Where Managed Services Works … and Where It Doesn't

 

Commonly attributed to Benjamin Franklin, the quote "...nothing in this world can be said to be certain but death and taxes..." seems more true everyday, and—just having gone through federal tax filing—it’s more painful than ever!

 

Interestingly though, we love to speak in such certainties and make bold statements, despite the “right” answer being (more often then not),"it depends."

 

I've been waist-deep in the IT managed services world since 2002, and have heard countless claims of a “universal need” for managed services. Guess what? It's just not true, so don't listen to people that say it is.

 

The value equation of managed services includes the following factors: cost, service levels, and risk. If a vendor can affect at least two of these three factors, there is a foundation for discussion. If not, move along.

 

Where Managed Services Works

  • GROWTH COMPANIES - the IT team is focused on planning, strategy, new site/user/system deployment. Daily operations maintain criticality, but the focus of the team needs to stay aligned with the growth of the business. High growth, regardless of stage lends itself to services where quality could otherwise suffer from distractions.

  • UNIQUE/ADVANCED TECHNOLOGIES - newer technologies, that are experiencing high adoption, typically create a shortage of talent in the industry. This was the case in network routing in the 90s and IP Telephony in the 00s, along with numerous other examples. Companies can't afford to hire/train to support all technologies in their stack, but the SLAs back to the business can't suffer.

  • HIGH COST TO ENTRY - there's a reason we book flights on commercial airlines. The cost to own and maintain our own planes is something most of us can't afford and doesn't make financial sense. Leveraging a cage or a rack in a colocation facility is similar, where the costs of N+1 or Nx2 resiliency would be prohibitively expensive unless that cost was shared with hundreds or thousands of other tenants.

  • DIFFICULTY TO HIRE/TRAIN/RETAIN - for different reasons, organizations can be challenged with staffing at levels to maintain quality in IT service delivery. We've worked with customers in rural locations where the required talent isn't available. We've worked with other customers where FTEs were reduced, but the OPEX budget could be leveraged to fill gaps.

Where Managed Services DOES NOT Work

  • YOUR MESS FOR LESS - those looking at managed services as a way to simply take an existing workload and deliver that for less will be disappointed. The provider has to make money, so they have to be able to deliver services more efficiently, leveraging shared resources and multi-tenant platforms, bound together with solid process to execute. The service has to be shaped to deliver quality back to the business, but delivered in a manner that will allow the efficiencies to be realized.

  • LARGE and/or STATIC COMPANIES - its difficult, if not impossible, for a vendor to know a customer's business and business process as well as the company does. We have customers with whom we've worked for over 7 years, and our team is still learning and refining our procedures. For companies that have developed IT operations teams, there is little to be gained by seeking managed services. The onboarding and ramp-up time will be frustrating, the response times may not be as fast if internal resources have capacity, and the technical competency may or may not improve. Dollars spent on training for existing staff can be a better solution in these environments.

  • BETTER, FASTER and CHEAPER - I had a former colleague who was a Project Manager who had a sign in his cube that said, "Better, Faster, Cheaper. Choose 2." If expectations are that costs can be reduced, services levels can be improved, and either risks to the business or other improvements can be realized, then the vendor will be challenged to deliver. When we hear of a company wanting to fire their managed service provider, my first inclination is to not be excited about the opportunity, but to inquire as to why they are not happy with the service. It may have to do as much with the customer as it does the provider, making expectations unrealistic.

As much as I'd like to have our managed services apply to all companies, and improve their ability to deliver IT services back to their respective businesses, it's not that clear cut. Make sure your vendor has the expertise not just in the people, process and tools part of service delivery, but also the understanding of how their services can impact your business.

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