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Managed Service is fundamentally any service managed and delivered by a
provider under a contracted service level agreement. The term is used by various
providers differently based on the context of the business and the services
provided.
Managed services provider (MSP) takes up complete management responsibility
to deliver a service that was traditionally rendered by internal staff. It is
not a one-size-fits-all concept. Rather it has to be customized based on an
organizations unique needs and service providers services portfolio.
Indian IT service providers have invested in and developed leadership
positions in Managed Services by moving up the business value-chain. Having
acquired functional knowledge of businesses, these players have developed the
ability to provide managed network and systems, databases, application
production support, business continuity and disaster recovery under strict
service levels and bring transformations through continuous innovations and
automation.
Managed Services has increasingly proven to be a significant transformation
agent for businesses in the highly complex and faster technology space where
meeting and exceeding the consumer demand in a very competitive and price
sensitive market is paramount.
Why Managed Services?
IT has since long became critical to business competitiveness, but not the
business itself. Jack Welch once stated, Your back office is someone elses
front office.
Managing the business enabling IT applications and infrastructure environment
has become extremely complex. IT organizations need high level of skills,
continuous investment in technology, processes and automation, and yet are able
to demonstrate predictable operational costs with year-on-year productivity
improvements. Every layer of the enterprise IT infrastructure has to work
seamlessly and efficiently in order to derive the above benefits.
Companies therefore are seriously considering outsourcing IT production
operations and infrastructure management to culturally aligned MSP. In India,
CIOs are seriously evaluating the benefits versus the challenges associated with
outsourcing.
Over the last decade many businesses in India have gone global and are
increasingly required to comply with mandatory government and industry specific
regulations on data security and data retention. What this means to the CIOs is
that the internal IT organization has to make huge investments to assure the
regulatory bodies of compliance to merely do business. Internal breaches of data
security, such as data theft can cost businesses many millions of dollars and
credibility in market place, which may sometime far exceed external threats due
to virus, malware, spam etc, even leading to bankruptcy. External threats to
data security is ever increasing and managing these is getting more complex by
the day.
It is a proven fact that a third party MSP for IT operationsas part of their
business requirementhas invested in these critical areas. Therefore, partners
whose business strategy and models are aligned to meet customers requirements
are better positioned to bring operational efficiencies, technological, and
transformation expertise than the organizations whose core business is not IT
operations.
Business Drivers
Innovation has helped businesses across industries achieve phenomenal growth
over the past couple of decades. However, continuously evolving competition,
reducing margins, and higher expectations from customers have led to
transformational operations change. The convergence of technology and different
business functions demands the highest operational efficiency and performance.
| Factors Impacting
Success of MSPs |
- Setting up a business case for outsourcing managed services Managed
service is a long term strategy and should not be treated as a point
project or a tactical measure A clear vision for Managed Services should
be drawn after assessing the readiness and related alternatives
- Comprehensive understanding of the costs, RoI, and benefits RoI must
be assessed after a clear understanding of all costs (fixed and variable)
involved, benefits (quantifiable and non-quantifiable) are listed as they
relate to impact on business
This will help you in two ways:
i. Prioritizing the Managed Services implementation roadmap
ii. Measure the impact of Managed Services on key factors, such as cost,
quality, time, risk and efficiencies
- Governance model to track, measure, and improve the performance goals
for maximized RoI and customer satisfaction
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The businesses therefore have to deal with a strategic intention to create
transformational value and differentiation for their customers from the limited
assets under their control; both human capital and finance. All the while having
to manage and optimize the business critical operations that are enabled by IT
and telecom infrastructure.
Customers should expect to realize long term gains across four
dimensionsoperations, value, flexibility and strategy.
Focus on Core Business
IT operations are extremely critical to run the business, but at the same
time they are repetitive, add low-value, and generate recurring costs to the
business. Businesses prefer to focus on market leadership strategies and
increase revenue by developing and selling value-added products and planning for
future growth. Such enterprises need to strategically consider contracting
managed services provider(s) to outsource operations like business processes,
network operations and maintenance, server and storage infrastructure monitoring
and support, global help desk, day-to-day IT operations, production application
support and enterprise backup. This will almost immediately alleviate the highly
experienced enterprise IT operations workforce that executes repetitive tasks,
to re-skill and re-focus on cutting-edge application and/or services or product
development.
Service Level Management
Enterprises that internally run their IT operations and support services
have been predominantly delivering the network and application availability and
performance through long-term employed staff. These are resources that have
developed significant expertise either as individuals or in small groups over
many years. However, this model has not delivered consistent performance or
scale and the ability to measure, report, analyze, tune, and optimize the
various service levels associated with IT operations. With managed services
contracts/agreements, the service provider and customer agree on key performance
indicators (KPI) as part of a comprehensive service level agreement for a
defined set of services. The managed services provider deploys a team to manage
and operate the day-to-day, round-the-clock services, adding value faster
through best practices developed by the knowledge and experience gained by
global knowledge management and process tuning. Service level managed processes
drive efficiency, system performance optimization, and consistent reporting and
analysis of value provided by IT to business.
| Managed IT
Services in a Nutshell |
- Planning and Design: This encompasses planning, designing, developing,
and optimizing
Business applications, support systems, Networks, Systems
Functions such as service desk, backup and recovery
- Building: This encompasses technology evaluation, integration and
implementation of networks, services, and end-user application
development, maintenance, and support of business systems
- Hosting: This is where the businesses outsource the complete IT
infrastructure and hosts business applications and support systems on a
service provider network. The hosting service provider is responsible for
application availability and performance where as the business focuses
completely on its core business strategies and market leadership.
- Operating: This includes day-to-day IT operations which include
business application systems, network operation and maintenance, email
services, IT service desk, vendor, and contract management. Typically, IT
operations is critical BAU (business as usual) service and includes
managing
Network and Network Security, Applications and Databases, Server and
Storage Systems |
Sharing the 3 Rs
A managed service provider takes complete responsibility of delivering the
contracted services and meets high performance service levels and therefore
becomes a catalyst for growth. Managed Services agreement also enables reduction
of risks in operations by sharing setup costs, people management, ramp up/down,
and attrition cost. The agreement also helps transferring the responsibility of
thought leadership to enhance efficiency at a lower cost and successfully
introducing new technologies and processes within the IT operations department.
As a partner, the managed service provider also benefits by getting rewarded,
when the service levels are exceeded and cost savings are realized year-on-year.
USP of MSPs
Having worked with various businesses and customer organizations, a managed
service provider can help bring cross learning, best practices, and knowledge on
variety of tools and technologies. It can drive process implementation and
best-in-class service delivery methodologies. A managed services providers adds
value in terms of implementing best practices that are developed based on years
of relevant experience across several organizations and domains. A managed
service provider also de-risks staffing, retention, and team enablement to keep
pace with technology changes and support demands.
Reduced TCO
Managed Services has successfully demonstrated measurable cost savings of up
to 30% over the years resulting from increased efficiency, lower cost of human
capital, higher skills, improved knowledge management and overall reduction in
operating cost. Fixed monthly operating costs aligned with business streams
allow better visibility and predictability to financial outflow.
Managed service providers economies of scale provide operating expenses
reduction and access to better practices and processes.
Out-tasking of specific-subject-area managed service yields less immediate
savings compared to complete outsourcing but is key lever to progress to
complete outsourcing, the latter carries more risk while former allows
transformations through manageable initiatives.
Conclusion
Managed Services is a specialized activity and is best handled by the
specialist service providers. These service providers will help you focus on
your core business by providing compelling value and substantial cost
efficiencies via a combination of world class processes, technology, and skills.
A partnership approach with the right specialist will assure ITs
availability and make your business perform better.
Raju Chellaton
The author is general manager and head, managed services of MindTree
maildqindia@cybermedia.co.in
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