What’s the Difference between MSPs and Technology Expense Management Providers?  

Difference btw MSPs & ITEM_Main blog page

As an information technology expense management (ITEM) provider, Tangoe is often asked the question “how are your services different from those of a Managed Service Provider (MSP)”? Although there can be some overlapping services, MSPs and technology expense management providers manage two distinctly different aspects of technology for businesses.  

MSPs are focused on IT service delivery, including coverage, performance, and service quality. In contrast, a technology expense management provider is focused on the financial management of IT including driving process efficiency and cost optimization. Expense management shouldn’t be an MSP afterthought. Instead, the two should work closely together. 

Here’s a closer look at the differences, where services can sometimes overlap, and why you might consider having both providers on your team. 

Managed Service Providers versus IT Expense Management Providers 

Over the years, MSPs have greatly expanded their scope of offerings. Traditionally, MSPs focused on network infrastructure services but as IT needs have grown so have their menu of services.  

What does a Managed Service Provider do? 

Gartner defines MSPs as those who “deliver services, such as network, application, infrastructure and security, via ongoing and regular support and active administration on customers’ premises. . . MSPs may deliver their own native services in conjunction with other providers’ services (for example, a security MSP providing sys admin on top of a third-party cloud IaaS). Pure-play MSPs focus on one vendor or technology, usually their own core offerings. Many MSPs include services from other types of providers.”  

In general, MSPs give companies the services they need, achieving the highest quality of service possible. They act as an advocate for their clients, protecting the end-user experience on a day-to-day basis by remotely administering and overseeing tech-based services. The goal is to ensure that the company’s technology operates smoothly and securely. Examples of MSP services include network monitoring, cybersecurity solutions, data backup and recovery, cloud management, and IT support for end-users. As an outsourced service, MSPs relieve the client’s IT administrators to focus on more strategic needs.  

What does an IT Expense Management (ITEM) Provider do? 

ITEM providers manage IT expenses to help manage budgets, minimize costs, fully utilize all services or resources purchased, and drive process efficiencies in financial management. ITEM providers offer expense management and cost optimization for various types of IT services including cloud applications (SaaS) and infrastructure services (IaaS), as well as mobile device hardware and smartphone data plans or calling plans, but also telecom expense management including fixed wireline network services for the corporate fleet of personal computers. The goal is to simplify the complexity of cost governance and ensure every investment delivers the most value for the business.  

ITEM providers offer benefits like: 

  • Overarching visibility into a wide variety of IT service costs with granular data also available 
  • Cost savings recommendations with actionable ways to get more value from your IT budget 
  • ROI insights and the ability to track how IT investments generate revenue 
  • Improvements in productivity and process efficiency as it relates to IT invoices, contracts, SaaS license management, and much more 

ITEM services support companies by:

  • Auditing all current services and assets to benchmark current costs 
  • Comparing existing IT service rates to low-cost leaders in the market 
  • Managing RFPs and contract negotiations 
  • Augmenting IT teams with strategic innovation planning and project management, IT financial analysts, and experts to support tech modernization projects, migrations, and upgrades 

Learn more in our complete guide to technology expense management, which explains how companies reduce their costs using Tangoe’s ITEM solutions.  

MSPs versus ITEM: Biggest Differences and Areas of Overlap 

The differences in these providers can be summarized across three key areas:   

  • Focus Areas: MSPs are focused on overall performance, security, and the reliability of a company’s IT systems and services, meanwhile ITEM providers are focused on the financial aspects of technology management 
  • Functionality: MSPs manage and maintain a company’s IT services – traditionally infrastructure services – while ITEM providers manage invoices and costs associated with a broad range of IT services 
  • Scope of Services: MSPs often provide a suite of services to keep a company’s IT systems operational, offering services such as cloud management, cybersecurity, help desk support, and infrastructure management — on the other hand, ITEM providers offer software and services to capture and manage expenses, reduce expenses, and ensure value is gained for the money spent on various technologies  

Areas of Overlap 

Key areas of service overlap can include: 

  • IT service orders and hardware or software provisioning 
  • Building and maintaining a detailed catalog or inventory of all IT services and assets 
  • Support in managing IT services and the changes made to them 
  • Usage monitoring – both MSPs and ITEM providers have ways to observe how clients consume IT services 
  • Business intelligence or insights about expenditures and ways to reduce costs, including reports and support for strategic investments and purchasing decisions 
  • IT staff augmentation and strategic planning 

Why have Both? 

Having both an MSP and an ITEM provider can offer a comprehensive approach to managing two different aspects of a company’s technology landscape. Synergies between the two services mean companies can achieve the highest IT service performance at the lowest cost.  

ITEM shouldn’t be an MSP afterthought. Because the two serve as a system of checks and balances for each other, they should be implemented simultaneously. For example, when ITEM is part of the cloud migration journey from day one, effective financial management is rooted in the foundation making it easier to foster a FinOps culture of cloud cost optimization.  

High Value: With Both You can Balance Price and Performance

When MSPs and ITEM providers unite, the needs of IT leaders and financial leaders also come together as one fluid motion. While MSPs oversee the overall health, security, and performance of the company’s IT infrastructure and systems, ITEM services keep an eye on optimizing technology costs, ensuring financial process efficiency as well as financial sustainability for long-term innovation. Key Benefits when MSPs and ITEM Providers Work in Unison 

When companies bring their MSPs and ITEM programs together, they typically recognize: 

  • Productivity in outsourcing the day-to-day management of both systems/service and financial tracking and reporting  
  • Cost savings and reduced IT waste 
  • Business continuity in protecting the uptime and availability of critical IT services while also keeping invoices paid on time to avoid service disruptions or cutoffs 
  • Risk mitigation in addressing both cybersecurity threats and financial threats to the business — innovation typically creates waste, for instance Generative AI can spur unrecognized technical debt  

In summary, while there may be some overlap in managing technology for businesses, an MSP primarily focuses on maintaining and optimizing the overall IT services, whereas an ITEM provider specializes in managing and optimizing the financial aspects of technology expenses. Both are critical to business success and should be considered foundational in enabling digital transformation. 

Ready to learn more? Talk to Tangoe today about help managing your cloud, mobile, and telecom costs.