Over the past several years, the phrase 'managed services' has morphed into an umbrella term to describe virtually any level of outsourced IT services - everything from semi-automated break/fix activities all the way to high value, SLA driven engagements. This dilution of the managed services intent is unfortunate for both the customer and the IT service organization, as neither business will truly achieve the full potential benefit of a true managed services program.
Many people believe that an MSP is any IT service organization that provides remote monitoring capabilities along side more traditional break/fix and block service engagements. While there is certainly some type of a market for that relatively low-value service, the real opportunity lies with organizations that have a greater dependence upon IT. While remote monitoring is a key piece to the puzzle, true value-based managed services is much, much more. Managed services is a method of IT service delivery whereby the MSP can deliver the same, or more value to a customer as an internal IT department delivers in a large enterprise - only in a consumption-based model that makes financial sense for even the small business owner.
To completely understand the value the customer is looking for from an MSP, one must first review the fundamental purpose of IT within the business environment. The purpose of IT, in a very general sense, is to automate or enable business processes, thereby allowing an organization to do something that otherwise couldn't be done, or alternately would cost exponentially more to accomplish. So it's ultimately about creating productivity and business value - and the function of the IT organization (internal or external) with respect to that value is two-fold: to ensure that existing systems continue
to appropriately support and enable the business processes, and to recommend and deliver new solutions that will help the business drive more productivity and business value in new ways.
The second part of the equation, the delivery of new IT services, is well understood in the industry and bears little discussion here, except to say that as the relationship between service provider and customer evolves into a true strategic partnership so too will the ability of the service provider to effectively recommend and deliver solutions to the customer evolve. As the MSP comes to know the customer at both strategic and tactical levels, they will be in a much better position to make recommendations on IT solutions that will positively impact the customer's business. Similarly, the trust factor that is inherent in a strategic relationship will mean that the customer will have faith in the MSP's recommendation and will more often incorporate those recommendations in their ongoing business planning.
The first part of the equation, the support of existing systems within the customer infrastructure, is where the problems generally arise. Many IT service providers fundamentally don't understand (or don't accept) the customer's expectation of IT, which of course is that once technology is deployed it will continue to work perfectly forever. The fact that this is entirely unrealistic and flies in the face of logic is irrelevant. The upshot of this is that as soon as there is an IT failure, the service provider has already failed and no amount of heroics will change the fact that the system stopped working. The reason customer's expect (or want to expect) that IT is infallible is that the business has become so dependent on IT systems such as email that, for many businesses, operations virtually shut down when a major IT failure occurs.
While the customer expectation of unstoppable IT is impossible to deliver, it helps us to begin to formulate a conceptual idea of what a value-based managed services program is: a collection of IT services that avoids and mitigates the business impacts that arise from IT failure as much as possible. This is a good start, but we're not quite there because delivering higher and higher levels of uptime costs more and more money. Logic dictates that as the IT availability target approaches the unachievable goal of 100% uptime, the cost to deliver the service begins to increase logarithmically, which of course is neither affordable, nor required by the vast majority of customers. So then we update our concept of managed services: a collection of IT services designed to avoid and mitigate the business impacts that arise from IT failure to an acceptable level for the customer.
