MSP definition

A managed services provider (MSP) is an outsourced third-party company that takes on the ongoing, day-to-day responsibilities, monitoring, and maintenance of a range of tasks and functions for another company—their customer. The MSP and the customer are typically bound by a contract with a standardized service level agreement that defines the expectations and quality metrics of the delivered services.

Common MSP business functions include:

• IT for connectivity, networking, data backup, and recovery
• Marketing for strategy, planning, and copywriting
• Human resources for employee on-and off-boarding and payroll
• Contingent workforce for external workforce requisition, placement, and tracking
• Supply chain for sourcing, procurement, logistics, and distribution

What services do MSPs provide?

Most commonly, MSPs provide off-site support for IT infrastructure, including connectivity, network monitoring, and security. But MSPs offer a much wider range of services for businesses like the management of a complete business function, such as administering payroll, monitoring supply chain and demand, or overseeing the end-to-end functions of an agile and skilled contingent workforce.

MSPs can also consult and advise on the best technologies or tools for your business. They can help you help you transition business processes to the cloud to enable greater visibility, control, and efficiency.

As a partner in helping you achieve your goals, an MSP can build a customized program based on your specific needs and objectives, oversee the implementation of the program, and manage the daily operation and maintenance of those critical functions.

In-house vs. MSP

Often, it is more costly and time-consuming to manage a function or service in-house. MSPs offer expertise and experience in their field of services for a more predictable cost. Outsourcing managed services allows businesses to reduce the cost of dedicated personnel working in-house, along with the technology, tools, and other required resources.

Businesses can take advantage of an MSP’s capabilities and industry knowledge while avoiding the direct cost of managing the program themselves. Further, companies that engage MSPs free themselves from burdensome functions outside their core skillset or business acumen, enabling them to focus on strategic projects and initiatives to grow the business.

MSPs can also consult and advise on the best technologies or tools for your business. They can build a customized program based on your specific needs and objectives, oversee the implementation of the program, and manage the daily operation and maintenance of those critical functions.

What are the benefits of working with an MSP?

Outsourcing to an MSP is a growing trend in business as more and more companies realize the benefits of outsourcing many of their functional operations to a third-party expert.

Benefits include:

• Control costs with a predictable, subscription-based model.
• Rely on experienced professionals to keep you up to date on the latest trends and technology.
• Increase availability and efficiency while streamlining operations.
• Reduce risks and liabilities, as MSPs can ensure compliance with government regulations and industry standards.
• Lower the overhead costs of managing the service with an in-house team of full-time employees.

The demand for managed services has grown exponentially in recent years. According to an IDC Spotlight*, Managed Services Reimagined: Empowering Growth in a Technology-Driven World, the global managed service business is projected to reach a staggering US $711 billion by the end of 2028, highlighting the increasing importance of MSPs to businesses.

How to find an MSP

Finding an MSP that’s the right fit for your specific needs is critical to reaping the benefits that you expect to get from outsourcing functions or services. Here are some steps you can take to find an MSP that aligns with your objectives:

• Assess needs. Identify the specific functions and services that your business requires.
• Research potential MSPs. Use online searches and directories and seek recommendations from peers to identify potential MSPs that specialize in the offerings, expertise, and experience you require.
• Verify credentials and reputation. Check for relevant certifications and read reviews or testimonials.
• Check technology and partnerships. Compare the services offered by each MSP to ensure they use up-to-date technology platforms and have strong vendor partnerships.
• Discuss security. Ensure that cybersecurity practices are robust, with a focus on staying current with the latest threats and technologies.
• Assess support availability. Ensure they offer adequate support for emergencies and regular communication.
• Review contracts and proposals. Carefully examine contracts and service level agreements (SLAs) for terms and guarantees. Request proposals or demos to understand their service delivery and compare costs and value.

Taking these steps can help you establish a partnership with an MSP that will provide your business with the right expertise and support to meet your unique needs.

Explore SAP solutions available as managed services

MSPs make it easy to realize the value of SAP cloud solutions—fast. By bundling software, services, and ongoing optimization into one managed offering, your business can accelerate transformation, improve performance, and free teams to focus on growth.

Get started in one of these areas:

Cloud enterprise resource planning (ERP)

From purchasing and manufacturing to sales and service, MSPs can help you transition your business processes to the cloud using modular, AI-enabled ERP solutions that provide visibility across your business.

Human capital management (HCM)

MSPs can put HCM solutions to work to support your HR needs across the entire employee lifecycle—from recruiting and onboarding through performance management, learning and development, time tracking and payroll, and offboarding.

External workforce management

From talent pooling and recruitment to offboarding and invoicing, MSPs can use the rich capabilities of external workforce management solutions to create and efficiently manage a versatile external workforce for your business.