Managed Hosting Services are used primarily by companies that either don't have staff with the expertise to manage a dedicated server or don't have staff with the time to attend to the needs of managed hosting. In either case the option of having the host manage the server can be of great value to firms that have such needs.
Some companies web sites are too traffic intense to share a server with any other sites. This is the point at which a dedicated server becomes a necessity. Many firms reach this point and are put in the position of being hosted on a dedicated server yet do not have the IT personnel with the background to manage a dedicated server. The knowledge requirements to upkeep the server operating system, updating security patches and handle the special circumstances that arise, require a great deal of in depth expertise. The question then becomes can the firm afford to hire someone with the capabilities needed to take care of a managed dedicated server or would outsourcing the task be more practical?
This question has to be answered by each individual company and all the factors are weighed according to the specific situations. The case could be for example that the firm is already needing additional IT help beyond the above needs and adding a qualified person would be a timely efficient solution. In most instances however it isn't practical to add full time specialized personnel, when getting managed hosting services is an option for much less expense.
A company may have personnel on staff that are capable of operating a managed dedicated server. The question then becomes is time available to devote to such a server and is the person able to keep abreast of all the continual updates and changes that the server industry is constantly incurring? Again the issue is does the additional expense of managed hosting services off set the added work load and responsibility that will be assigned to the existing staff. Since a dedicated server is definitely needed the managed dedicated server option can add as little as $250-$300/mo. to the total monthly outlay.
A final very important factor to consider in either of the above circumstances is how critical is the uptime of the company web site? Some firms can get along fine with a 99.9% uptime yet with others circumstances require 100% uptime. There are managed dedicated server hosts who offer 100% uptime. Be ready to pay top dollar if you want these characteristics in a host. Such uptime levels often demand redundant sites, elaborate multi-homed environment or possibly a backbone connection. Hosting companies such as E-Insites have seperate divisions dedicated to managed hosting. You can see their offerings at http://www.onlymanaged.com
Recapping a company's staff's ability and availability are main factors in choosing a dedicated server or a managed hosting services. If there is staff available that has the capabilities to manage a dedicated server then by all means save some money each month and get a good dedicated server hosting company to work with. On the other hand if the specialized staff isn't available or otherwise needed then a reputable managed dedicated server host will provide service that will leave the existing staff free to do what they do best to make your company thrive.