Managed services is a broad term for outsourcing many functions in business. Typically, business owners hear the term the first time they investigate IT outsourcing. Managed services is also the favorite term for IT support companies looking to generate a recurring revenue stream. Small and medium business owners will find that IT companies offer varying descriptions of what they consider managed IT service packages. So what is managed services?
Managed Services Defined
Wikipedia defines managed services as “the practice of outsourcing day-to-day management responsibilities and functions as a strategic method for improving operations and cutting expenses. This can include outsourcing HR-activities, production support and lifecycle build/maintenance activities. “
Over at the MSP Alliance, they describe managed services as “the proactive management of an IT (Information Technology) asset or object, by a third party typically known as a MSP, on behalf of a customer. The operative distinction that sets apart a MSP is the proactive delivery of their service, as compared to reactive IT services, which have been around for decades.”
And finally, Gartner defines a managed services provider as a company that “delivers network, application, system and e-management services across a network to multiple enterprises, using a “pay as you go” pricing model. A “pure play” MSP focuses on management services as its core offering. In addition, the MSP market includes offerings from other providers — including application service providers (ASPs), Web hosting companies and network service providers (NSPs) — that supplement their traditional offerings with management services.”
Basically, the industry defines managed IT services as a program in which some portion of IT service is done proactively and with some sort of monthly fee. However, the process and results may vary depending on how the individual company approaches their support package.
Many IT support companies simply add some sort of service with a monitoring package for a nominal fee and call it managed services. On the other end of the spectrum, a full-time Managed Service Provider or MSP, will have an end-to-end platform in which they take responsibility for their clients’ technology and a laser-like focus on improving the overall client experience and their technology results.
The Managed Services Theory and Purpose
The basic theory behind the value of managed services is that as a company grows and relies more on their technology, calling an IT company to resolve problems becomes cumbersome and costly. Some companies begin looking to have some proactive IT management mixed into their current strategy. There are many levels of monitoring and review in a proactive strategy. The overall goal should be to utilize the proactive activity to reduce the amount of reactive issues and business risks.
Alternatively, some companies opt to hire an internal IT person. Managed services, when done properly, should offer companies a cost effective solution that reduces reactive problems and helps the client plan for future issues and business changes. Using economies of scale and through best practices developed and refined across a base of clients, a good managed services approach should certainly be more cost effective than hiring internally and deliver better results.
Variations of Managed Services
While the definition of Managed Services can be somewhat vague, the variations are also sometimes confusing. Listed below are some of the more common “managed services” offering that a person may come across. While some would argue that the most basic offerings are not managed services at all, they are included if only to illustrate how much variation exists.
Monitoring Only
A monitoring only package is the least expensive and least effective of any managed services approach. It probably should not be considered managed services, however, many MSP’s use it as an entry level service at a low cost. Once an alert occurs, the IT support company calls the client to schedule the necessary resolution at an additional fee. This method may shorten the response time by an IT company but does not do much to make a real positive change for the client.
Limited Response
The next step for many companies, this approach allows for some issue remediation. The boundaries are usually specific and somewhat restrictive. This approach may offer a set amount of hours for reactive network support per a time period or include limited response for specific server, computer or other technical issues. Any problems that fall outside of the defined perimeters incur a service fee.
Hybrid Approach
This approach allows for companies that employ their own internal IT personnel while utilizing the resources of a well-equipped and knowledgeable managed services IT company. Many times, a business has the need for a full-time technology employee for a specialized purpose. Typically, using this approach, the internal person can focus on his or her specific function and allow the managed services company handle the issues that occur outside of those perimeters. Using this model, the managed services company should be able to implement their process to positively affect the client’s business while the employee is then not burdened by unnecessary distractions.
Note: Many companies feel the need to have an on-site person to more quickly respond to employee issues. This approach is usually costly and is generally not necessary. When done properly, the managed services approach should focus on minimizing the need for a reactive response by avoiding most day-to-day issues, negating the need for an on-site technician. In fact, remote response can many times be faster than waiting for a person to respond, even if they are in the same building. In the rare occurrence of an issue that requires on-site personnel, an MSP should be well-equipped to respond appropriately.
Remote-Only Help Desk Support
Using this approach, the managed service company is able to implement their entire process with the only limitation being that any on-site service will be at an additional, sometimes discounted, cost. This model can be very effective for companies that require little on-site response or have a dispersed workforce. Most companies that use remote-only support can benefit from the higher level of service and results that a good MSP delivers and only pay for on-site response as needed.
Full IT Department
The full IT department package places all of the responsibility for the client’s technology results in the hands of the MSP. When done properly, the MSP can utilize tools, technology, best practices and a well-developed process to:
- Drive down reactive issues
- Increase client productivity
- Consult on technology decisions
- Provide a multi-year budget
- Reduce the client’s overall business risk of data loss and downtime.
When a reputable managed service provider engages a client using this approach, they are committing to provide a positive result for a set monthly fee.
What Do You Need?
With the many variations and sometime loose definition of managed services, the typical business owner can be confused by multiple service delivery models. This can be especially daunting when pricing between companies can differ by large dollar amounts. Business owners can sometimes lump all IT companies into the same category, but usually there are large disparities in approach, methods and expectations.
IT can be simple and an asset to your company, but making the right decision between MSP’s can seem overwhelming. When evaluating a managed service provider to maintain your company’s technology, focus on the results that the MSP promises. It is our belief that the best approach is for the MSP to be involved in all aspects of a client’s technology. By getting to know our client’s business and technology, we are more effective in providing the very best IT support and management. Managed service providers offering to partially manage your network are usually hoping for the big payday that comes when something equally big goes wrong.