How Enterprises Can Balance Ownership Of Organizational IP With Their MSPs

By Jorge Rodriguez, Cleo

MSPs are a key element of the enterprise ecosystem, as they deliver several tangible benefits to customers. Aside from cost savings, these benefits include increased productivity through fast resolution of IT issues, and the ability to focus on core business objectives rather than managing IT assets.

Market statistics help paint the picture of enterprises’ dependence on MSPs: according to Statista, the overall IT outsourcing market – which includes the services MSPs manage for their customers – was valued at $378 billion in 2018, and is forecasted to reach $413 billion by 2021.

Although MSPs play a crucial role in countless enterprises’ business strategy, some enterprise customers have found that their experiences with MSPs can go awry for one consistent reason: the phenomenon of the customer losing its grip on its organizational intellectual property (IP) once the contractual agreement is made. And while this outcome isn’t intentional in most cases, the ramifications could be costly.

Nomadic IP

In order to determine the ongoing management of its organizational IP, an enterprise first needs to understand where the IP sits within its organization – because as is the case with data and other information, IP tends to be strewn across the enterprise. For most enterprises, IP falls into two asset categories: technical and knowledge.

A piece of technology, such as legacy software, is an example of a technical asset – which is often dispersed in a disorganized fashion. A knowledge asset is oftentimes an employee – but the problem here is that in many cases that employee is the only person who has that knowledge. This becomes a significant issue if that employee is close to retirement, or chooses to move on from the organization – as they take that invaluable IP with them when they depart.

While MSPs can’t help with the employee retention element, as enterprises continue to grow and scale, they turn to MSPs to help modernize and manage their IT infrastructure – the technical assets.

Signals Pointing To A Loss Of IP Ownership

It usually doesn’t take long for an enterprise to start realizing that it might have ceded too much control over its IP to the MSP (and again, most of the time there is nothing nefarious behind this kind of development). The signals become clearer when the enterprise customer requests to take something back from the MSP to manage themselves, or the customer makes a change to their internal processes – and the MSP pushes back or is delayed in their response.

Usually after six to nine months, the customer will discern that they and the MSP aren’t seeing eye-to-eye on the management of the enterprise’s IP, and after a year, the customer will realize that its IP is no longer under its control. The major challenge is that by then, it’s too late to reverse course.

Restoring the Balance of IP Ownership

Although it may sound improbable given the above scenario, there is ample opportunity for an enterprise to strike a harmonious balance of IP ownership with its MSP – the customer simply needs to know the questions to ask its potential MSP during the evaluation and negotiation processes.

To start, it’s crucial that enterprises understand the type of MSP they’re evaluating: is the MSP a product vendor that makes its money by offering services, or is it a services provider whose revenue source is selling more services? This is not a case of semantics, as these two types of MSPs operate distinct business models, which will inform every aspect of the customer/MSP relationship.

Before signing the contract, then, the enterprise should ask the MSP for a deployment plan to understand how the MSP will support the enterprise and the associated timeline, as well as a contingency plan for reducing or terminating engagement. While the MSP may – and almost always will – devise a detailed plan for initiating the engagement, if there isn’t an equally clear process for stopping service, the enterprise should stand firm on requiring one.

Expanding on the point about evaluating the MSP at the outset, the customer should gain a full understanding of the MSP’s business model and product roadmap – because if there isn’t alignment with those integral items, the partnership is very likely doomed from the start. If the MSP’s business model is to grow its business via acquisition and it plans to buy or partner for more tools, how will those tools fit into its existing platforms? Speaking of technology, are the software tools and services offered by the MSP easy to integrate, or do they require an in-depth implementation process? It sounds ironic – given that the “s” in MSP denotes “services” – but in some cases, the MSP’s tools might require a prohibitive amount of servicing for the enterprise to realize their value.

The End Goal: A Symbiotic Enterprise/MSP Partnership

The win-win scenario is the enterprise partnering with an MSP that can provide a double benefit: freedom for the customer to oversee its IP as it sees fit (including taking back control whenever necessary), while gaining the assurance that the MSP is responsibly managing the IP. Ultimately, while the enterprise pays the MSP to manage its assets – and therefore should let the MSP do its job – the customer has every right to dictate the level of ownership over its invaluable IP. If the enterprise and the MSP are a good fit as partners, that balance should be easy to strike.

About The Author

Jorge Rodriguez is Senior Vice President, Product, at Cleo. He is responsible for the development and engineering of all Cleo software and solutions, including design, implementation, and testing. He ensures Cleo solutions meet client expectations and manages Cleo’s rigorous quality assurance, certification, and testing schedules.