What are ‘Managed Services’ and their pros and cons
20th December 2018
‘Managed Services’ has become somewhat of a buzzword, with article headlines urging companies to move towards what they call the ‘modern model’. But underneath the entire buzz, for many of us, the question still remains– what are managed services and what are they good for? This is the question we at Certes will aim to answer clearly and in enough depth to give you a better grasp of how managed services work and the pros and cons for both clients and providers.
In a nutshell, a managed IT service is an information technology task provided by a third-party contractor for a client organisation. Managed services can be tailored to almost any business requirement within IT. Managed Services frequently comprise running applications, databases, data recovery and back-up, network management, storage, security, and monitoring. However, not all managed services are technology-based, despite that being the most widespread use of the term. At its most basic level, a managed service is an outsourced business need which may even cover things like marketing and transportation.
A managed IT service comes with a service-level agreement (SLA), which is the contract between the service provider and the customer. The SLA identifies what services the provider will supply and how successful delivery of services will be measured.
Within this model, the client owns or has direct oversight of their organisation or system. The managed services provider (MSP) is the service provider delivering the managed services. The client and the MSP enter into a contractual, service-level agreement that defines the performance and quality metrics of their relationship.
What are the benefits of Managed Services?
- Enabling business agility and adaptation. Managed services are emerging as an invaluable strategic asset that aids enterprises in adapting more quickly to changes in the market. This is achieved by allowing quick access to new capabilities via cloud services, such software as a service (SaaS), platform as a service (PaaS) or infrastructure as a service (IaaS). In addition, access to data and analytics is enabling enterprises to better assess current and future business needs.
- Optimising productivity and performance. While managed services open doors to accessing specific talent, cloud capabilities help to improve employee productivity and efficient use of resources. Cloud capabilities are also utilised to focus enterprise needs by requirements of each business unit and specific systems of engagement (e.g., sales, marketing, customer support).
- Ensuring integrated, end-to-end “hybrid” IT service delivery and management. Companies also are using managed services as a way of receiving support across a hybrid of IT linking traditional delivery models and up-and-coming cloud-based options, which are far more automated.
Pros and Cons of Managed Services
- Because the provider is responsible for the delivery and management of stakeholder expectations, the client business can fully focus on their core strategic initiatives
- Providers can have more autonomy and benefit from a fairly disturbance-free supervision of the project.
- Providers will be able to make long-term strategic investments that should indirectly benefit the client organization.
- Providers are able to implement their best practices into the project, and therefore make key process improvements rather than having to fit into a rigid existing framework.
- Knowledge retention becomes more streamlined and sustainable.
- Providers can be disinclined to take on additional management duties
- There can be a culture incompatibility between the client and provider organisations which can lead to a lack of understanding or a breakdown of collaboration between the two, which in turn can have an impact on outputs and deliverables
- In some situations, because they are external to the organisation, providers will not be able to understand all of the client organisation’s problems, pain points and worries. They may also struggle to fully grasp the scope of the project, which might result in significant delays and setbacks.
- Where there are multiple managed service providers, with each managing a different part of the organisation’s IT requirements, it is not uncommon to find an approach of shifting blame, with providers being unwilling to take responsibility for disappointments and failures.
- Despite process improvements bringing great benefits, a potential disadvantage of such improvements is a reduction in the number of people necessary to support the project. This is a drawback for the providers who may lose out on billing due to a reduced requirement of service.
- The client may wish or need to re-allocate the contract to a new managed services provider, perhaps in part due to issues in performance or the SLA not being honoured. This is likely to become a significant challenge for the client, because the existing provider may become hostile or less co-operative.
On the whole, managed services are a great asset to any modern organisation, with opportunities to benefit in a multitude of ways. An MSP can lead to significant reductions in costs. Most providers will charge an upfront fee and then an ongoing fixed monthly fee, which provides clients with a set monthly expenditure, making financial planning much easier. Outsourcing managed services also allows business owners to reduce the cost of employees working in-house as well as the technology, tools, and other resources needed to handle the tasks.
Secondly, the managed service provider will bring the knowledge, expertise and experience in their service offering that will enable increased accuracy and decreased risk and liabilities, especially since they have to ensure compliance with government regulations and various industry standards.
Third, the MSP will have the tools, technology, and resources required to improve efficiencies by streamlining procedures and various processes. This can then lead to increased transparency and better understanding, which will then provide a foundation for stronger decision making based on factual, real-time statistics and information.
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