If, on the one hand, your organization is good at managing it’s service providers, then there may well be an opportunity to lighten the load. But, if you struggle with SLA management, then you may do more harm than good trying to, say, have someone manage your security and network.
Also, who is providing the service? What are the Sarbanes-Oxley implications if the service they provide has a material impact on your bottom line? Can you hold them accountable?
You have to very careful who sign with, obviously, said Julie Craig, a senior analyst with Enterprise Management Associates. But, the big difference today, and where the market seems to heading, is the breadth of the offering (MS providers are getting more and more point-solution focused everyday) and the length of contract.
“It’s actually somewhat different than (traditional) outsourcing in that a lot of these companies have month-to-month contracts,” she said. “So, what they’re telling you is, ‘If you don’t like my service after a month you can discontinue it’.”
From that perspective, managed services offer a better deal than a typical three-to-five year IT outsourcing arrangement. If you find you don’t like their services you can disengage from the provider pretty rapidly since they are working remotely to manage your in-house systems—no data-ownership issues, for example.
But, if you’ve let all your database admins people go—since they were no longer needed and you wanted to say money—then you might have a problem. You are now, at least temporarily, locked in to your service provider.
Since IT complexity is a given and getting worse these days—even though it may not appear to the be the case to end-users (most of the time anyway)—the decision to take on a third-party provider is not an easy one, or a decision that should be taken lightly. But, obviously, since the market is flinging it way further and further down the corporate size chart, there is real benefit to be had as well.
“You might find, that through use of a MSP (managed service provider), you can be better at things you were poor at,” said Martorelli. “But, in general terms … , if you can manage services effectively internally, it may prove you have little reason to outsource, number one.
“But, on the other hand, it may demonstrate that, at least, you are in a position to understand outsourcing, control it effectively and so you may have a good opportunity to benefit from intelligent and thoughtful outsourcing. We would argue … this is where the market is going.”