By Eran Farajun, EVP at Asigra Cloud Backup
Sept. 21, 2012

Asigra Cloud Backup Expert Tips: Defining “MSP”

“Managed services” is a concept that was popularized by utility companies in power and telephony sectors. The concept initially denoted the transfer of responsibility for day-to-day infrastructure management activities to third parties for a strategic advantage. The third parties to the business contracted with the business to provide improved and effective utility services to their clients for a price. Characteristically, the ownership of the assets required for providing the utility, was owned and operated by the Managed Service Provider. The “usage” of the utility was charged to the customer.

Managed Services are distinguished from “Professional Services” and “Outsourced Services” in five ways—customer objective, economics, differentiators, pricing methodology and measures used.

A professional service provider does not own the technology that is deployed by the client. The client owns the technology and the professional helps the client integrate the technology; creating a ‘one to one’ relationship. The professional offers expertise and regards the contract as a project with well defined achievement milestones.

The outsourced vendor owns the technology that is used to facilitate the client at short notice with reference to a product or service. The relationship is ‘many to one’ and cost is the differentiating basis of the contract. The contract may be for a short period or for multiple years. The measure is the total cost of ownership.

Managed service providers (MSPs) operate sophisticated technology for the client to provide a ‘utility’ to the client. They may or may not own the technology they use, but enter into service level agreements with clients to provide services that are differentiated by standards of delivery. The relationship is “one to many” and the contract is generally annual. Many successful MSPs differentiate themselves by becoming vertical market specialists and establishing themselves as trusted advisors in a specific industry. This provides added value to the customer as a segment-specific MSP who will better understand the customer’s business, requirements and challenges. The MSP’s portfolio of customers in the targeted vertical market serve as points of validation and references in the respective vertical.

Managed services in the cloud can be B2B or B2C services.

B2B or Business to Business Managed service providers operate in a niche market. They contract with the “Cloud Concept Developer” to extend the market-reach of the principal and resell the cloud-concept developed to other managed service providers who contract with them. They coordinate with the principal in educating the reseller and their MSPs in effectively
marketing and managing the provisioning of utility services to their ultimate clients—the utility consumer. The principal and the MSPs provide “cloud enabling services” to other businesses that provide utilities to customers.

B2C or Business-to-Customer Managed Service Providers may or may not own the “cloud concept” they market. Concept owners may go direct to market with their product and contract with customers for providing managed software, hardware or platform services. They may also contract with other businesses on B2B basis to extend their market reach. These businesses have to be classified as both, MSPs and enablers. Those who do not own the ‘cloud concept’ but provide services to customers using concepts developed by others are to be categorized as pure managed service providers (MSPs).

What ever the nature of the ownership of the software, hardware or platform, managed services in the cloud are characterized by the following features:

1. Remote delivery of computing services

2. Leveraging of technology for provisioning hardware, software or platform as a utility

3. Leveraging of IT personnel in the operating center for creating value for the client

4. Proactive management of software, hardware and platform delivery services

5. Delivery of services as specified in Service Level Agreements

6. Shifting of risk from the client to the provider

7. Provisioning of services for a contracted term at a fixed rate or fixed plus variable rate

8. Billing as specified in the contract

About the Author: Eran Farajun is EVP at Asigra, a leading cloud computing software vendor focused on cloud backup, recovery and restoration with more than 550,000 global installations.

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