The Why & How of Managed Services

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1 SOLUTIONS Cut Costs While Improving Productivity The Why & How of Managed Services What are Managed Services? CIOs all face similar challenges: cost containment, reliability of systems and keeping pace with new technologies to advance the business of the organizations they serve. Add to that the fact that IT teams are stretched thin. Too often, highly-paid staff members are tasked with handling the routine activities of monitoring and maintenance, leaving little time for innovation. And it s become increasingly difficult to attract IT professionals with the unique skills to maximize the advantages of new technologies, especially when they are also required to handle routine maintenance tasks. In light of these issues, Managed Services arrangements are on the rise. More companies recognize the value of utilizing Managed Service providers to handle routine operations, enabling internal IT teams to better support strategic initiatives. Gartner reports that 65% of commercial enterprises have at least one Managed Service deal, and more than 55% indicate that they plan to increase their use of Managed Services. 1 However, companies that fail to match vendor capabilities with organizational needs and don t insist upon outcome-based service agreements will ultimately not be pleased with the decision to engage outside assistance. Entering into a Managed Services relationship requires some internal analysis and a clear outline of goals and expected benefits. Here are some guidelines to help you follow a tried-and-true path to a beneficial relationship. Services range from basic monitoring and maintenance to more extensive packages. Typically basic agreements include alerts, operating system patch management, problem resolution and proactive problem prevention. Additional services can include security, software and technology updates, document management, help desk response, firewall monitoring, intrusion detection and restoration of operations. Fast-track CIOs add external resources to manage applications and infrastructure, their internal teams are able to focus on creating business value through high-impact initiatives. They seek providers that can minimize risk, manage uncertainty, enhance agility and control costs. In such environments, Managed Services takes on a much more strategic role and

2 Developing a Managed Services Strategy A plan to use Managed Services should underscore the importance of aligned people, processes, technology and service to achieve higher value that can be obtained from the limited resources available from internal staffing options. Developing business-driven sourcing strategies should follow four key stages: Assessing the current state Developing the business case and action plan Identifying a Managed Services partner Transforming the business value of your IT department serves as a tool for enhancing business agility, conserving capital, and managing costs. It should be noted that Managed Services is not the same as staff augmentation. Gartner has found that companies too often seek staffing support to fill sourcing problems, only to find the recruiting issue never resolves itself and outsourcing becomes a perpetual staffing approach. This results in less than optimal satisfaction levels over a multi-year period. 1 Managed Services models differ from staff augmentation in a number of ways. A Managed Services provider is committed to delivering an outcome versus simply supplying the performance of an activity, with no commitment that the activity will result in the desired outcome. Reasons for Seeking Managed Services In today s uncertain business and economic climate, the ability to be flexible can be critical. Organizations need to stay agile and learn in order to take advantage of changing business conditions that can lead to an increase in revenue, or as importantly, mitigate costs when business opportunities dry up. Utilizing a Managed Services company allows you the ability to scale the scope, size and range of services based on business needs. Companies that out-task enjoy high levels of network support and availability. They enable internal IT staff to focus on strategic activities instead of network support, making the company that utilizes a strong Managed Services team more agile and in a better position to move quickly on new opportunities. Additionally, when systems change, a Managed Services company can supply staff already familiar with the operations of hardware and software, enabling faster integration into the business workflow and faster timeto-value for the company. There s a strong Been There, Done That component of the professionals available to you from a Managed Services company. Experienced technicians have often dealt with problems at other companies they ve supported that your in-house IT staff may not have faced. Managed Services teams not only know how to resolve such issues that might confound an internal team, they can also anticipate issues that might arise and put in place procedures to prevent them. Experience working with other companies like yours also enables Managed Services teams to be more knowledgeable about new technologies, enabling you to more readily exploit innovations that can provide new business

3 value. In addition to improved service, companies will typically enjoy lower overall costs with Managed Services. Providers can offer economies of scale and industrialization of service delivery, making it less expensive to outsource services than it is to handle them in-house. Managed Services frees up capital by shifting IT costs to operating expenses and away from capital expenses. Assessing Current State Organizations that benefit from Managed Services do so for many reasons, not just cost savings. Most companies find that Managed Services enables them to be more proactive in identifying new services the IT department can offer business users. Rid of the need to spend copious amounts of time maintaining systems, your IT staff is better able to step back and make recommendations on new solutions that can improve business outcomes. In fact, CIOs frequently engage in Managed Services contracts to achieve better and faster response to company IT needs, not just for cost reasons. They are seeking initiatives that can provide a competitive advantage and speed deployment or time to market. Of course cost is ultimately always a factor in any business decision. Gartner reports companies are achieving as much as 30% savings from Managed Services arrangements. 2 But cost evaluations should take into consideration not only the fees versus salary comparisons but also lost opportunity costs associated with diverting IT staff from core business functions to system maintenance. The ability to free internal IT staff to focus on revenue-generating projects should be considered. Downtime is another reason companies seek Managed Services support. A vendor that can supply highly skilled personnel with a track record of improving uptime of the systems and applications you re running can make a huge difference in your reliability reports. When evaluating your current state, consider these questions: Are we able to find the right people at the right price to handle our IT maintenance and monitoring tasks? Are there gaps in our ability to seamlessly manage and maintain our infrastructure, hardware and software? Is our IT department flexible and scalable enough to ensure the organization s competitive positioning in the marketplace? Are we able to keep up-to-date with new technologies and processes to maintain our competitive advantage?

4 Envisioning the Future Once a provider has a solid understanding of the services levels required to manage and optimize your existing environment, a forward-looking Managed Services partner will work closely with you to identify methods to accelerate your goals and transform processes that better drive business outcomes. So as you re looking at the current state, keep in mind where you want to take the IT capabilities and the projects that will move you toward that envisioned future state. Are we able to implement new technologies quickly in order to achieve fast time-to-value? Are overhead costs fluctuating and damaging the budget? Do we have difficulty maintaining 24/7 resources? Conducting an analysis of IT functions better served through outsourcing is not a process you must complete alone. A reputable Managed Service company has the experience to help you sort through the options to find the best approach. You can work together to identify business requirements and to determine the best areas for Managed Services support. Establishing that level of trust and a sense of partnership early in the relationship helps both sides create an agreement that takes into consideration your organization s unique requirements and to arrive at a proposal for support most likely to be highly beneficial to your company. Transparency regarding your IT structure strengthens and makes it easier for both to develop a plan to meet critical KPIs.With a clear understanding of your current state, the Managed Services provider is better able to identify ways to first stabilize the situation, if needed, and then transform and optimize the existing environment to deliver defined business value. Optimizing your current environment prepares the organization to integrate new technologies and transform the business. Developing the Business Case The concept of Managed Services is far from new. It is a business model that makes sense for both sides of the arrangement. IT departments take advantage of receiving consistent and reliable support in the management of both routine and mission-critical software and hardware for a predetermined price. Managed Services providers use economies of scale to profitably cut client costs. Managed Services not only reduces costs, it helps CIOs simplify the management of the IT department. Adding highly skilled technical specialists to the team when and where needed enables organizations to achieve higher levels of efficiency. Productivity benefits occur in a variety of ways. The IT department gains when internal staff is able to focus on initiatives that drive the business rather than keep the lights on. A better-running IT department delivers greater functionality and higher uptime, making everyone in the company more productive. Perhaps

5 Identifying a Managed Services Partner You want a Managed Services Partner that is both technically savvy and ready and willing to take responsibility for your success. There is no one-size-fits-all type of Managed Services. Programs must be customized to meet each organization s unique needs. Recognizing the importance of the service and responsibility the vendor will take on, there must be a feeling of partnership on both sides of the agreement. most importantly, Managed Service agreements are based on achievement, not performance. Gain agreement on KPIs that must be met as part of your Service Level Agreement (SLA). A strong SLA will drive efficiency and ensure the team optimizes systems in order to best achieve defined goals. The level of quality and the outcomes you expect from a Managed Services provider should be clearly outlined in your agreement. When pricing is tied to defined outcomes, the business value to the organization is clear and apparent. Your Managed Services partner should serve as a strategic advisor, alerting you to problems and recommending methods to minimize or eliminate disruptions to service. They should make recommendations regarding ways to maximize the benefits you receive from current infrastructure and applications, and suggest new technologies and processes that will improve results. They should be able to provide the skills, processes and resources needed to complete your in-house capabilities. Today s progressive Managed Services providers are not order takers. They work side-byside with their clients to deliver very proactive advice and support that incorporates a technology-based approach to IT management. Seek firms able to provide analysis of your current state and recommendations on improvements to boost efficiencies and further lower costs while increasing support levels. When reviewing potential Managed Services providers, be sure to get a solid understanding of their strategic approach to the project. Establish a clear understanding of their capabilities and any potential risks that might be associated with their ability to meet critical elements of the service level agreement. Understand the skill levels of the team assigned to work on your account, and work closely with possible Managed Services providers to assess the capabilities and expectations on both sides what the provider brings to the table and what your organization supplies and expects. For some companies and circumstances, the Managed Services partner may offer the pricing benefits of offshore support. Technology has shrunk the world, so that not only are there cost savings to offshoring, but also improved results and faster ramp-up time from a highly skilled and readily available labor pool. When considering Managed Services providers with offshore services, take a subjective assessment of provider characteristics such as cultural compatibility, industry knowledge and degree of process maturity. Providers who supply local management of offshore resources can often deliver the high quality you demand at the costs you can appreciate. Make it your

6 Always in the Know with AdvizeX Insight SD AdvizeX Managed Services clients always have the full picture of activities being conducted on their behalf. AdvizeX s Insight SD provides a robust, customizable system management tool that is paired with our reactive and proactive monitoring. That highly sophisticated, proprietary monitoring solution ensures that all critical functions of each supported technology are watched closely so AdvizeX staff can quickly intervene and take corrective action before issues impact profit, and are often fixed even before client system users notice the failure. Insight SD reporting provides deep analysis to ensure both technical and business reporting needs are met. These reports help management stay on top of problem systems. AdvizeX Insight SD is a robust, customizable system management tool providing powerful business continuity and planning capabilities. goal to find a partner with whom you can establish a long-term client relationship. To make the relationship a lasting and mutually beneficial one, both parties must agree to a common set of goals and values, the constant flow of communications and the commitment and flexibility to continually adapt to changing circumstances. Contracts for services should be based on achieving certain success benchmarks. Results are what you pay for with a Managed Services contract. Negotiate performance-based service level agreements backed by penalties when missed. Service-level managed processes should be set to drive efficiency and optimize system performance. Quality is the ultimate value to be delivered, and that level of quality should be delineated and clearly incorporated into service level agreements. The right partner will not only take the burden off the internal IT team, it will also enhance their abilities. Knowledge transfer is an important element of the relationship. Documentation of processes and a free and transparent flow of information will help improve the knowledge of your internal team. Transforming the business value of your IT department Once a decision is made and you enter into a relationship with a Managed Services partner, let openness be your guide. Work together to identify business requirements for your IT services and determine the right fit for Managed Services within your IT operations. You should approach early strategy and planning sessions with a sense of trust, handing over important insights into your business and operations so that the Managed Services partner can fully understand the requirements to ensure success. Trust in your partner should extend to the sharing of business plans, revenue projections and operating expenditures. Information like this allows a Managed Services partner the insights to create a solid project plan with accurate scope and resource allocations to meet your objectives. Understanding key business goals enables your Managed Services partner to better recommend strategies to align IT delivery with them and identify changes needed within the organization to accelerate their achievement. Your Managed Services partner should move through the stages of a strong relationship with you, from optimizing your existing IT environment to transforming it for greater business benefit and establishing a process

7 of continual improvement. Working to stabilize and optimize current state puts your organization into position to truly transform the IT department and better serve business needs. Once processes are stabilized and running smoothly, it s easier to integrate new technologies. Your Managed Services partner should be there before, during and after the transformation project, fully supporting post-implementation management of new systems. Your Managed Services partner should never operate in a vacuum. A system should be put in place for regular and timely communications. The internal IT team should always know what issues are being handled by the Managed Services partner and the outcomes of each. Conclusion The world of IT is changing faster than ever before. With increased complexity and a growing need to support key business initiatives, coupled with cuts in staffing and difficulty in finding highly skilled talent, it s not surprising that more companies are working with Managed Services providers. Certainly the CFO s desire to transform capital expenditures into operating expenses has caused greater interest in Managed Services. But quality remains job one. With more pressure on IT departments to show business value, there s more incentive to keep internal staff focused on revenue-producing functions rather than business-supporting ones. Managed Services are enabling organizations large and small to cut costs while improving productivity. Taking a strategic approach to the tasks you move to a Managed Services relationship will help ensure business goals are met and the IT department is recognized for the value it brings to the organization. Footnotes 1. Diligently Evaluate Outcome-Based Managed Services Versus Capacity- Driven Staff Augmentation, Gartner, April Outsourcing Trends 2013: The Nexus of Forces Will Accelerate Managed Services Sourcing Adoption, January 2013

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