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Managed Service Provider, also known as Managed Dedicated Server, is an entity or an organization that provides a service of active management to a client’s IT infrastructure over a licensed subscription plan or an on-demand basis. So, in simple words, the term ‘Managed Services Provider’ can mean a number of things. On the one hand, it can simply mean a dedicated computer server belonging to a vendor. On the other hand, it can also mean a computer server owned by a corporation and leased to a client for the purpose of active management.

On the one hand, vendors are the ones who lease their resources to third-party companies for the purpose of providing active management. On the other hand, managed service providers are those who lease their information technology infrastructure from a vendor management firm. They act as information technology resellers or data centers for third-party companies. Some resellers specialize in specific segments of information technology like network services, managed hosting services, e-mail accounts, security systems, or file services and software.

Providers also provide the necessary connectivity between different servers in order to allow for information to be accessed. There are various types of managed service providers offering different kinds of services. One example includes application service providers, or ASPs, application service providers offer database management, data management, and web site administration. On the other hand, infrastructure-assembling virtual managed services providers (ISPs) specialize in providing managed services on the central IT infrastructure.

Managed Service Providers have significant advantages over vendors, resellers, and/or independent information technology consultants.

For starters, they are licensed by the IT Industry Association and can therefore offer standardized features. Also, they can immediately deliver services at the onset without incurring long-term costs and liabilities. Furthermore, providers typically have tie-ups with other companies that could extend their reach and give them access to a larger pool of clients. Lastly, managed services providers have large infrastructures and technical teams which are very crucial in delivering services faster and at higher quality levels.

There are two basic models used by Managed Service Providers to provide IT services.

The subscription model offers the client the convenience of self-service administration. In this model, the client pays a monthly fee according to the chosen plan and is assigned an account manager. This model is the most popular among application service providers.

Another model used by Managed Service Providers is the flat fee billing model. In this case, the client pays a flat fee for the entire system administration process, regardless of the number of servers. This type of managed service provider charges a standard rate for each server irrespective of its size. However, this type of pricing model is not suitable for businesses that require smaller servers. It also does not make sense to use this model for managing applications which are less sensitive.

A third alternative offered by managed services providers is the on-demand pricing model. In this case, the customer is charged a flat fee for any particular services needed by the organization. This type of pricing model has significant advantages. For instance, it allows for flexibility as the client can decide whether or not to subscribe for a long-term plan after the first one expires while it does not make sense to pay for services which the organization will not need anytime in the near future.

A fourth value proposition offered by Managed Service Providers is value based services.

  • They determine the value of their services through a series of factors such as cost, reliability and scalability. They also consider other factors such as customer’s satisfaction.
  • The aim of value based services is to provide the most suitable and cost-effective solution to organizations. This value proposition enables Managed Service Providers to offer services at competitive prices and generate sufficient revenue from them.
  • As a result, these Managed Service Providers have been able to develop excellent relationship with their customers and keep them.

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