The forces that have radically reshaped the role of CIOs at many companies are redefining another IT role: the relationship between CIOs and their managed service providers. Rapidly evolving tech, a volatile business environment and the pressure to keep IT costs low are driving strategic alliances between CIOs and MSPs.
For many CIOs, MSPs are no longer viewed simply as vendors providing IT services at the lowest price. Instead, MSPs are now playing a more critical supporting role to CIOs.
Modern MSPs have emerged as indispensable to running a lean and effective IT organization. Operating as strategic partners, they are executing, automating, securing and scaling IT infrastructure and operations so that CIOs and the internal IT team can focus on the differentiating work that helps companies compete in a digital economy.
Joe McKenna, global CIO for managed cloud provider Syntax, said the evolving roles and responsibilities of modern MSPs are tied to the heightened demand for CIOs to be business strategists -- and to the volatility of business and IT environments.
"Because business environments and needs are changing constantly," he said, "MSPs give CIOs the freedom to focus on their business without worrying about staffing to support IT infrastructure, core application support, data center or security. Knowing that the MSP has that under control allows CIOs to attend to dynamic business needs, changes and drive innovation."
MSPs also bring a fresh perspective to how IT can add more value and do things more efficiently and at a lower cost, McKenna added. "CIOs are tasked with doing more for less and driving the business forward with innovation, so they need support from their MSPs to drive results."
Importantly, for CIOs to successfully partner with MSPs, they must manage them as they would any other part of their IT teams, expecting MSPs to execute on the goals set out by IT and the business.
Security MSP acts as safeguard and selling point for startup
Ben Forrest, CEO of tech startup Olio Health, can attest to the strategic value of MSPs. Forrest said that for Olio Health to succeed, employees need to be laser-focused on the delivery of its core product: software designed to improve communication between hospitals and post-acute facilities. Equally critical to the startup's success is ensuring a secure environment.
But recruiting, hiring and paying for enough staff to accomplish these equally important endeavors would stretch his nearly three-year-old health IT company beyond measure, Forrest said. So, he hired the cybersecurity MSP provider Pondurance to take over managed threat detection and response.
"We couldn't hire the needed security talent for what we spend on Pondurance," he said, noting that even if he could recruit the talent, he'd pay at least threefold more for it than he spends on his contract with the MSP. In assessing what Pondurance brings to Olio, Forrest cited efficiency as a key value.
"But I'd also add expertise. It's their space; it's what they know," he said. "Security and compliance in my eyes are not something you dabble in. I want somebody totally focused on making sure we're … up to speed in those areas."
Forrest said the high level of security Pondurance provides not only safeguards the fledgling business's assets but also demonstrates to existing and potential clients that Olio is serious about security. The MSP's role thus becomes a selling point to Olio's own customers, he said.
Braden McCann, a senior account executive at Pondurance, said CIOs certainly come to the firm for its advanced level of technology and talent. More and more CIOs are also interested in tapping the MSP for its insights on security, compliance and risk. Clients are teaming with the firm to map out the strategies that will strengthen their security postures. "They're looking at the bigger picture," McCann said.
MSP roles and responsibilities: 5 ways MSPs deliver value
CIO and MSP strategic partnerships are formed for many reasons, as the CIOs, management advisors, researchers, business executives and MSP leaders interviewed for this article made clear. But, in general, an MSP that functions as a strategic partner to the CIO takes on all or some of the following responsibilities:
- Delivers a needed service cost-effectively. "This frees up CIOs to focus on customer needs and innovation and not worry about the run," said Chad Willaert, a principal consultant at business and IT consulting firm Open Systems Technologies.
- Brings process improvement knowledge. An MSP's deep expertise in a specialized area helps CIOs identify ways to improve processes and create further efficiencies.
- Provides a highly skilled workforce. Modern MSPs are generally competitive in recruiting, retaining and upskilling IT talent in their specialized areas.
- Aggressively keeps up with technological advances. Modern MSPs constantly identify, test and prove out emerging technologies that can bring incremental and transformational changes.
- Supports transformation. MSPs draw on their experience with what has worked at other organizations and across industries to advise and support CIOs on digital transformation initiatives.
Commodity vendor vs. strategic MSP
The expansion of MSP roles and responsibilities is fueling growth in the global managed service market. Grand View Research expects the market to reach $376.13 billion in 2025, up from $174.98 billion in 2018 with an anticipated compound annual growth rate of 11.7%.
In announcing its (pre-pandemic) expectations, Grand View Research said the "growing dependence of enterprises on IT assets for driving their business productivity coupled with the need for specialized [MSPs] and cloud-based managed service is expected to drive the growth." Researchers also said that an "[increasing] need to reduce downtime of systems is expected to further fuel the market growth."
Indeed, many MSPs have responded to the business's growing reliance on IT by positioning themselves as collaborators instead of simply providers that sell their abilities to perform specific tasks in a cookie-cutter format. "They have moved from operating a service to offering a solution," said Mark Lippman, managing director at the technology consulting firm Protiviti.
To be clear, however, MSPs in general still provide commodity IT and cybersecurity services, just as they have always done, management consultants noted. These offerings include everything from backup service to email administration, application development and threat detection to data center and cloud service. Their ability to provide these commodity services more efficiently and effectively than their clients is tied to the economies of scale they enjoy in procuring the technology and talent required for increasingly complex technology stacks. Indeed, many MSPs continue to do well -- and remain in demand -- simply by efficiently providing those commodity services.
On the other side, not all CIOs are ready to use their MSPs as strategic partners. Even the CIOs who actively use MSPs to strategically support their IT departments recognize that not every MSP needs to function as a partner.
The ability to make that distinction is where successful CIOs set themselves apart: They not only understand which service to send to an MSP, but they also know which MSPs should be elevated from vendor to team player.
Twenty years ago, having a couple of "jack-of-all-trades" engineers on staff might have been enough to support the IT systems across an organization, said Kim Whittaker, president of FNTS, which provides customized IT solutions and managed IT service.
"But IT has gotten more complex, so you really need subject-matter expertise in different areas, and that has become cost prohibitive," she said. Even if a CIO can recruit and afford to hire a specialized worker, the CIO has to consider what happens when that one worker goes on vacation, takes a sick day or leaves the company. "CIOs have found as they need those specialized skill sets, it becomes more cost effective to hire MSPs," Whittaker added.
Under this scenario, MSPs become an extension of the IT team, providing that subject-matter expertise in core areas, Whittaker said.
"CIOs can then leverage MSPs to do the day-to-day tactical support so their tech people can focus on strategic initiatives that will drive their companies forward," she said. "And by marrying the two, they get a more efficient and a more cost-effective model that generates more value back to the company."
How Ancestry manages MSP partnerships to optimize value
Sriram Thiagarajan, the CIO of genealogy company Ancestry, said he considers various drivers when determining when and whether to engage MSPs, what their roles and responsibilities entail, and when to keep a task in-house.
For example, Thiagarajan said he's keeping network engineering, corporate network design and management of cloud connections and the cloud environment in-house because of their critical nature.
"Those are key to our customer experience, and they're key to scaling our infrastructure. Our future is going to be on the cloud, and we didn't want to give that away to providers," he explained.
On the other hand, Thiagarajan said he is using various cloud MSPs for their ability to scale service more rapidly, more efficiently and more effectively than his own organization could do.
"The providers have a critical mass of talent that is much more skilled than any one company can hire," he said. "In some cases, they'll also have knowledge about where the industry is going. We need to keep up with things as they change, and we're relying on their knowledge and skills as the industry moves ahead."
IT functions that are typically off-limits for MSPs
While MSP roles and responsibilities are expanding and becoming more strategic, there are elements of the IT department that CIOs generally don't turn over to the MSP. They include the following:
- cultivating the connections with the business units and the business unit leaders;
- developing differentiating technologies;
- leading the work on core and mission-centric initiatives;
- devising the IT roadmap; and
- syncing IT strategy to the organization's overall vision and other high-level tasks.
Anthem's playbook for using MSPs: Agility is key
Rajeev Ronanki, senior vice president and chief digital officer at insurance firm Anthem, said he seeks MSPs who can deliver consistency and efficiency but can also dovetail with the company's nimble mindset. "Anthem's view is that agility drives everything for us, and we work to ensure the MSPs fit into that model. They need to be adaptive," he said.
Ronanki said he does the following to help ensure MSPs deliver the value that Anthem expects:
- insources staff from MSPs so that the workers are like "extensions of our teams" rather than outsiders handling carved-out tasks;
- aligns MSPs with his vision of using artificial intelligence and other digital technologies "to eliminate work so we can truly focus on the things that matter;" and
- stipulates that IT work, including that performed by MSPs, is focused on business outcomes.
Ronanki said he looks to his MSP providers to cut costs and help grow revenue. "They need to think about finding ways to eliminate the work itself and deliver more efficiencies, and enable top-line business growth," he said.
MSP role and digital transformation
Ronanki is not alone in his high expectations of MSPs. MSP executives said they're increasingly getting such demands from CIOs, who are engaging them to help digitally transform their IT departments and their enterprises overall.
"We have the ability to help them modernize. We have the ability to help customers figure out what's next, and we can do this on scale for our customers because we have the talent and technology to optimize the cost," said Paola Doebel, senior vice president and managing director for North America at Ensono, an IT service management company. "CIOs need that: They need a provider who will meet them where they are today and can help them get where they want to go."
Using MSPs as a partners in digital transformation, however, can be a difficult to pull off, starting with how to contract for such advanced expertise.
"MSPs invest in AI/machine learning and advanced technologies are looking for a return, so 'giving' access to their clients is unlikely," Doebel explained, "So then, what is a tolerable pricing model?"
She also said that this scenario of MSPs working with CIOs to help them future proof their enterprise assumes that the enterprise "has filtered their strategy into a one-page illustration of what that advanced technology should equate to in their MSP arrangement and possible future accelerated business growth."
Doebel added: "Realizing this model will depend on both the providers and their clients clearly understanding realistic outcomes and expectations of the other and then learning how to contract for it."
As such, even as both sides move to adopt emerging technologies to deliver value and ultimately revenue to both sides, experts said CIOs and MSPs must understand that the root of success is in developing a good relationship. That depends as much on the MSP's understanding of the company's business as it does on the MSP's technology chops.
"I don't think advanced technologies will 'expand' a role or even lead to that long-illusive 'partnership' both organizations express they are seeking," said Brett Sparks, senior director analyst in the IT leaders sourcing, procurement and vendor management team at Gartner.
"Deeper involvement into the specific business of the client and beginning to truly baseline and measure business outcomes will get MSPs and clients to a partnership," he said. "That involves trust and transparency on both sides, especially when an MSP and client have been working together for an extended period of time."
Biggest challenges to optimizing the CIO-MSP partnership
Many CIOs continue to see lower than expected returns on their engagements with MSPs. Gartner estimated that more than 60% of buyers won't achieve the goals sought from their IT outsourcing deals.
Experts listed the following as some of the challenges and obstacles that CIOs should anticipate and address in their MSP engagements.
Questions around who has responsibility for what. Modern IT departments typically use a mix of in-house workers, business unit employees, contract workers and MSPs to deliver tech solutions, which frequently complicates the delineation of responsibilities. MSPs themselves may also use their own subcontractors and partners, which adds another layer of complexity, particularly if an MSP doesn't take full responsibility for any lapses of its own vendors' work, said Akiba Stern, a partner at the law firm Loeb & Loeb LLP and author of "Reacting to a Vendor's Request to Implement a Remote Working Solution as a Consequence of COVID-19."
MSP's lack of alignment to IT and business goals. A lack of alignment can arise for various reasons, from CIOs failing to be forthright about their goals to the enterprise having different business divisions with various and possibly conflicting objectives.
Lack of understanding of the organization's business and internal processes. This shortcoming also includes the possibility of the MSP's being unwilling to learn the business.
Potential of a shutdown. Contract disputes and delayed payments could prompt the MSP to shut down its service if safeguards aren't contractually spelled out, Stern said.
Vendor lock-in. This problem is compounded by the introduction into the IT department of MSP proprietary tools and processes that won't necessarily transfer to the client should the CIO move to another provider.
Unanticipated additional costs. Depending on how the CIO's contract with an MSP is structured, the CIO could face extra, unanticipated fees for upgrades or revised work processes.
'Know thyself' key to sorting out MSP roles and responsibilities
In the end, CIOs are in the driver's seat when it comes to how and when they use MSPs and to what extent.
CIOs can decide "whether keeping the lights on at a lower cost is good enough right now," according to Gartner's Sparks. Or they can opt to seek out MSPs who can help them transform.
"In today's pandemic environment, some organizations are laser-focused on cost avoidance, while others are looking to invest in advanced technologies to further accelerate growth when the economy recovers," Sparks added.
CIOs at digitally mature organizations in industries that are currently faring well are better positioned to use MSPs as partners to explore new technologies and support their innovation initiatives, while CIOs at companies facing more economic stress may still prioritize MSPs that can help IT cut costs.
To successfully leverage MSPs as partners, experts said CIOs must have a vision and know the strengths their own IT departments bring and which ones are lacking.
"CIOs are focusing on the internal roles where they get the most value, and they look at MSP partners to get the value they need elsewhere," Whittaker said. "They're really relying on the service provider there and are putting a lot of trust in that service provider to deliver."
Additionally, experts said CIOs must be willing to share their strategic visions with partner MSPs. They must also assign high-level IT personnel to work with executives on the provider side to align work and manage the relationship. They need to establish trust between each other, too, and create a work environment where the internal IT employees and the MSP staffers know what each side should be doing, buy into the assigned work processes and collaborate.
Successful CIOs and their MSP partners also need "first-class contracting and first-class governance," said Loeb & Loeb's Stern. MSP partnerships should have clearly defined metrics, Stern advised, so that both the internal IT team and the MSP knows who delivers what, how each side is evaluated on success and where they each need to improve over time.
Above and beyond
Ensono's Doebel said that a trusted relationship was critical to the work her company recently performed with Guinness World Records, a client for 16 years.
GWR, like nearly all other organizations, was navigating complex requirements and objectives as it sought to digitize, modernize and break down legacy siloes as well as move to the cloud while avoiding vendor lock-in, Doebel said. Guinness officials then felt the need to accelerate their plans in response to the pandemic, as the world shifted further and faster to virtual everything.
"You need a partner who can help you solve for all that complexity," Doebel said.
Paola DoebelSenior vice president and managing director, Ensono
For Ensono, that meant helping GWR actually migrate out of its existing managed cloud services with Ensono to the AWS platform. Ensono worked with GWR to migrate the company's mission-critical applications -- including its capacity to store and manage 4,000 video downloads, 50,000 applications, 47,000 record inquiries from 178 countries and 6,000 records approved annually -- over to AWS.
Doebel said her company embraced GWR’s decision, believing it was the right strategic move for its client, as well as supported the logistics of the shift. That's the mark, she added, of a true partner.
"You need an MSP who will meet the customer where they are today and can help them get where they want to go," Doebel said.