Small businesses moving to the midsized outsourcing providers

Three reasons small businesses are making the move to midsized outsourcing providers

By Dan Twing , Network World
December 20, 2006 12:01 AM ET

. What's this?

Editor's Note: We regret to let you know that starting in 2007, we will no longer be publishing the Outsourcing newsletter. Starting Jan. 3, you will begin to receive our Network/Systems Management newsletter, which publishes every Monday and Wednesday. That newsletter is also written by analysts at Enterprise Management Associates. If you would like to update your newsletter subscription, or sign up for others, please go to the Subscription Services link below. We thank you for your continued support.

If you would like to information on how to continue to get this content, please register here, and you will be notified of where to receive my future writings on this subject.

The Outsourcing stories that most often make the news are the big company, big outsourcer mega-deals. Even as the mega-deals have given way to mega-multisourced deals, these are the stories we hear the most about. And when these go bad, they get even more attention.

However, the everyday heroes of the outsourcing world are the small and midsized managed services providers (MSP) who support the infrastructure, hosting and integration needs of the thousands of small businesses that are the cornerstone of the economy. Small businesses generally cannot justify the cost of dedicated internal IT resources. Some will have a network administrator to handle the basics, some will just get by as they overwhelm the one person who knows something about desktop configuration or the e-mail server setup. Many need some outside help.

Related Content

EMA recently conducted a survey of 188 small businesses for a report that will be available in January titled “SME (Small and Medium Enterprises) – Strategies and Priorities.” About 50% were outsourcing some of the their infrastructure or software needs. 41% of those outsourcing were using multiple types of outsourcing including MSPs, Software as a Service, or network services. The most often outsourced function is the Web Services and eCommerce infrastructure. On the rise is outsourcing of accounting and financial software; e-mail hosting; and data backup and recovery services.

I recently spoke to Eddie Spears, a partner at 3T Systems, an MSP with data centers in Denver and Fort Collins, Co. Mr. Spears has seen a trend where small businesses are moving to the midsized outsourcing providers, either moving up from the small three and four person IT support services providers or moving down from the very big MSPs.

The smaller providers provide great customer intimacy and local support, but they lack deep expertise on a variety of disciplines and have little or no infrastructure. The big providers have a sophisticated, multiple location infrastructure and lots of staff to provide expertise across many disciplines. However, they do not provide the same customer intimacy, often being inflexible and distant.

Spears identified three reasons that he sees small businesses making this move:

1. Need for customer intimacy – a desire to have a provider who knows your company, your needs, and is watching out for you.