Managed services can ease cost pain

IT service providers have reached a critical stage in their lifecycle as research indicates customers are shifting away from traditional break-fix models.

To meet this growing demand, IT support providers need a managed service approach that not only meets customer needs, but also provides them with an edge in the face of growing competition. The choice is simple: adapt and grow or die.

Analyst firm IDC has IT outsourcing by Managed Service Providers (MSPs) as one of the top two trends in its Top 10 Predictions report for 2008.

However, before adopting a MSP solution partner, IT service providers should review the benefits on offer and benchmark the service against a criteria that best meets their own business needs, as well as the needs of their customers.

Owning and impacting the client relationship
An effective managed service system should provide a platform that allows IT service providers to continue to directly ‘own’ their customer relationships and deliver services on financial terms that work for the provider and their customers.

Detailed Service Level Agreements (SLAs) must meet the financial needs of all parties – not just the vendor.

Furthermore, the service should also allow white labelling so that IT service providers are able to brand the system and position it as a proprietary service ‘unique’ to their business.

As a result, the MSP customer solution is effectively owned by the IT service provider, not the solution vendor.

IT service providers also need to be able to see where and how the solution can generate a return on investment.

This approach should assist the MSP to develop a better-performing business centred on higher levels of productivity gained through a variety of efficiency savings and more billable work.

For example, avoiding non-billable travel and related downtime from staff callouts.

The MSP should also be able to spend time better managing additional customer environments – as many as 1000 systems per technician.

From the customer’s perspective, they should be able to share in the significant efficiencies and cost savings generated by the MSP.

Instead of a break-fix relationship, an effective managed service solution will provide customers with high-level IT service that costs less than those usually paid for managing IT needs in-house.

Essentially, MSP customers should be gaining technology support, management and strategic guidance in three key areas: PC, server, and network management. Integrated and automated features should be able to help streamline repetitive
tasks such as patch management, software deployment, auditing, and disaster recovery and performance management.

It should also be able to demonstrate greater scalability, more predicative management, and the measurement criteria to track improved returns.

Focus on the outcome
Outsourcing SMB IT needs to an MSP is an attractive option when technical issues can be fixed within an hour, if not minutes.

A truly effective managed service system should also be able to automate the provision of detailed reports on the status of a customer’s network and server as well as the health of those systems used by remote workers and workstations.

Such reporting should be made available in formats that meet the individual needs of the MSP, as well as the information needs of customers.

An effective MSP approach to technology service should also provide customers with better- performing technology as well as more control over their technology support spend and IT budgets.

It should allow customers to focus on their business instead of managing their systems.

Applied properly, the MSP approach should provide opportunities for their customers to gain a more robust IT infrastructure while ‘seeing’ less of the service provider and their IT technical support staff.

They should also be able to shift their focus from the time it takes to fix IT problems to increased productivity from minimal downtime, higher reliability and less disruption to their businesses.

This creates a classic win win: the customer gains improved returns and more visibility on their IT spend at a lower cost.

The MSP gains higher returns and more robust business with less non-billed downtime.

Going beyond basic functionality
With a remotely managed IT infrastructure, the platform of services available must do more than simply notify the IT service manager of an event and prompt a call-out to a customer’s office to rectify the problem.

If that’s all the platform provides, you will rarely gain the greater efficiencies and lower costs available from an effective MSP solution.

Similarly, the systems in place need to be properly configured to avoid issuing false alerts, which aggravate rather than alleviate the pain-free functioning of an IT network.

Even those MSP systems that perform a fuller set of managed services, including proactive or preventive services that eliminate threats before they evolve, must properly document their activity to demonstrate their true value.

Furthermore, an effective MSP needs to address the three primary areas of skills issues, process issues and technology issues.

Managed properly, the remote solution should provide opportunities for the service provider to deliver specialist services that add better value and can be billed at a higher rate than traditional break-fix services.

Partnerships generate all-round gains
The relationship between the IT service provider and the MSP solution vendor should be viewed as a partnership.

The vendor should help the IT services business recoup upfront costs reasonably quickly, as well as providing the capacity to generate higher returns from a stronger suite of services.

The vendor should also promote gains made from improved customer loyalty, reduced overheads, and a higher quality service to customers, as well as providing the capacity to allow the MSP to take on more customers without increasing staff levels.

The customer should also be able to make gains from improved staff productivity and business competitiveness. Perhaps most of all, the customer should gain peace of mind that their system is monitored, managed and supported while they get on with their ‘real jobs’.

Leverage the sales advantage
Rather than sell the business benefits of an effective managed services solution to company executives, many MSPs try to sell outsourcing services to the IT manager.

This approach inevitably fails because the IT manager will often see the MSP as a threat to their job, rather than an ally in the effort to better manage their IT operations.

An effective MSP system should be able to be presented as a means to assist IT managers to do their jobs.

It should also include a presentable business case that will appeal to company executives.

This will enable an effective MSP system to be presented to, and understood by, the right decision maker – possibly a non-technical person.

Through the customer’s eyes, some SMBs may be hesitant about shifting to an MSP.

They may be uncomfortable about the economics and practical deployment of a remote IT management service, especially if they are used to a traditional break-fix IT service where on-site support is paid for a case-by-case basis.

To overcome these barriers to sale, an effective MSP system must be able to be packaged, presented, and delivered in a way that overcomes buyer uncertainties.

Such a system should be able to demonstrate and deliver substantial benefits to the customer including predictable and recurring cost structures, increased reliability and availability, higher levels of service and lower costs.

Furthermore, an effective MSP business model is the key to growth and survival in the competitive IT services environment.

However, managed services are more about proactive management and preventing an outage in the first place rather than creating an alarm and then remote controlling in to fix the problem.

For those looking to make the move to a MSP, fully test the offering being reviewed on a remote client site. If the application you are considering doesn’t allow you to do this with ease, don’t buy it.