The Managed Service Provider Model

There’s one last wrinkle that we need to address as we try to refine our view of what it means to be a multi-tenant SaaS environment. Some organizations have opted into what’s referred to as a Managed Service Provider (MSP) model. In some cases, they’ll categorize MSP as a variant of SaaS. This certainly has created some confusion in the SaaS domain. To better understand the challenges here, let’s start by looking at an MSP environment and see how/where it fits in this discussion. Figure 1-8 provides a conceptual view of an MSP environment.

Figure 1-8. A Managed Service Provider (MSP) model

This model definitely resembles the classic installed software model that we outlined earlier. At the bottom of this diagram, you’ll see a collection of customers that are running various versions of a software vendor’s product. Each one of these customers will be running in its own infrastructure/environment.

With MSP, though, we’ll try to get efficiencies and economies of scale out of moving the operations to a centralized team/entity. This is the service that these MSPs provide. They often own responsibility for installing, managing, and supporting each of these customers, attempting to extract some scale and efficiency out of tooling and mechanisms that they use to operate these customer environments.

I’ve also represented the software vendor at the top of the diagram. This is here to convey the idea that the software provider may have third-party relationships with one or more MSPs that are managing their customer environments.

You can see how some might equate the MSP model to SaaS. Afterall, it does seem to be trying to provide a unified managed and operations experience for all customers. However, if you look back at the principles that we used to describe SaaS, you can see where there are substantial gaps between MSP and SaaS. One of the biggest differences here is that customers are being allowed to run separate versions. So, while there may be some attempts to centralize management and operations, the MSP is going to have to have one-off variations in their operational experience to support the different footprints of each customer environment. This may require dedicated teams or, at a minimum, it will mean having teams that can deal with the complexities of supporting the unique needs of each customer. Again, MSP still adds lots of value here and certainly creates efficiencies, but it’s definitely different than having a single pane of glass that gets its efficiencies from having customers run a single version of a product and, in many cases, getting efficiencies from sharing some or all of their infrastructure. At some level in the MSP model, you’re likely to still inherit aspects of the pain that comes with one-off customer variations. MSPs can introduce some measures to offset some of the challenges here, but they’ll still face the operational and agility complexities that come with supporting unique, one-off needs of separate customer environments.

The other difference here relates more to how SaaS teams are structured and operated. Generally, in a SaaS organization, we’re attempting to avoid drawing hard lines between operations teams and the rest of the organization. We want operations, architects, product owners, and the various roles of our team working closely together to continually evaluate and refine the service experience of their offering.

This typically means that these teams are tightly connected. They’re equally invested in understanding how their tenants are consuming their systems, how their imposing load, how they’re onboarding, and a host of other key insights. SaaS businesses want and need to have their fingers on the pulse of their systems. This is core to driving the success of the business and being connected more directly to the overall tenant experience. So, while this is a less concrete boundary, it still represents an important difference between SaaS and MSP.

Now, it’s important to note that MSP is an entirely valid model. It often represents a good fit for some software providers. MSP can even be a stepping stone for some SaaS providers, providing access to some efficiencies while the team continues to push forward toward its SaaS delivery model. The key here is that we have a clear understanding of the boundaries between SaaS and MSP and avoid viewing SaaS and MSP as somehow being synonymous.