Moving towards a new managed services model

05 April 2024 Consultancy.uk 7 min. read
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Having developed almost two decades ago, managed services remain an important part of the IT function – but they may be at risk of going stale. According to two experts from Elixirr, managed services companies need to upgrade their offering to become partners, rather than just service providers.

According to Davor Turkalj – a service desk manager at iOLAP, an Elixirr company – managed services (MS) was “born out of a need to outsource responsibility for monitoring and maintaining certain services, or more often specialised appliances such as on-prem data warehouse solutions or rather cumbersome ETL servers or network configurations.”

Initially developed between 2005 and 2006, the IT outsourcing practice as it is today now sees a company’s responsibility for maintaining, and anticipating need for, a range of processes and functions, contracted out to external operators. This allows for improved operations and reduced budgetary expenditures, through the reduction of directly-employed staff.

Moving towards a new managed services model

While this has been an effective technique, however, MS has undoubtedly changed and evolved over the years, particularly in the technical capabilities that most MS providers offer. And according to Turkalj, over the last decade this has led iOLAP to “consistently observe one particular issue”.  

He explains, “Many of our clients, despite having invested in the latest tooling, built internal MS teams or secured a contract with a reputable 3rd party provider of IT MS, still suffer from performance issues and in many instances, have declined. So, what’s the issue? The challenge is not in the technical capabilities. It’s in the mindset, approach and applied model of IT MS leaders. To understand this, let’s first look at the IT outsourcing market and what it offers.”

IT outsourcing is the practice of contracting out various IT functions or services to external providers, rather than handling them in-house. Dieter Halfar, an Elixirr partner based in London, clarifies that this can include “a wide range of services such as software development, infrastructure management, network operations, technical support and cybersecurity.”

Managed services

According to Halfar, IT MS is one of the most common IT outsourcing models. Managed service providers (MSPs) typically offer six services on a subscription or pay-as-you-go basis, providing ongoing support and management of IT infrastructure and systems – each of which the pair note below.

  • Day-to-day maintenance: Perform routine tasks like updates and tune-ups. These tasks are easy for employees to overlook since they might not directly relate to their work. 
  • Troubleshooting: An often time-consuming but absolutely necessary process for determining the source of a problem so that it can be removed/fixed. 
  • Administration: Full management of everything from onboarding new employees, creating necessary logins and ensuring that all of the rules and regulations are being followed. 
  • Data backup: Retrieving lost information and rebuilding systems and environments can be expensive and time-consuming. Managed services can protect you from this cost by performing regular data backups to keep information safe. 
  • Network monitoring: Monitor your network 24/7 for problems. Even a small shutdown can result in major expenses for a business. Consistent monitoring ensures that your business can respond to these issues quickly and efficiently and prevent them whenever possible.
  • Environment synchronisation: A common task that, when neglected, can cause big problems for any company. Developing new software and products on a DEV environment that is not fully in sync with your production environment can lead to months of work that will end up wasted if developed on old/outdated data.

Turkalj adds that while MS can combine a wide range of tasks into one service, thus eliminating headaches associated with organising multiple vendors, there are risks to this. Chiefly, it is important to note that “every MS contract comes with SLA/SLO which guarantees the speed and reliability of the support supplied”, so that companies can focus on further developing their operations in confidence.

Professional Services

The second most popular form of IT outsourcing comes in the form of professional services (PS). Halfar explains that this involves “outsourcing specific IT projects, tasks or expertise to external consultants or firms”. For example, services such as software development, system integration, IT consulting, project management, and specialised technical expertise.

“PS engagements are often temporary and project-based, with the external provider delivering a specific outcome or solution within a defined timeframe,” Halfar continues. “Looking at the market and its needs, there are five impactful PS categories for any company.”

  • Consulting: In order to prevent expensive losses due to uniformed pouches or ill-prepared strategies, PS can help prevent such scenarios through consultations and in-depth analyses to stay ahead of such problems.
  • Cloud migration: Moving your on-prem system to the cloud is often a monumental task and requires a wide range of expertise that most small-to-medium sized companies do not have at their disposal. Cloud solutions offer scalability, seamless integration of a wide range of tools and technologies, reduction in TCO, and much more. This is a perfect example of a one-off project that professional services can provide.
  • Deployment: Deploying any new hardware or software component to your production environment can be a complicated process with many moving parts. Professional services can provide a smooth transition with minimal to no downtime.
  • Advanced troubleshooting: Finding the root of the problem and how to solve it can be an extremely challenging and time-consuming process for which the in-house IT department won’t have the time or skills. Professional services can help by bringing in the right skills and knowledge to solve such problems.
  • IT auditing and compliance: Evaluating IT systems to ensure they comply with industry standards, regulations and best practices is important. This might involve audits for security, performance or regulatory compliance.

Each solution has its own benefits and risks. When comparing MS and PS, the most significant difference is the timeframe in which they operate and the scope of work. So, what does this mean?

Turkalj says, “Both models have their value and deliver substantial benefits. The challenge is in the mindset previously mentioned, and it lies in thinking these services don’t or should not overlap. The biggest challenge across industries over the past few years is the speed in which companies need to tackle their problems or jump on opportunities. The best way of doing that is creating synergy between managed and professional services. In short, having a team that can do both.”

That can be easier said than done, though – and for such synergy to work, it needs to be set up correctly, and that goes beyond the technical skills. In this context, MS and PS providers need to shift their offering to take advantage the opportunity – from ‘we are a service provider’ to ‘we are your partner and we will help you in your development.’

New model

“The new model of IT managed services needs to put the focus on the client,” states Turkalj. “Success should be measured through the success of the client and how much the service you provided helped in achieving that. SLA and SLO are the measures of your ability to follow the rules of a contract, but not the true value and quality of your service.”

Concluding on the matter, both experts also provided a list of key benefits realised from customer-centric MS.

  • Holistic solutions: Integrating both services provides end-to-end solutions, covering everything from strategic planning and implementation to continuous management and support.
  • Client-centric approach: This merger ensures a deep understanding of client needs, offering tailored solutions that evolve and adapt as the client’s requirements change.
  • Efficiency boost: The combination optimises operations, streamlines processes, and reduces downtime, ensuring more efficient and effective service delivery.
  • Scalability and flexibility: Clients benefit from scalable solutions that can grow with their business, supported by ongoing managed services and professional guidance.
  • Continuous improvement: The merger fosters a culture of ongoing improvement, incorporating feedback from both the initial implementation phase and the ongoing management phase. 
  • Cost-effectiveness: Bundling these services often results in more competitive pricing without compromising the quality of services rendered.
  • Risk mitigation: The comprehensive approach minimises risks associated with technological changes or business transformations by blending proactive planning with ongoing management and support.