This is the first article in a series of articles we will release during the upcoming months. We will touch topics like what a managed service is – both from a general perspective, but also content wise more concretely. We will look at SLAs (Service Level Agreements) vs. XLAs (Experience Level Agreements) and Output vs. Outcome based agreements when talking about managed services.
Or, in short, we will take you through the 101 of Managed Services.
What is a Managed Service?
Managed Services are the practice of outsourcing certain processes and functions intended to improve operations and often cut expenses on a proactive basis . It is an alternative to the break/fix or on-demand outsourcing model where the service provider performs on-demand services and bills the customer only for the work done. Under this managed services model, the customer is the entity that owns or has direct oversight of the organization or system being managed whereas the Managed Services Provider (MSP) is the service provider delivering the managed services. The customer and the MSP are bound by a contractual, service-level agreement that states the performance and quality metrics of their relationship.
Or, in short…
A managed service is a well-defined task provided by a service provider and regularly delivered to a customer.
In a managed service arrangement, the managed service provider retains responsibility for the functionality of the IT service and/or equipment, and the customer typically pays a monthly fee for receipt of the service. There are many different types of managed IT service offerings, but the idea behind all of them is to transfer the burden of maintaining IT from the customer to a service provider. In an effective managed services relationship, a customer benefits from predictable pricing and the ability to focus on core business concerns rather than IT management chores.
As already indicated above managed services come in many flavors and cover a wide range of technologies – for example, and not limited to Managed Clients, Managed Network, Storage, Print, Compute Capacity, Service Desk, Meeting rooms, Security Services, IP Telephony Services, etc. But, central in all of them is, they are well-defined and governed by a contract based on Service Level Agreements (SLAs) and a simple and easy to understand pricing model. A service provider can charge for a managed IT service in several ways – per device, per user and all-inclusive pricing is among the typical pricing models. Managed IT services are typically billed on a regularly scheduled basis, with monthly fees a common approach. A flat fee billed on a consistent schedule provides customers with predictable pricing and gives the service provider the stability of a monthly recurring revenue stream.
There are numerous benefits for a customer when entering into a managed service agreement with a service provider – some of which are tangible and thus easy quantifiable, while others are intangible and harder to put a value on. This mix of tangible and intangible benefits is important to keep in mind when putting up a business case if outsourcing through managed services is a viable solution for a company or not.
In the following, the top 10 benefits of outsourcing through managed services are addressed.
1. Control of IT Costs
Outsourcing converts fixed IT costs into variable costs and allows customers to budget effectively. In other words, a customer only pays for what he is using when he needs it – no more, no less.
2. Reduction of Labor Costs
Hiring and training an IT staff can be very expensive, and temporary employees don’t always live up to a customer’s expectations. Managed services and outsourcing let the customer focus the human resources where they need them most and where they benefit the core business the most.
3. Trained, Experienced, Qualified, Certified
If you’re not IT trained, how do you assure an employee is qualified? Certifications from technology providers like Microsoft, Cisco and Citrix are important, but so is the experience. Outsourcing puts the responsibility of a customer’s IT in the hands of trained, experienced, qualified and certified professionals who know what they’re doing.
4. Qualified doesn’t mean Experience
Few problems are new for leading service providers, which see related problems multiple times across multiple customers. An in-house IT employee leads an isolated existence no matter how much they train and get certified. We’d all rather an experienced doctor; the same is true for IT.
5. Increase Efficiency and Competitiveness
Companies that try to do all IT Services in-house themselves can have much higher research, development, and implementation time, all of which increase costs of IT in general and which ultimately are passed on to the business. This responsibility and thus also costs are put on the service provider in a managed service engagement.
6. Quickly Implement New Technologies
A quality managed service provider will have the resources to start new projects right away. Handling the same project in-house might involve weeks or months to hire the right people, train them, and provide the support they need. For most implementations, professional managed service providers will bring years of experience to the table and thus saving time and money – read: faster go-to-market.
7. Stay Focused on Core Business
Businesses have limited resources, and every manager has limited time and attention. Managed services and outsourcing will help a customer’s business to stay focused on their core business and not get distracted by complex IT decisions and daily IT tasks.
8. Risk Reduction
Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and especially technologies all change very quickly. Managed service providers assume and manage much of this risk for a customer, with specific industry knowledge, especially technology, security and compliance issues. Managed service providers generally are much better at deciding how to avoid risk in their areas of expertise.
9. Level the Playing Field
Most small and medium businesses can’t afford to match the in-house support services that larger companies maintain. Managed services can help smaller companies act “big” by giving them access to similar technology, and expertise that large companies enjoy. Managed services and outsourcing IT services to a managed service provider company gives especially small to medium companies access to high quality and reliable and reputable IT support and thus the possibility to gain a competitive advantage.
10. Compliance and Security
With managed (security) services a company can enjoy automatic software updates, full-system backups, and 24-hour system monitoring – for example through a Security Operations Center (SOC). A customer can rest assured that the service provider is minimizing the risks associated with maintaining client data, credit card numbers, sensitive competitive information, GDPR and more.
By the sounds of it, only benefits can be achieved by procuring managed services. Aren’t there any risks attached?
Of course, there are and as a customer, one must be aware of them and include them in the business case and carefully assess the service provider to engage with. Some of the risks include the following.
1. Loss of Control
If there’s an outage, there’s little a company reliant on managed services can do. A professional service provider will be able to address issues much more quickly than an internal IT team, but it can be frustrating to not have the same visibility of serious problems and progress opposed to dealing with them in-house.
2. Loss of Flexibility
In general, managed service providers will have standard offerings which are available to all their customer. They may be able to modify these, but it will usually be less flexible than having a solution that is customized to business needs and might at times come at a prize. Managed service providers work with economy of scale.
3. Loss of Personal Touch
An in-house administrator/supporter becomes intimately familiar with the eccentricities and unique characteristics of the infrastructure, solutions, and systems he manages. Because of this, he can deliver results more efficiently, quickly and personally. Managed services and outsourcing can rarely provide a personal touch that comes close to that of an in-house IT specialist. Many managers reject the thought of giving this up, even though they can save money by outsourcing.
Should anything happen to the service provider, customers could be left trying to find alternative solutions in a short space of time.
If the benefits outweigh the risks for a customer or vice versa depends on the concrete situation a customer is in – including future strategies the customers’ business has.
Fact is, that Atea sees more and more customers engaging with managed services. Not big and complex monolithic outsourcing contracts like in the past, but easy to consume and onboard managed services like application packaging, managed clients (PC, Mac & mobile devices) or IoT monitoring. And, within the public cloud space, we see customers consuming services like Azure Cost Control, Managed Azure Security Center or a Security Operations Center based on Microsoft Sentinel as a service.
What is your take on this?
Join the conversation…
– Ilja-Otis Godau, Director of Sales & Marketing