Why MSPs Bundling vCIO Services Is a Conflict of Interest
One vendor handling both your IT operations and your IT strategy sounds convenient. However, by going this route, you create a governance problem.
Corporate governance research has been making said argument since 1976. When the same entity executes work and oversees that work, accountability erodes. Incentives make it inevitable.
The Governance Principle
Agency theory, introduced by Jensen and Meckling in Theory of the Firm, describes what happens when decision-making is handed to someone whose interests don’t fully align with yours. Without independent oversight, self-interested decision-making takes over.
This is why external auditors exist. Why independent board directors exist. Why fiduciary frameworks in finance, healthcare, and law all require separation between the people doing the work and the people evaluating it. IT governance operates under the same principles, whether organizations apply them or not.
What Happens When an MSP Also Governs Strategy
When an MSP provides both operational IT services and vCIO services, it occupies two roles that should never belong to the same party. It becomes the vendor and the oversight of the vendor simultaneously.
Self-monitoring environments tend to underreport failures, overstate performance, and make decisions that protect revenue. The result is information asymmetry, biased recommendations, and a version of transparency that isn’t transparent at all.
Delegating Responsibility Doesn’t Transfer It
Fiduciary law is clear on this. You can delegate tasks. You cannot delegate accountability.
Organizations that rely solely on vendor-provided reporting are asking the vendor to grade its own homework. When vCIO services sit inside an MSP contract, that independence is compromised from the start. The person responsible for your IT strategy has a direct interest in the continuation and expansion of the services being evaluated, and governance research finds repeatedly that oversight functions embedded within execution teams lose rigor over time.
What Independent IT Governance Actually Looks Like
An independent CIO or vCIO sets strategy and evaluates vendor performance. MSPs execute. Leadership gets advice that isn’t filtered through someone else’s commercial interest. Best-practice governance frameworks across industries follow this structure for the same reason: separation between strategy, execution, and oversight is what makes accountability real.
MSPs deliver genuine value, and operational IT management is a legitimate and important function. The issue is the governance problem that appears when strategic oversight is folded into the same contract. When an MSP governs itself strategically, the organization carries hidden risk. The cost of ignoring it tends to stay invisible until something goes wrong.
Sources & Further Reading
Jensen, M. C., and W. H. Meckling. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Journal of Financial Economics 4, no. 3 (1976). [link.springer.com]
- Adams, R., Hermalin, B., and Weisbach, M. “The Role of Boards of Directors in Corporate Governance.” Journal of Economic Literature 48 (2010). [link.springer.com]
- Wienclaw, Ruth A. “Agency Theory and Corporate Governance.” EBSCO Research Starters (2021). [ebsco.com]
- Al‑Faryan, M. A. S. “Agency Theory, Corporate Governance and Corruption.” Cogent Social Sciences (2024). [tandfonline.com]
- Atlas Systems. “Vendor Governance Framework: Best Practices.” (2025). [atlassystems.com]
- Sprinto. “What Is Vendor Governance?” (2025). [sprinto.com]
- Truist / McGriff. “Fiduciary Duties in Vendor Selection and Management.” (2026). [truist.com]
This article references academic research and governance frameworks for informational purposes. While every effort has been made to represent sources accurately, it does not constitute legal, financial, or professional advice. Organizations should seek independent counsel when evaluating vendor governance structures or fiduciary obligations.
