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Glad
March 2014
The New Managed Services:
Report
Title – size
and position text
to center
Flexibility,
Accountability,
and box
Control
Report Title in the blue bar
Stratecast Analysis by
Lynda Stadtmueller
Business Communication Services
(BCS)
Volume 8, Number 1
The New Managed Services: Flexibility, Accountability, and Control
Introduction1
Back in 2008, as service delivery expanded beyond the equipment-centric “break-fix” model,
Stratecast offered a definition for “the new managed services”—one that focused on collaboration
between provider and customer. 2 In recent years, we have seen another shift in the way enterprises
purchase technology services, necessitating that we revisit our definition.
As business technology solutions grow in number, complexity, and strategic importance, resourcestrapped IT departments are increasingly turning to outside experts to help them manage those
technologies and the business processes they support. According to Frost & Sullivan research, nearly
half of U.S. businesses have invested in some sort of managed communications or technology
services, with another third planning to add or expand such services in the next two years. 3
But what exactly do those managed services look like? It turns out that there is little consensus as to
what comprises a “managed service.” Some providers appear to use the term to denote a premium
version of their standard service, one that involves a
higher level of customer support. Other providers use Greater accountability for meeting
the term to denote the inclusion of management tools business goals calls for a higher level of
or a self-service management portal that is provided to visibility and control over IT components.
customers. In a few cases, the word “managed” appears
to be gratuitously appended to a service name to make it fancier (and presumably to justify a higher
price point)—like calling a roadside diner a “café.”
In years past, IT leaders (along with most of the industry) considered managed services as a point on
the lower end of the outsourcing scale—a sort of “outsourcing lite” for customers who chose
neither to fully manage their technologies themselves nor to implement a complete Business Process
Outsourcing solution. Managed services were a compromise solution, like frozen supermarket meals
for those who had no time to cook but could not afford a restaurant dinner.
Today, the role of the enterprise IT department is evolving, from self-sufficient cottage industry to
service broker. IT leaders are re-assessing what it takes to deliver services to the business
successfully. Greater accountability for meeting business goals calls for a higher level of visibility
and control over IT components. Greater flexibility in delivering services calls for a higher level of
integration and collaboration with service providers.
In this context, the new role of IT calls for a new and expanded definition of managed services—a
definition that cannot be adequately represented on the linear scale of task performance that runs
from “in-house” to “full outsourcing.” The new managed services represent a strong
partnership—in which the provider contributes technology and expertise, and the customer
Please note that the insights and opinions expressed in this assessment are those of Stratecast and have been developed
through the Stratecast research and analysis process.
2 See SPIE 2008-31, The New Managed Services: A Partnership Between Providers and Enterprise Customers (August 2008). For
information on how to obtain this or any Stratecast or Frost & Sullivan report, contact your account executive or email
inquiries@stratecast.com.
3 See BCS 6-6, 2012 U.S. Business Connectivity Services User Survey: Managed Services Trends (July 2012).
1
BCS 8-1, March 2014
© Stratecast | Frost & Sullivan, 2014
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retains control and oversight—as both parties accept accountability for achieving specific
outcomes.
In this brief, Stratecast revisits our definition of managed services, updating it for today’s more
complex business and technology environment. In doing so, we recommend ways for Managed
Service Providers (MSPs) to meet the current and future needs of enterprise clients.
What is a Managed Service?
Businesses are enthusiastic participants in our service economy, buying and selling services up and
down the supply chain. But not every service can be called a “managed” service.
The very term “managed service” suggests its essential components. By definition, a “service”
involves one entity performing a function or providing some sort of accommodation for another
entity. To “manage” is to introduce ongoing processes that drive toward success, generally in the
areas of operational performance and efficiency. This is the context in which we talk about
managing our employees, our expenses, or our household affairs: each involves ongoing effort that
drives toward a goal (e.g., maximizing productivity, optimizing profitability, and maintaining order).
Thus, a managed service must not only satisfactorily perform a function (e.g., networking or
storage), but must incorporate tools and processes that allow customers and their expert
partners to continually assess how well their goals are being met, and make necessary
changes.
The specific components of a managed service vary based on the type of service being managed.
Some services require a high level of provider expertise (e.g., managed security services); others offer
little more than an extra set of hands (e.g., managed router services). However, three broad areas
differentiate a managed service from a non-managed service; they are:
•
The managed service includes proactive, hands-on monitoring by expert technicians.
Today’s sophisticated technology platforms provide high degrees of visibility into service
and component performance, making it easier for even non-technical users to understand
and manage their services. And increasing levels of automation enable systems to “learn”
and enact changes based on policy or situation, without
A managed service requires human
human intervention. Nonetheless, in Stratecast’s view, a
oversight and intervention, by an expert
managed service requires human oversight and
who has the experience to interpret
intervention by an expert who has the experience to
monitoring data, and take or recommend
interpret the monitoring data (at a customer or global
appropriate actions.
level), and take or recommend appropriate actions.
For example: Managed security service technicians
monitor global traffic data in real time. This allows them not only to respond, but to
anticipate potential cyber-attacks, assess the risk per customer, and take action to minimize
the impact.
•
The customer participates in defining and redefining success. In its new role, the IT
department is responsible for meeting business objectives, such as cost reduction, or
application performance, or time-to-market. For that reason, managed service delivery must
be flexible enough to allow the customer to establish relevant performance parameters and
measurement criteria, based on its unique and changing needs. In contrast, a service that
BCS 8-1, March 2014
© Stratecast | Frost & Sullivan, 2014
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