Managed services have been around for several decades now, and it has a lot of meaning to many people. But, is there a useful definition for this phenomenon we call managed services? Here is our official attempt to define the term managed services; and the answer just might surprise you. If interested, here is the “official” MSPAlliance attempt to define the term managed services. 

Origins of the term

The term managed services came out of the mid to late 1990s ASP sector. ASPs delivered managed applications to users on a one-to-many basis, without the need to purchase a traditional software license. More interestingly, application service providers also helped managed applications belonging to other organizations, often delivering hosting, security, and general maintenance functions related to the application.

From ASPs came the logical next evolution in the business model, which was going from applications to infrastructure, and MSPs were born.

Distinguishing MSPs from Other IT Providers

Much has been said (and written) about this topic. One of the primary reasons for so much confusion in identifying and labeling MSPs from other types of IT providers is the lack of consistently applied nomenclature; we don’t classify ourselves rigorously as other professions.

Lack of consistently applied naming conventions aside, there are identifiable ways you can differentiate a mature MSP from a less mature provider. One of the many ways you can do this is by asking how much managed services revenue the organization generates. If a company only brings in 10% in managed services revenue, it may not be focused on managed services delivery.

Proactive or Reactive?

Another way of determining what type of IT provider you are dealing with is by examining the delivery of IT services. Typically, an MSP will make money when a client’s IT assets are running normally; this is when the MSP makes their money.

A break/fix or reactive IT company will often profit when the client has IT problems and needs something fixed. There are exceptions to this rule as many legitimate MSPs perform project work and work outside the confines of a managed services agreement. However, it is still a good rule of thumb to look at how an IT provider consistently delivers its services; this will tell you whether they are an MSP or not.

Many Varieties of Managed Services

Not all MSPs look the same. There are many styles and sizes of MSPs throughout the world, representing a diverse and robust community of companies. This diversity does add to the complexity of identifying an MSP and often requires additional scrutiny similar to what we have written about above.

The point is, you should not expect all MSPs to look the same; they do not! Some MSPs focus on particular vertical or service markets. Some MSPs operate in a confined geographical area, while others may have a global or international clientele.

If all this seems confusing, start with these fundamental questions.

1) Are you an MSP?
2) Does your company offer any managed services?
3) Is managed services the only thing you provide, or do you perform other services?
4) Are you proactive or reactive? This could get confusing depending on how they answer, but this should begin to separate the many reactive IT shops representing themselves as MSPs.