduction, leveraging the lower labor costs in countries like India and Latvia. However, this model had challenges, including cultural differences, time zone disparities, and communication barriers.
Modern Outsourcing Trends
Today, outsourcing has evolved into a more precise and focused strategy. Instead of transferring entire departments, businesses now outsource specific operational tasks to M.S.P.s. Partnering with an IT service in Chicago, for instance, helps reduce costs and also provides local businesses with access to specialized expertise.
The Rise of Managed Service Providers
Who Are M.S.P.s?
Managed Service Providers (M.S.P.s) are companies that offer a range of I.T. services to businesses. These services can include everything from basic operational tasks to complex technical support. M.S.P.s vary in size and scope, from industry giants like I.B.M. to smaller, specialized firms. They operate data centers and provide services from various American cities, benefiting from a skilled labor force and lower operational costs compared to larger metropolitan areas.
Benefits of Using M.S.P.s
For businesses with stretched-thin I.T. departments, M.S.P.s offer significant advantages. Mark E. Bakken, CEO of Bedrock Managed Services and Consulting in Madison, Wisconsin, highlights the financial benefits: “Operations typically account for 70 percent of a company’s I.T. budget. If we can cut that by a third, they can pocket the money or use it to grow.”
Key Drivers Behind the Success of M.S.P.s
Affordable Internet Connectivity
One of the major factors driving the success of M.S.P.s is the decreasing cost of Internet connectivity. Corporations can now enjoy more flexible Internet capacity, paying only for what they use. Aaron Bazler, Network and Infrastructure Manager for the Manchester Airport Authority in Britain, notes, “The real driver was the ability to provide a flexible bandwidth model to cater to unpredictable demands on our Web servers from the general public looking for information.”
Increasing Importance of Internet Applications
As the Internet becomes integral to corporate operations, the demand for reliable and secure Internet-connected applications grows. E-mail, for example, has evolved into a critical tool for external communications. Rich Bader, CEO of EasyStreet Online Services in Beaverton, Oregon, points out, “E-mail is now about external communications, and we sell Microsoft Exchange by the mailbox at $15 per month each. Exchange is very picky to run properly, and a lot of companies just don’t want to devote the necessary resources to get the kind of reliability that the business requires.”
Advanced Remote Management Tools
The development of advanced software tools for remote server management has also played a crucial role in the rise of M.S.P.s. Companies like I.B.M. and Microsoft have enhanced their management tools, making it easier and more cost-effective for M.S.P.s to monitor and maintain servers. Bob Longo, Director of ClearPointe Technology in Little Rock, Arkansas, states, “I call Dell or H.P. and wait on hold and tell them what they need to fix so my customers don’t have to waste their time.”
Legal and Regulatory Compliance
Legislation such as the Sarbanes-Oxley Act has prompted even smaller corporations to prioritize disaster recovery and off-site data protection. M.S.P.s have adapted to these needs by offering cost-effective solutions tailored to smaller businesses. Charles Weaver, President of MSPAlliance, an association of managed service providers, explains, “Legal compliance complexity is driving more business to M.S.P.s.”
Case Studies: M.S.P.s in Action
Manchester Airport Authority
The Manchester Airport Authority outsourced its parking-reservations system to an M.S.P., which freed up bandwidth for its own needs. According to Aaron Bazler, “Having an M.S.P. manage our servers has made a huge positive difference in their availability.”
EasyStreet Online Services
EasyStreet Online Services in Beaverton, Oregon, relies on multiple high-speed Internet lines to ensure reliability. CEO Rich Bader explains, “We have four upstream Internet providers coming into our place. Among the three very high-speed lines, usually one goes down once a month. The trick is that we have enough spare bandwidth on the other lines to handle any outage.”
ClearPointe Technology
ClearPointe Technology in Little Rock, Arkansas, monitors over 25,000 devices and performs routine maintenance on 700 servers across the United States. Bob Longo, Director of ClearPointe, emphasizes the value of their services: “ClearPointe has a minimum of three engineers on duty at all times. We monitor and manage these devices for an average monthly cost of $700 per server.”
The Future of M.S.P.s in IT Outsourcing
Expansion of Services
As the role of the Internet in business operations continues to grow, M.S.P.s are likely to expand their service offerings. This includes getting the best-managed security service provider, integrating emerging technologies, and offering customized solutions to meet the evolving needs of their clients.
Increased Demand from Smaller Businesses
The trend of smaller businesses leveraging M.S.P.s for their I.T. needs is expected to continue. With the increasing complexity of I.T. operations and the need for cost-effective solutions, M.S.P.s will remain attractive for businesses looking to streamline their operations and focus on core activities.
Technological Advancements
Advancements in artificial intelligence, machine learning, and automation will further enhance the capabilities of M.S.P.s. These technologies will enable M.S.P.s to provide more proactive and predictive maintenance, improving overall system reliability and efficiency.
Conclusion
The role of Managed Service Providers in I.T. outsourcing has evolved significantly over the past decade. From their early days of large-scale departmental transfers to today’s precise and strategic outsourcing of specific tasks, M.S.P.s have become essential partners for businesses of all sizes. With the benefits of affordable Internet connectivity, the increasing importance of Internet applications, advanced remote management tools, and the need for regulatory compliance, M.S.P.s offer a compelling value proposition.
As businesses continue to navigate the complexities of modern I.T. operations, the demand for reliable and specialized M.S.P.s will only grow. These providers not only help businesses reduce costs and improve efficiency but also allow them to focus on their core competencies, driving growth and innovation in an increasingly competitive market. The future of I.T. outsourcing looks promising, with M.S.P.s playing a pivotal role in shaping the landscape of business technology.
