Requirement of Active Management by Customer for Outsourced Engagements

June 22, 2016 3:30 pm | Updated 5 years ago.

Strategic decision to Outsource

A business takes a strategic decision to outsource, to bring in external skills to innovate and drive growth beyond what is possible by using internal resources of the company. Outsourcing, therefore, needs to be viewed as a strategic partnership and not simply throwing the specs over the wall and expecting the solution to come back. In most outsourcing engagements, some level of active management by the customer is always desirable.

However, some small to medium size businesses that do not have adequate in-house IT capabilities or even some larger organizations that may have budget or hiring limitations may want to proactively outsource the management responsibilities as well. This is what is usually termed “Managed Services” model. A Managed Service Provider (MSP) proactively manages the infrastructure or the end-user systems, without much active involvement of the customer.

The practice of providing Managed Services started with providing support services for the huge networks of Fortune 500 companies in the USA, where alerts were generated whenever there was a network problem. An MSP mostly depends on ‘Alerts’ being generated for every user symptom or risk and needs to ensure that all alerts are attended to within the agreed SLA.

The benefits of Managed Services are:

  1. Reduced operating costs: To create a recurring monthly revenue stream, MSPs usually operate on a flat monthly fee model. This model enables the customers to control costs and reduce their overall operating expenses.
  2. 24 Hour monitoring: Usually the MSP manages the issues with Internet, Desktops and Laptops, Printers and also the vendor relationships. This allows the customer to focus on running the business rather than technology.
  3. Minimized downtime: Remote monitoring by the MSP and preventing major issues from happening substantially reduces the downtime.

Over the last two decades the services provided by the MSPs have evolved from remote management of networks to:

  1. Remote Application Hosting Services
  2. Remote support of Customer’ end-point devices
  3. Mobile device management
  4. Managed Security Services including firewall administration

With the advent of cloud technology, as the customer’ infrastructure are more and more migrated to clouds, the MSPs are trying to reinvent themselves by either providing their own private cloud or providing some of the services related to the cloud environment like cloud-based backups, disaster recovery etc.

Having discussed at length the evolution of MSPs and what type of services they mostly provide, let us now look at how relevant the MSP model is to the Gartner’ Bi-Modal IT architecture.

It is D2E’ opinion that the MSP model will remain mostly limited to remote Infrastructure management. Even in Infrastructure Management space, large corporate like GE are looking for “Operations Analytics” to optimize the usage of Storage and other Network components, the services that are not in the realm of MSP. AffinityIT, a D2E Partner is a significant player in this space.

MSP, in D2E’ opinion, will not be a major player in either of the two modes proposed by Gartner in their Bi-Modal IT architecture due to following considerations:

Mode1 (Slow IT): The applications in this mode contain all the core business logic and will need close involvement from the business group of the company with the outsourced services provider.

Mode 2 (Digital IT): The applications in this mode provide innovation and more importantly how services are delivered to the business users. Also, because of usages of methodologies like Agile and DevOps, close interaction between outsourced development partner and the IT team of the customer is strongly recommended by D2E.