The world of IT is changing rapidly, embracing the cloud. With this has come a shift in focus for technology firms, away from professional services and into managed services. What does this mean to you as a business owner?
Professional or managed services: what is the difference?
Professional services are provided by contractors, vendors and resellers to assist customers with the planning, design and implementation of various technology projects. These services are either provided on a time and materials basis or a fixed-price contract, with the latter approach being more prevalent.
Until recently, professional services were the mainstay of many IT providers as they provided higher margins than hardware and software sales.
IT providers would sell hardware and software at low margins and then sell their services for installation and configuration. Every three years they would come back and do the same again. The cloud has changed this dramatically. No longer do companies need to buy and manage their own technology: now they can choose to buy a managed service, and many are doing just that.
Managed services enable business to selectively outsource some or all functions and their management to a service provider who charges on a contracted recurring basis.
Managed services providers can either manage your existing on-premises equipment or provide the same functionality by leveraging either their own cloud or one from a public cloud provider such as Microsoft, Google or AWS – therefore removing the need to own and manage your own technology.
Right now, you can buy just about any IT solution as a service. In fact, the industry now has a new acronym: XaaS – 'Anything as a Service'!
A great example of this is Desktop as a Service (DaaS), where a provider may bundle together servers, storage, a productivity suite such as Microsoft Office 365 and a virtual desktop environment, selling this on a per user/month model.
Many such others exist as well, including Software as a Service, Backup as a Service, Infrastructure as a Service and Disaster Recovery as a Service.
Buying IT as a service provides many benefits, the most common ones being agility, productivity and cost reduction. It allows you and your team to focus on your business while letting someone else worry about the things that are not core.
Often the service levels provided are much higher than those you could otherwise achieve internally, meaning more reliable services, thus enhancing overall productivity. Managed services provide access to enterprise-grade technology solutions and services, often at the same cost as what you are spending today or less. Better still, you can buy an outcome that is measurable by SLA.
Selecting a provider: look beyond skills
Choosing the right provider is a make-or-break decision and a lot of due diligence should be done. The key to selecting a provider is to ensure you are relevant to their business. They must be interested to take the time to understand what you do, working together to define an overall strategy.
Make sure they have a lot of experience delivering what you need or that they partner with companies that can. Remember, they must be able to deliver their service to you better than you could do it yourself.
This is IT and there will always be problems, no matter who is providing the services. Seek to understand how your provider performs in times of adversity by asking their reference customers to relay their experiences.
Make sure your provider treats their internal team well. Seek to understand their staff turnover rate as a lagging indicator. Our customers often ask about our team and sometimes to interview random members to gain an understanding.
What about the cost?
The beauty of managed services offerings is that you can pay for what you use, and with some services you don’t even need to contract for a period of time.
Pricing models vary between providers, with the most popular being per user, per desktop, per server or per process (such as security or backup), and often these have different levels.
Many providers use metal as their tiers – bronze, silver and gold, each of which provide different services levels, offering the opportunity to tailor your purchase to meet your requirements. Many providers are also happy to tailor packages to suit specific requirements.
Making the shift to a service-based delivery of IT can sometimes be difficult for a business where there is an existing investment in people and technology. Making the move from a capital expenditure to a consumption-based operating expense model does help to control the spend; however, price alone should not be the determination.
When evaluating, be sure to place value on the broader benefits such as agility, scalability, reliability, increased efficiency and economies of scale. Be sure to take a three-year outlook; immediate returns are not always there, but in the long term the benefits can be significant.
Shifting your business to procuring IT as a service should not be undertaken lightly, yet it doesn’t need to be overly complex. Start by dissecting your IT into individual functions (such as help desk, procurement, email, file storage, security and backup) to determine which ones of those could be more effectively purchased as a service.
Once you have a view of what you want to procure as a service, you can then look for providers that have expertise and offerings across as many as possible.
Remember: disrupt or be disrupted. Just because you have always done it one way doesn’t mean it has to stay that way.
Ronnie Altit is the managing director at Insentra.