3 Types of IT Service Providers

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You need a dedicated resource to help keep technology up and running. But with so many options to choose from, how do you know what makes sense for your business? Even though the core function is the same, all IT service providers are different in their service delivery process and their relationship to clients. Here, we’ve listed out the main 3 types of IT service providers, and some information to help inform your decision on which type is right for your business.  

Types of IT Service Providers

Independent Provider 

This is a small, “mom and pop” kind of service shop, with typically one to a handful of employees. This kind of provider often assists with more basic, day-to-day technology issues and likely follows more of the break/fix model than a strategic IT plan. 

Pros:  

  • Likely a low-cost solution 
  • Minimal red tape/delays in completing projects 

Cons:  

  • Due to the small size of these providers, they are limited in the services they can offer and the number of people who can provide support upon request.  
  • While it can be someone very knowledgeable in IT, their technical experience and certifications can vary.  
  • A small IT team means they can’t offer a wide range of expertise across topics like networking and IT security.  

While using an independent provider may make sense if you are self-employed or have a very small, very new business (fewer than 20 employees), using one as your IT service provider as your business grows to 20 employees or more will not give you the expertise or bandwidth you need to succeed and scale.  

Internal IT Department 

As the name suggests, an internal IT department is part of your organization, and serves everyone in your business to help with anything from a password reset to maintaining your network. The size of the internal IT department can vary depending on the organization, with just one internal individual to 10 or more. 

Pros:  

  • Only serves your organization, so the team is familiar with your company process, applications, and needs.  
  • Typically can respond onsite to user issues quickly since they are usually a cubicle away 
  • You can personally select who is part of your team  

Cons:  

  • Requires recruiting, training, and maintaining industry related certifications, which is expensive. It is expensive to maintain certifications and salaries of employees. 
  • Employee salary, benefits, and overhead (like supplies, office space, etc.) are covered by your organization 
  • Limited bandwidth – Often internal teams are stretched thin. The department can’t be everything to everyone all the time (i.e. help desk and a comprehensive IT security team). 

An internal IT department typically makes sense for very large organizations (upwards of 500 employees that use technology), as IT staff costs can be justified. However, for small to medium sized businesses (less than 500 employees), it is often not cost effective to maintain the salaries of the few employees for the level of expertise available. 

Managed IT Service Provider 

A Managed Service Provider (MSP) is an organization dedicated solely to providing IT services. They typically have tens to hundreds of employees, with a variety of areas of expertise. While they are not sitting next to you in the office or on your payroll, they serve as an extension of your team. They work closely in partnership with you and your business leaders to monitor, maintain, and strategically report on your IT.  

Pros:  

  • Access to a team of IT experts 24x7x365: MSPs are like having access to a hospital full of expert doctors rather than one small practice. You can have an expert for help desk issues, networking, cloud, IT security and more. They don’t take PTO (at least at the same time) and are available whenever you need them.  
  • Removes the burden of hiring, managing, and maintaining industry certifications  
  • Cost justification: Typically, the math doesn’t work for companies that have fewer than 20 employees or more than 500 employees. However, within that sweet spot of 20 employees up to 500 employees, the flat, predictable monthly fee typically comes in under or at what it would cost to hire internally. Then you have to consider the additional benefits you are receiving for the cost, listed above.  

Cons:  

  • Not always cheaper than an internal IT department or independent provider. Short term, MSPs can be more expensive (when looking at month to month costs). In the long run, strategic guidance and the pros listed above can help to create more efficiencies within their tech stack which could lead to greater cost savings over time.  
  • Response time can be slower compared to that of an internal team depending on the priority of the issue  

An MSP often makes sense for small to medium sized businesses (specifically those with greater than 20 and less than 500 employees) that need both 24x7x365 IT support, IT strategy and consultation, cybersecurity experts, and experts for any IT project. For the cost, you get far more resources and level of expertise than you could hiring an independent provider or having an internal department. 

 

While there is no right or wrong answer for what you choose as your company’s IT service provider, there are pros and cons to the different options available. Review the above options, discuss with your management team and decide what makes sense for your business. 

 

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