Tips For Navigating The Managed-Services Ecosystem - InformationWeek

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7/23/2009
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Tips For Navigating The Managed-Services Ecosystem

Want to make sure that your managed-service provider is on board for the long haul? Here are a few points to consider when making your choice.

Want to make sure that your managed-service provider is on board for the long haul? Here are a few points to consider when making your choice.Managed-service providers, like many other IT vendors, often use both direct and indirect distribution channels. The former method is pretty straightforward: A provider sells access to its services directly to business customers.

Yet this just represents the tip of the managed-services iceberg. Many providers also cultivate networks of value-added resellers (VARs) that purchase and repackage managed services, offering them in turn to their own business customers. As the term "value-added" suggests, these VARs differentiate themselves by providing additional support and services designed to make a managed-service offering more useful and convenient.

Over the past few years, a new term has come into vogue to describe the upstream service providers that resell their offerings to VARs: Master Managed Service Providers.

These reseller channels are an important, and rapidly growing, component of the managed IT services market. Like most resellers, managed-service VARs compete by providing a wide range of supplemental services to their customers. Some VARs, for example, focus on customers working in particular industries, such as retail, financial services, or healthcare. Others cherry-pick selected Master MSP offerings that are a good fit with their existing IT expertise.

No matter where your company shops for its managed services, it's important to understand how these reseller relationships work. Consider, for example, that the quality and reliability of a managed service could depend both upon the Master MSP and the VAR reselling that provider's service.

A reader who responded to my last blog post on this topic suggested some important tips for evaluating both a Master MSP and an associated VAR. Here is the gist of that comment: "First, see if the company is accredited by the MSP Alliance. Secondly, review the MSPmentor 100 list of top providers (www.mspmentor.net/top-100-msps/). And thirdly, determine if the vendor is SAS 70 Type II certified. The first two speak to a company's financial stability, and the third validates the company's operational viability." MSPmentor is a very useful source of all types of information about managed-services ecosystem. Besides the MSPmentor 100 list mentioned above, it provides blogs, expert commentary, podcasts, and other content of interest to any company seeking to understand how this market works.

The suggestion involving SAS 70 compliance is also sound. These are auditing statements, issued by the American Institute of Certified Public Accountants, designed specifically to assess a service provider's internal operational controls. (The "Type II" designation extends this assessment over an extended period of time.)

Many Master MSPs tout their SAS 70 certification in order to win business from large enterprises. These customers are frequently subject to strict regulatory compliance guidelines that extend to their use of outsourced Software-as-a-Service offerings; as a result, they typically demand a very high level of accountability from their service providers. Most smaller companies aren't subject to the same level of regulatory compliance, but SAS 70 certification can still tell them a lot about a service provider's long-term operational stability.

It's an important point to consider; after all, companies that use managed-service providers must entrust their data -- their virtual lifeblood -- to an outside organization. No matter how your company conducts its due diligence, ensure that you get satisfactory answers about whether a managed-services VAR, and its upstream Master MSP, are running on a rock-solid financial and operational foundation.

The tools are available to protect your company against underfunded, fly-by-night managed-service providers. But it's up to you to use them.

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