The Middle Path Between MSPs and Building In-House Ops

Managing cloud operations is a challenge for UK businesses. Small and medium-sized enterprises (SMEs), SaaS startups, and EdTech companies often face a tough decision: rely on Managed Service Providers (MSPs) or build an in-house team. Both options have drawbacks:

• MSPs: Offer expertise and round-the-clock support but can be rigid, costly, and lack customisation.
• In-house teams: Provide control and flexibility but require significant investment, making them expensive and difficult to scale.

A third option is gaining traction: the hybrid model, blending internal control with external expertise. This approach allows businesses to:

• Outsource tasks like security monitoring and compliance.
• Keep product development and sensitive data management internal.
• Save costs while maintaining agility and control.

With 68% of UK SMEs planning to increase cloud investments, the hybrid model offers a practical way to balance costs, security, and scalability. It’s not about choosing one extreme - it’s about combining the best of both worlds.

Should You Hire an MSP or Build an Internal IT Team?

MSPs vs In-House Ops: What You Need to Know

MSPs and in-house teams each bring their own strengths and challenges, influencing your business operations and overall costs in different ways.

What MSPs Offer and Where They Fall Short

MSPs provide around-the-clock monitoring, enterprise-level security, and access to a diverse range of expertise. For a business with 20 users, the cost averages £14,400 annually at £60 per user per month.

In 2023, a staggering 90% of UK businesses faced cyber attacks. Companies that use managed security services reported 65% fewer successful breaches compared to those relying solely on internal teams.

But MSPs aren't a perfect solution. Outsourcing IT operations often means giving up some control. Urgent issues might get delayed as they become just another ticket in a queue. Additionally, standardised service packages may not always align with businesses that rely on specialised software or have unique compliance requirements.

Building Your Own Ops Team: Benefits and Drawbacks

In-house teams, while more costly, offer unmatched flexibility and customisation.

With an in-house setup, you get immediate responses tailored to your specific needs. There's no need to wait for external support or explain your systems to someone unfamiliar with them.

However, the costs can be daunting. An IT manager earns an average of over £50,000 annually, and monthly expenses for a 200-user operation can add up to £8,000. This pushes annual costs beyond £250,000 . On top of that, hiring and retaining skilled engineers can cost between £45,000 and £60,000 per year per person. As your team grows, so do the expenses and management challenges, which can lead to inefficiencies.

MSPs vs In-House: Side-by-Side Comparison

Businesses using managed services experience 60% fewer unexpected outages and report higher satisfaction with IT performance (78% compared to 45%). Despite this, 62% of UK SMEs use some form of MSP, while 15% still rely on break/fix support.

These differences highlight the potential value of a hybrid approach that combines the strengths of MSPs with the adaptability of in-house teams.

The Hybrid Model: External Support with Internal Control

The hybrid model for cloud operations strikes a balance between outsourcing and in-house management. Instead of committing to fully managed services or building an entirely internal team, this approach allows businesses to outsource specific tasks while retaining control over key operations.

How the Hybrid Approach Works

This model combines public cloud services with in-house capabilities, enabling organisations to delegate non-core tasks to external providers while maintaining control over crucial operations like business-critical applications and sensitive data management.

Your internal team handles strategic decisions, day-to-day operations, and application deployment, while external specialists step in for tasks such as round-the-clock monitoring, security enhancements, or compliance management. As Darren Howe puts it:

"When we describe being consciously hybrid, we're really just talking about being open to the idea that cloud computing and technology can be delivered anywhere." - Darren Howe

The key to this approach lies in careful planning. Businesses must decide which tasks remain internal and which are better outsourced, prioritising based on needs and constraints. For small and medium-sized businesses (SMBs), this often means keeping product development, customer-facing applications, and core business logic in-house, while outsourcing infrastructure monitoring, security operations, and compliance tasks to external experts. This division ensures efficiency and focus.

Why UK SMBs Choose the Hybrid Model

For UK SMBs, the hybrid model offers a practical solution to scaling challenges, avoiding the extremes of fully outsourced or entirely in-house operations. According to Forrester's Infrastructure Cloud Survey 2023, 79% of 1,300 organisations surveyed were using a mix of internal private cloud and external services.

One major advantage is cost efficiency. By maintaining a smaller internal team and using external support as needed, businesses avoid the high costs of a fully staffed in-house operations team.

The model also offers flexibility. Functions can be scaled up or down depending on demand. For example, additional engineering support can be brought in during busy periods, while quieter times allow scaling back to only essential services.

Another benefit is improved data protection and compliance. By keeping sensitive data in-house and outsourcing tasks like security monitoring and compliance reporting, businesses can meet GDPR requirements while maintaining data sovereignty.

The hybrid model also tackles the skills gap many UK SMBs face. Instead of hiring expensive specialists across multiple disciplines, businesses can focus internal recruitment on core roles and rely on external providers for niche expertise like security operations or cloud cost management.

Perhaps most importantly, the hybrid model ensures agility. Businesses can make swift decisions and adapt quickly without the delays that often come with coordinating large external teams. This balance of flexibility, control, and scalability makes the hybrid approach an increasingly popular choice for UK SMBs.

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How to Build Your Hybrid Model: Tools and Workflows

Creating a hybrid model that works requires careful planning and the right combination of tools and workflows. Instead of rushing into new platforms, take a step back and assess your current operations to identify where external support could make the biggest difference.

Evaluate Your Current Operations

Before introducing new tools or partners, it's important to review how your current operations are set up. Many UK small and medium-sized businesses (SMBs) already operate a partial hybrid model - using cloud services for infrastructure while managing applications internally.

Start with a simple audit of your existing setup. Document your current monitoring processes, identify who handles incidents, and highlight the areas where your operations face the most challenges. Reviewing support tickets and outages from the past three months can help you pinpoint where external expertise might be needed.

Take an honest look at your team's workload and skill set. If your developers are spending more than 20% of their time dealing with infrastructure issues or if projects are delayed because of missing expertise - such as in security or compliance - these are clear signs that outsourcing could help.

The beauty of a hybrid approach is its flexibility. You don’t need to overhaul everything at once. Start small by outsourcing one or two critical areas, then expand your efforts as your business and needs evolve.

Choose the Right Tools and Partners

Once you’ve reviewed your current setup, the next step is selecting tools and partners that enhance your operational capabilities without disrupting your workflows. A strong hybrid model depends on tools that provide visibility across your entire infrastructure without locking you into a single ecosystem. Cloud Management Platforms (CMPs) are particularly useful because they offer centralised control over on-premises infrastructure and public cloud resources through one interface.

With 35% of companies using multiple cloud providers and 31% adopting hybrid models, unified visibility is crucial. Tools like Datadog (priced at around £0–34 per month, with discounts for higher usage) offer comprehensive monitoring across different environments, earning solid ratings of 4.3 and 4.6 on G2 and Capterra, respectively. For cost management, platforms like nOps integrate seamlessly with AWS accounts at no initial cost and are highly rated (4.9/4.8), providing real-time optimisation for engineering teams.

When choosing partners, look for transparency and flexibility. Avoid flashy features that might not align with your needs. Instead, work with providers that integrate with your existing tools and processes. The best partners focus on improving your current setup before suggesting new solutions. Also, prioritise tools that allow easy data export and partners who clearly document their processes - this ensures you can adapt as your business grows.

Open-source solutions can also be a smart choice. Tools like Terraform (rated 4.7/4.8 on G2 and Capterra) and OpenStack offer powerful functionality without subscription fees, allowing you to allocate your budget to areas where commercial solutions provide the most value.

Deciding What to Keep In-House and What to Outsource

Balancing internal control with external expertise is key. Assign tasks based on their strategic importance and operational efficiency. Keep core functions and customer-facing tasks in-house, while outsourcing specialised or round-the-clock responsibilities.

For example, cost tracking and budget allocation are best handled internally since your team understands your business priorities better than anyone else. Similarly, core application development and deployment should remain in-house to maintain agility and alignment with your product vision.

On the other hand, tasks like incident response and security monitoring often require 24/7 attention and specialised knowledge - making them ideal for outsourcing. Compliance audits and regulatory reporting can also be efficiently managed by external specialists who stay up-to-date with changing standards.

Here’s a simplified framework to guide your decisions:

This approach helps UK SMBs leverage the hybrid model’s flexibility while keeping costs manageable and operations efficient.

Managing Costs and Scaling Smart

The hybrid model stands out for its financial flexibility. Unlike traditional methods that demand long-term commitments or hefty upfront investments in staffing, this approach allows you to balance costs effectively while keeping the operational control your business needs.

Hybrid Model Costs vs Other Options

Combining Managed Service Provider (MSP) services with in-house capabilities can reduce IT expenses by 20–30%. This is achieved by outsourcing high-value tasks to external providers while managing routine operations and strategic decisions internally.

Here’s a practical cost breakdown: basic MSP support for routine tasks typically costs £35–55 per user. Mid-tier services, which include enhanced security, range from £55–85 per user, and enterprise-level strategic planning can cost £85–175 per user. With a hybrid model, you could assign basic support for the majority of users while reserving mid-tier services for critical systems, keeping overall costs in check.

The savings aren’t limited to service fees. Businesses waste up to 32% of their cloud budgets, but hybrid models equipped with cost management tools can pinpoint and eliminate this waste. AI-driven cost management can further reduce expenses by 20–30% within just a few months, making the hybrid model a genuinely cost-effective choice. This efficiency also creates the foundation for scalable growth.

Scale Up or Down Without Long-Term Contracts

The hybrid model isn’t just about cutting costs - it’s also about adaptability. Unlike MSPs tied to long-term contracts or in-house teams that lack scalability, the hybrid approach offers the flexibility to adjust resources as your business needs change.

Pay-as-you-go cloud services and managed support ensure you only pay for what you actually use. For example, if you need extra expertise for a product launch or a security audit, you can bring in specialists on a short-term basis rather than committing to permanent hires.

This adaptability is especially useful during periods of growth. With 71% of organisations anticipating increased cloud spending, the hybrid model lets you scale infrastructure and support incrementally, based on actual needs rather than predictions. Auto-scaling tools can adjust systems dynamically to match usage trends, avoiding both over-provisioning and performance issues.

During slower periods, you can scale back external support while keeping core operations in-house. This prevents the challenge of retaining costly, underutilised resources or being underprepared during busier times. Regular reviews of your hybrid setup can also help identify unused software and redundant licences, keeping your costs aligned with your current requirements.

UK Compliance and Support Requirements

For UK businesses, the hybrid model aligns well with regulatory needs. Regulations like GDPR, ISO 27001, and industry-specific requirements demand constant attention from experts who understand these evolving standards. Instead of hiring full-time compliance staff or relying on your developers to stay updated, the hybrid model allows you to access specialist advice as needed.

Data sovereignty is another key consideration. For many UK businesses, ensuring that data remains within specific jurisdictions is critical. Hybrid models excel here by providing control over where data is stored and processed, while still allowing access to external compliance expertise. This is particularly advantageous for sectors like EdTech, which handles student data, or SaaS companies managing customer information across multiple regions.

Security adds yet another layer of complexity. MSPs can reduce the risk of cyberattacks by up to 50%, but UK businesses also need providers familiar with local threats and regulatory expectations. By combining external security monitoring with internal oversight, the hybrid model ensures compliance without sacrificing operational control. This approach aligns with UK-specific standards, reinforcing the balance of cost, control, and security.

A well-structured hybrid model assigns clear compliance responsibilities. External providers should deliver documentation and audit trails that meet UK standards, while internal teams oversee compliance strategies and address business-specific needs. This division of labour ensures nothing is overlooked, while keeping costs manageable and expertise readily available.

Why the Middle Path Works Best

When it comes to cloud operations, the hybrid model stands out as a practical choice for UK SMBs, SaaS startups, and EdTech companies. Instead of committing to one extreme - fully outsourced or entirely in-house - this approach strikes a balance, offering control, flexibility, and cost efficiency.

In fact, 82% of IT decision-makers using a hybrid strategy report being satisfied with its efficiency - outperforming other cloud models. Moreover, independent studies reveal that businesses can cut their total cost of ownership by up to 40% through hybrid-cloud migration. Some specific use cases have even demonstrated savings as high as 91%.

As Fortinet puts it:

"With a hybrid cloud, an organization has the opportunity to obtain the 'best of both worlds.' They can use cloud services where it works best while keeping certain operations within their own on-premises network infrastructure or inside a private cloud." – Fortinet

A key advantage of the hybrid model for UK businesses is its ability to meet strict regulatory requirements. Take, for instance, a mid-sized law firm that implemented Azure Stack to store sensitive legal data in its local data centre, used Google Workspace for team collaboration, and relied on GCP for cloud backups. This setup not only ensured GDPR compliance but also led to a 50% improvement in collaboration speed, 99.9% system uptime, and a 35% reduction in infrastructure costs.

The hybrid model also shines in its ability to adapt to changing needs. With 22% of organisations planning to expand their hybrid cloud capabilities in the next 12–24 months, it’s clear that businesses value the ability to scale resources up or down without being tied to long-term commitments. This flexibility is especially valuable for startups and growing companies dealing with unpredictable growth patterns.

Another major benefit? The hybrid approach complements your internal team rather than replacing it. Developers retain control over strategic decisions, while external experts handle routine operations. This ensures you’re not overly reliant on a single provider or locked into rigid contracts, giving your business the freedom to grow on its own terms.

FAQs

How can the hybrid model help UK SMBs manage cloud operations while balancing costs and control?

The hybrid model offers UK SMBs a practical way to balance cost savings with maintaining control over their operations. By blending external expertise with in-house teams, businesses can avoid the hefty expense of building a fully internal team while still keeping a close eye on their cloud operations.

This approach allows companies to tap into external resources for specialised tasks while relying on their internal staff for everyday management. The result? Smarter spending, better resource management, and clearer insights into cloud expenses. Plus, the hybrid model makes it easier for SMBs to scale up or down as needed, adjusting to market demands without stretching their resources too thin.

How do I decide which tasks to manage internally and which to outsource in a hybrid cloud operations model?

When deciding whether to handle tasks internally or outsource them, it's essential to weigh factors like control, cost, expertise, and scalability. Tasks that are central to your business or need to align closely with your company’s values and culture are often better managed in-house. On the other hand, outsourcing works well for specialised or time-consuming tasks, where external expertise can save both time and resources.

Consider the strategic importance and complexity of each task. For instance, outsourcing routine maintenance or monitoring can free up your team to focus on innovation. However, sensitive areas like security or compliance might be better kept within the organisation. Finding the right balance will depend on your current growth stage, budget, and long-term objectives.

How can UK businesses stay GDPR-compliant when using a hybrid cloud approach?

To keep a hybrid cloud setup in line with GDPR regulations, businesses in the UK need to focus on strong data governance and put in place well-defined data processing agreements with their cloud providers. These agreements should clearly detail how personal data will be stored, handled, and secured to meet GDPR standards.

It's also important for organisations to carry out regular audits, offer staff training on privacy laws, and maintain openness with individuals about how their data is used. Compliance management tools can be a valuable resource for tracking and enforcing GDPR requirements, while clear internal policies help ensure teams remain accountable. Taking a proactive approach can help avoid costly data breaches or fines.

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