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More and more companies are choosing to outsource their IT to the cloud instead of trying (and often) struggling to do everything in-house.

This is a mostly positive trend. Managed services are a great way to optimize and scale IT operations and assets. They increase efficiency while bringing down costs; no wonder businesses are projected to spend $193 bn (!!!) on them as early as 2020.

But there is a caveat.

Not all Managed Service Providers (MSPs) are created equal. The industry is new and loosely regulated, with many providers that are still untested and unproven. It’s not exactly the Wild Wild West out there – but consider that a single instance of carelessness by your MSP can lead to…

When you look at figures like these, the importance of picking a quality MSP becomes immediately apparent. Losses like these can (and do) put successful companies under.

Free Download!  Click here to get your Free Checklist of 6 Ways to Know an MSP is Efficient and Secure!

For example, significant data breaches result in eventual business failure 96% of the time. This means you want to avoid them – as well as data theft, extended downtime, and general security breaches – at all costs. Your business’s survival literally depends on your ability to do so.

And while it’s important to acknowledge that most (if not all) MSPs work very hard to serve their clients, it’s equally important to understand the very real possibility that one little mistake on their part can end your organization.

To make sure that doesn’t happen, the article below will show you the 5 key signs that your Managed Service Provider might be exposing you to data theft, downtime and financial loss.

Sign #1: They Want You to Abandon Reliable Legacy Software

Making the switch to managed services means integrating your IT environment with that of your service provider. Given how many apps, services, and APIs exist in the modern world, this often involves giving up some of the software you use.

This isn’t necessarily a bad thing. In fact, a managed service provider can be the exact catalyst your IT department needs to move towards better, more modern software.

But what if that’s not what happens?

What if your MSP asks you to give up reliable legacy software that worked just fine?

Technology Problems

Then you’ve got 3 potential problems on your hands:

  1. You’re being asked to invest time and resources into switching to new software unnecessarily. This is wasteful and inefficient.
  2. Newer software tends to be more complex, which can make it vulnerable to security breaches. (Consider that something as innocuous as a modern antivirus can put your IT infrastructure in harm’s way.)
  3. There’s a learning curve to switching from legacy software. The change doesn’t happen overnight and increases the likelihood of human (and software) error.

Sometimes, all of these risks are worth it because of how much added value you get from your new applications and services.

If you’re not convinced that’s the case in your organization, don’t put up with an MSP that forces you to upgrade your software. There’s no need to expose yourself to mistakes and security vulnerabilities for the sake of it.

You should be particularly careful about switching from legacy software if it looks like…

Sign #2:  Your Provider Doesn’t Have Much Staff

A great MSP is like the A-Team: mobile, available on-demand, and equipped to deal with any situation.

Also like the A-Team, a great MSP needs a crew of diverse experts to do what they do best. Specifically, you want to make sure your provider has at least one of each of the following:

  • A software engineer that can design, edit, and code apps and APIs.
  • A systems analyst that comes up with solutions to your needs, wants, and problems.
  • A tech support/helpdesk specialist that interacts with your business and/or your clients and partners.
  • A network engineer that will set up and maintain your communication systems efficiently.

IT Personnel

Unfortunately, this isn’t always the kind of team an MSP has. What often happens is that you get two or three guys working from notebooks, relying on Asian or Eastern European freelancers to help out when necessary.

Free Download!  Click here to get your Free Checklist of 6 Ways to Know an MSP is Efficient and Secure!

This is a problem, because as well-intentioned as these small teams might be, they’re not equipped to handle an organization’s IT in its entirety.

They leave you open to data breaches, extended downtime, and financial loss: the 3 things that, as explained above, can literally kill your business.

Don’t get us wrong; we love and support small businesses (after all, we are one). It’s just hard for small MSPs to offer a full suite of services with limited staff and limited hardware, which is what we’re going to talk about next.

Sign #3:  Their Hardware is Limited

North American companies lose $700 billion to downtime each year. A popular misconception is that this barely affects smaller companies. This is incorrect; the average mid-size business loses $1 million to downtime annually.

According to IHS Research Director Matthias Machowinski, the primary reason for these losses is equipment. Most companies don’t have the hardware to operate and scale seamlessly. Sooner or later, their in-house equipment gets overtaxed and their IT ecosystem goes down (fully or partially).

This is why it makes so much sense to turn to MSPs. They can give you access to near-unlimited processing power, storage space, etc. This is one of their major draws.

But when you’re dealing with a small provider whose own equipment is limited – again, think to those two IT guys working from notebooks again – guess what happens?

Exactly. The same downtime you wanted to avoid in the first place.

That’s why it’s so important to make sure that your MSP has all the hardware they need to help you scale immediately! If they don’t, take it as a major sign to look at other options.

(Just watch out for sign #5, which you’re about to learn about right after reading the next few paragraphs.)

Sign #4:  Your Own Staff is Marginalized

Your MSP isn’t there to replace your own IT staff. They’re there to augment your IT department with cloud-based, outside help; not do their job for them.

But what happens a lot of the time is that a managed service provider attempts to take over your IT operations, marginalizing your staff in the process. This is almost always well-intentioned – but it can lead to massive problems for your business.

After all, even the most incredible managed service provider can’t replace the company-specific expertise your staff have. They don’t know the ins and outs of your IT environment; your front and back-end interfaces; the intricacies of your networks and security systems.

Most importantly, MSPs rarely bear legal responsibility for the data they handle. Unless you trust them 110%, letting them marginalize your IT department is likely to end in heartbreak. The name of the game should be “cooperation” – not “competition”.

Now on to red flag #5, which we promised to tell you about above!

Sign #5:  Your Costs are High

A managed service provider provides a specialist service. This allows them to reduce costs and improve efficiency in many ways, e.g. through:

  • Having efficient IT operations
  • Being highly qualified and effective staff
  • Buying equipment in bulk
  • Buying traffic in bulk

This is what allows MSPs to provide highly efficient IT services. It’s what allows them to save money and pass on some of their savings to their clients, creating a win-win situation for everyone.

But if an MSP is actually driving your costs up?

They’re effectively making your IT less efficient and taking value from your organization instead of adding to it.

Free Download!  Click here to get your Free Checklist of 6 Ways to Know an MSP is Efficient and Secure!

It doesn’t matter what root cause is. It could be the equipment, it could be staff, it could be a poor business model; the point is, all these problems are indicative of inefficiency and (usually) incompetence.

In other words, high costs don’t directly lead to security vulnerabilities and other issues – but they are indicative of a sub-par provider.


Let’s recap by looking at the 5 warning signs that indicate your MSP is exposing you to data loss, downtime, and and data theft:

  1. Asking you to abandon legacy software
  2. Not having enough staff
  3. Limited hardware capabilities
  4. Marginalizing your IT department
  5. Driving your costs up

Now that you’ve almost completed the article, give yourself a pat on the back. You’re one step closer to creating the efficient, inexpensive, scalable IT infrastructure your business needs to succeed in the 21st century.

And you can certainly choose to stop righit here…

But if you’d like to learn even more about picking the right MSP for you – and avoiding the problems listed above – why not download our free checklist that outlines the 6 ways to know an MSP is efficient and secure?

It’s got everything you need to know about your outsourced IT assets and operations, including the stuff MSPs really wish you didn’t know.

Ultimate Guide to MSPs

Melissa Martin

Melissa Martin

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Melissa is the new kid on the block at Greenbrier Technologies & Electric. When she’s not tag teaming with her husband trying to wrangle and engage their two young daughters, you’ll find Melissa finding new and exciting ways to share GTE’s story and build relationships with folks in the “other” valley. The Greenbrier Valley may be the original home of GTE, but Melissa is quickly showing the team why the Shenandoah Valley is the place to be!

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