Why Your MSP’s Managed Hosting Plan is a Trap

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Imagine yourself in the following scenario: you go out to eat at a fancy restaurant. When you pull up, a valet offers to park your car. You toss the valet your key, leave a tip and head inside for dinner. Unfortunately, you didn’t notice a sign at the entrance which says: “we charge parking by the hour.”

When the time comes to leave, the valet hands you a bill for $97 when parking was $17 at a garage right down the street. While this scenario may seem far-fetched, managed service providers (MSPs) hide bigger upcharges in their managed hosting plans all the time. Worst of all, they trap their customers to prevent them from switching to a less expensive option.

In this article, we’ll explain what managed hosting is, and why the best MSPs – including MainSpring – have moved onto better solutions for hosting your data and applications.

What is managed hosting?

Managed hosting is an IT provisioning model in which a provider leases the use of dedicated servers to their client while also taking charge of maintenance and administration. Often considered an “essential” IT service, many MSPs provide it either as an add-on to their contract, or as a requirement for doing business with them.

Businesses are lured into the managed hosting model for many reasons: for one thing, it’s convenient. It does not require technical expertise from the client, and it provides a sense of security through the management of experts who usually perform regular backups. At some point in the past, managed hosting was also cheaper than most other options – but increasingly, that is no longer the case.

The Cost of Housing Data

Today, managed hosting can set you back tens of thousands of dollars per month. But why? First, if you’re hosting data with an MSP, you’ll almost certainly be leasing their server equipment. The costs for doing so vary based on server type, what applications you’ll be migrating and how much data needs to be stored.

But in addition to leasing fees, you’ll also have to pay for hidden costs that typically aren’t made obvious within their contract. Some of these “extra” services include:

• Data migration onto servers
• Debugging
• Data backup
• Installation of SSL scripts
• Email archiving
• Upgrades and installations
• Data management
• Security costs
• Bandwidth usage

Each of these service fees can fluctuate depending on the size of an organization and changing business needs. But worst of all, MSPs often include a hefty fee to move data away from their servers – in our experience, these fees can range between $3,000 and $10,000. At the end of the day, customers who are stuck with managed hosting plan will ask themselves “is moving worth the cost?”

At MainSpring, we call this tactic “getting sticky” – rather than retaining customers with high quality service and concrete results, low-quality MSPs can keep them around by making it hard to leave.

Managed hosting: no longer the best option

From the 1990s to the mid-2000s, managed hosting was a standard IT service that made more financial sense for organizations than hosting data or applications in-house. But it’s not the 1990s anymore, and with the emergence of cloud computing, many IT strategy and consulting firms have shifted away from this model of IT delivery.

At MainSpring, we realized some time ago that managed hosting in the modern world is usually just a way for MSPs to gain additional revenue from their customers without providing any real benefits other than convenience.

We believe that clients should retain ownership of their data when they adopt a hosting solution. They should be able to freely change their provider as they please, without prohibitive overhead. Consequently, we built ProSuite – our managed IT service – to be more like a partnership that changes in response to the needs of your business.

The benefits of cloud

In today’s world, there is no good reason for an MSP to host your data or email in their facility. The many cloud vendors and public hosting providers on the market today provide all the benefits that managed hosting used to provide, with fewer downsides.

Faster deployment – cloud instances can be configured, deployed and spun down quickly, providing better scalability
Lower cost – at the end of the day, nobody can provide compute resources more cheaply than a cloud service provider (CSPs) that buys hardware in bulk and provisions resources as needed.
Superior security – today’s CSPs provide an impressive array of security controls, including multiple layers of DDoS protection, data encryption at rest and in transit, firewalls, load balancing and more. Redundancy is a guarantee against data loss, and backup/recovery can be easily automated.
Better use of IT expertise – IT talent is in short supply today, and organizations have to make the best use of the IT talent they have. Cloud-based hosting maximizes the value of both in-house and outsourced IT expertise – like vCIOs – by eliminating the need for maintenance, updates and other routine tasks.

At MainSpring, we consider ourselves to be our own ProSuite client, so we strive to live by our recommendations. For instance, as of right now, 95 percent of our company is run out of the cloud, using Microsoft and Amazon as our platforms. Drawing on real experience, our IT experts can tell you which cloud configuration is best for your organization based on your existing infrastructure and long-term goals.

Consult an IT professional

As with any recommendation, it’s important to bear one thing in mind: every organization is different, with different needs and requirements. Therefore, it’s nearly impossible to determine the correct solution without gathering more information about your current IT situation. If you have an IT partner, ask them:

• Where is our cloud data stored?
• Does your company manage our contract?

If it turns out that you are currently hosting with them, be sure to ask them what it would cost to move your data elsewhere, so you can at least know where you stand. Finally, talk with your team about what processes are currently in place to evaluate your data hosting on a recurring basis. …If this evaluation process doesn’t already exist, then you are officially sticky.

Choose MainSpring

MainSpring is your go-to for IT strategy and support. Our award-winning managed services are handled by a diverse team of experts on the cutting edge of business technology, with decades of combined experience serving small-to-medium sized businesses. We adopt a proactive mindset to every customer, taking ownership of your results and working diligently to exceed your business needs. To learn more, contact us today.

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