While nothing new, managed services seem to be moving into a new era with the advent of one-size-fits-all, scalable solutions; the Internet; and economies of scale.
Yet, while more and more businesses look to third-party providers for everything from network monitoring to full-on IT outsourcing engagements, the definition of just what is a managed service is getting increasingly murky.
Is it software-as-a-service where you subscribe to a solution not owned or hosted by your company? IT outsourcing where you offload personnel to a big player like IBM or HP? On demand compute cycles from Sun Microsystems?
“It can mean, in practice, anything from traditional ITO kinds of things like managed mainframes or servers, managed network services, remote monitoring, SaaS; it doesn’t necessary entail any percentage of automation verses labor,” said Forrester Analyst Bill Martorelli. “A lot of managed services are just managed in the context of people doing a lot grunt work.”
While the answer may not clear, what is clear is there is a new and increasing interest in having someone else provide you with functionality—either IT or business-process centered—so you don’t have to deal with it. And this is especially true for the small-to-mid-sized business (SMB) space, said Jeff Jernigan, an analyst with the market research firm In-Stat.
“It’s easier to scale services now so you don’t need the ‘feet-on-the-street’ to serve however many small-and-mediums businesses there are in the U.S. and the world, for that matter,” he said.
In research into the managed services space In-Stat recently completed, what they found was complexity was a driving factor in deciding to off-load IT functions traditionally performed in-house.
In-Stat looked at network security, storage and data back up, LAN and WAN management, routing management, hosting, PBX and phone system management, and telecom expense management; to name just a few of the areas managed service providers are now offering services.
“The results were pretty overwhelming because even those who didn’t currently employ a managed service, or plan to, even they were pretty likely to admit complexity would have a factor on them in the future,” said Jernigan.
The $64,000 (or million) Question
So the question becomes: If the market for managed IT services is taking off because of complexity, is this really a good way to lessen that complexity or does it simply introduce a new set of problems in the place of old ones?
The answer, as you can imagine, is not straight forward, said Lou Washington, the “Master of MIPS” and a senior business analyst at software and services provider Cincom Systems.
“To me it’s a natural opportunity to concentrate on your core-competency, and hiring somebody who is certainly more adept at whatever technical requirements you might have in terms of your infrastructure,” he said.
But … “It’s not a particularly easy thing to do, to manage multiple service providers …,” said Forrester’s Martorelli. “I believe that calculus is going to be different. Some people may find it pretty much a God send, others will find it not to be.”