Org Strategy, Org structure

The Rise of the Managed Service Provider Org Structure

By: Tim Brewer

Over the past twenty years, organizations have realized the benefits of outsourcing much of their admin, accounting and IT needs rather than deploying dedicated servers, software, air-conditioned hosting rooms and an internal suite of IT personnel to do all this in-house.

Allied to this trend, we have witnessed the proliferation of SaaS (software as a service, or subscriptions) businesses, as well as data centers, cyber security firms, the Internet of Things companies and cloud computing.

'Managed services' refers to the practice of outsourcing the maintaining, and anticipating the need for, a range of processes and functions to improve business operations and reduce expenses.

It is an alternative to the break/fix or on-demand outsourcing model where the service provider performs on-demand services and bills the customer only for the work done.

Under this subscription model, the managed services provider (MSP) delivers the managed services for a regular (e.g. monthly) subscription fee. The business and the MSP are then bound by a service-level agreement (SLA) that states the performance and quality metrics of their relationship.

The Rise of the MSP

The rise of these cloud-based platforms has brought on an explosion in the market for MSPs.

From accounting to virtual assistants to CRMs to email and so much more, organizations have found that dealing with a reliable MSP is more convenient and efficient.

Is it really ‘core business’ for an organization to develop its own in-house admin, accounting, CRM and IT capability? And then having to employ staff to look after all this? For many companies, the answer to these questions is a resounding ‘No!’

A 'set and forget' system with an outsources expert (MSP) taking care of all this seems to be more agreeable.

Some are even predicting the rise of XaaS, or ‘everything as a service’.

The Managed IT Services market is estimated to grow to an eye-watering $339 billion by 2025, from $220B in 2020 (1).

Key Attributes of an MSP Organization

Service providers such as MSPs operate in a fast-moving environment.

Businesses have to be responsive to customers' needs, as computers, connectivity and IT systems can fall over at any time, leaving the client organization exposed. The proliferation of cyber attacks makes every business susceptible, and most have realized having a reputable MSP working with them takes care of this risk.

On top of all this growth, the industry itself is evolving, meaning the MSPs have to be up to date with all the latest technology, theory and practice.

This means the MSP has to be highly nimble and responsive, covering a wide range of IT solutions, within a strong, stable knowledge framework and ready-made solutions.

MSPs also tend to be more collaborative and work across traditional department lines. For example, let’s say there is a flaw in the product. This can hurt sales and customer retention. It may invalidate marketing. It may cause budgeting and financing issues. Since everyone has a stake in the product delivery, it becomes a group responsibility.

What departments make up an MSP Org Structure?

In a small MSP, with a handful of staff - probably technical and IT in nature - there would be less specialization. Required tasks would likely include request ticketing, customer support, service delivery, sales, marketing and admin.

The Owner/Manager may have to take on nearly all the sales, marketing and admin roles themself, with the remaining IT staff working on the company’s platform, and dealing with customer issues. It might seem like an ‘all hands on deck’ approach, but a semblance of structure will still be required.

As the MSP grows and hires new staff, more specialization will be required to provide an efficient service to the business clients.

One new department may be Service Coordination, so that the requisite standard of delivery is provided across the client base. Some clients would be on a Service Level Agreement (SLA) that provides them with support within an hour should something go wrong, others may be on 4 hours or a day. Some customers' needs would be far more complicated than others. 

As the MSP grows beyond 10 or 20 staff, then the IT staff may be subdivided into entry-level work (for juniors) and more developed work (for seniors).

Help Desks may be housed by generalists, and other teams may work on networks, cyber, devices and fieldwork. Junior staff can enter at these lower levels, learn on the job, and rise through the ranks to more senior positions as their experience and expertise grows.

In time, there will be some staff that would concentrate entirely on the MSP’s own product platform and interface, together with specialist sales and marketing teams, teams of service delivery and business operations.

Example of an MSP Org Chart

Let's imagine a small to medium-sized MSP organization of around 25 staff, with one Managing Director/Owner and five functional departments:

  1. Internal Platform
  2. Help Desk
  3. Service Co-ordination
  4. Sales and Marketing
  5. Administration, including Accounts

 

Interactive Org Chart - use tools to zoom, view job details, etc... © Functionly

This simplified org chart shows departments and their titles; within Functionly, you can add actual team members, names, titles, roles, reports and accountabilities.

The (above) simplified org chart shows the five departments, with a head of each reporting to the Managing Director and a team below each line manager. The departments describe what the respective teams 'do', yet the structure provides space for promotion to team lead, or swapping over into other teams, or collaboration, as appropriate. 

What happens to the organizational structure when the MSP's staff numbers rise above 30, 50 and on to 100 becomes crucial. It is precisely during this phase that organizations can become administratively cumbersome, which destroys productivity and performance as 'the system' takes on a life of its own.

It is at this stage you need to examine closely how best to organize staff, and thankfully, Functionly is here to help...

Functionly-icon: Help Yourself to a Free Org Chart!

The best org charts will define where your organization is now, but also allow you to envision where your organization needs to go in the future.

Creating multiple variations for different levels of growth can help you see gaps in your staffing or functional areas. It can help you better prepare for the future, especially in times of uncertainty, rapid change or growth.

Functionly provides a fast way to create beautiful and easy-to-understand org charts to visualize your structure. Using intelligent org design, you can create simple or complex org charts using built-in templates or design your own.

With drag and drop functionality, it’s easy to make changes, so when you’re planning for the future, you can easily evolve your org chart.

Sign up now for a free trial and let us show you how creating org charts for your structure can help you manage and grow your business.

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Sources:

  1. MarketsandMarkets MSP Analysis, MarketsandMarkets.com, 2019
  2. Optimal Organizational Structure for MSPs, S Buyze, Advanced Global, 4 Feb 2021
  3. How to Structure Your Managed Services Organization, G Humphrey, TSIA, 23 Feb 2015
  4. How to Structure Your MSP Team Through Various Growth Stages, A McCluney, BrightGauge, 23 May 2017

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