Outsource IT processes to a third-party expert for greater efficiency and to reduce costs
What are IT managed services?
IT managed services are computer-based processes that are outsourced to a third-party contractor. The contractor, known as the Managed Services Provider (MSP), takes responsibility for providing IT (information technology) services and equipment. The company pays a set fee for these services. It is an alternative to the break/fix or on-demand outsourcing arrangements where a contractor would only provide services when specifically requested by the company.
Typically, the services and payment are governed by a service level agreement (SLA) that outlines scope and quality metrics for the services. Companies usually retain IT managed services so that they can have predictable IT expenses and can focus on larger core business concerns rather than day-to-day IT functions.
The advent of cloud computing has allowed IT managed services to expand into cloud services such as Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) capabilities.
The popularity of IT managed services continues to grow as companies believe it doesn’t make sense to commit large resources to IT management when a third party can perform these tasks better at a lower cost. With the growing acceptance of on-demand consumer services as the norm, businesses now want a similar service model for online storage, security and other IT functions.
Just about any IT function can become an IT managed service. Popular IT functions to outsource include:
- Application services
- Backup and recovery services
- Email services
- Help Desk services
- Hosting services
- Network services
- Security services
- Storage services
- Telecommunications (including mobile) services
Evolution of IT managed services
IT managed services began as a way for hardware and software vendors to keep their customers’ IT services operational. By the late 1990s, vendors were spending millions of dollars to develop custom tools, data centers and command/control centers to provide clients with ad-hoc services. Contracting with these vendors was expensive and usually only Fortune 1000 companies could afford their services.
The increasing viability of cloud computing in the mid-2000s brought down prices so that medium-to-smaller companies could afford IT managed services. Managed Services Providers (MSPs) could offer maintenance and emergency repair work on servers, storage devices and PCs remotely—through the cloud—instead of costly on-site client visits. A single engineer could now manage 200 or more systems. MSPs could provide services on periodic subscription basis and make money while keeping services affordable.
During this time, MSPs also expanded beyond remote monitoring and management. Additional services included backup and disaster recovery (BDR), network operations and client-facing Help Desk services. In the late 2010s, companies began experiencing a dramatic increase in cyber threats and attacks. Because of this need for increased security, IT managed services have recently expanded into offering end-to-end security. Many MSPs can now monitor, manage, secure, remediate and back up client data.
One emerging security innovation is blockchain. Blockchain is a transparent and tamper-proof digital ledger that allows organizations to set up a trusted network. Companies such as IBM are now offering a blockchain platform that provides a managed and full stack blockchain-as-a-service (BaaS) offering
Another emerging trend is Artificial Intelligence (AI). In 2017 Frost & Sullivan found that 70 percent of IT leaders are looking to integrate more AI technology. Companies are looking to IT managed services for cloud managed services—partnering with MSPs that understand the demands of AI computing.
Why are IT managed services important?
The IT managed services market is expected to grow from $180.5 billion in 2018 to $282.0 billion by 2023⁽¹⁾. Companies are relying more on these services because of their increasing dependence on IT assets to boost business productivity. IT managed services are also increasingly beneficial to organizations because they:
Achieve greater efficiency and productivity. Managed Services Providers (MSPs) are being paid based on performance. Typically, MSPs must meet stated Key Performance Indicators (KPIs) as part of their contract.
Allow companies to focus on core business goals. MSPs take the worry and headaches from day-to-day IT operations so that a business can concentrate on their business strategy.
Enhance strategic planning. MSPs can provide forecasts on future IT needs. Companies benefit from having proactive support to ensure that their IT infrastructure and software is upgraded and updated to avoid downtime, viruses and crashes.
Reduce staffing while increasing resources. IT Managed services allow businesses to run a lean IT department—or no IT department at all. Not only does an organization receive day-to-day IT support, but also IT management—including a virtual CIO.
Provide expert advice. Organizations can rely on a team of experts to help with large IT initiatives, such as migrating to the cloud.
Increase agility. Relying on outside IT sources helps an organization quickly scale or adjust their IT needs to meet ever-changing market conditions.
Decrease costs. Companies have access to more IT infrastructure and critical IT resources without adding to capital expenditures. Usage-based pricing avoids over-provisioning.
Top providers for IT managed services
Enterprise Management 360° compiled a list⁽²⁾ of the IT managed services providers that offer the most extensive services and generate the most revenue. They include: IBM, Accenture and Cognizant (United States), Atos and Capgemini (Europe) and TCS, Infosys and Wipro (India).
IBM has one of the widest portfolios of managed services offerings in the world. It provides managed services to clients directly as well as supporting other MSPs. IBM offers a skills and training program where IT professionals can reinforce their existing skills and learn new ones.
Steps to effective decision making about IT managed services
Choosing the right provider of IT managed services is not a simple business decision. Gaps in security, services, technology, expertise and ability to deliver could have serious consequences. Organizations will benefit most from IT managed services if they take the time to make sure the managed services provider is a good “fit” with the company.
Hold MSPs accountable. Ensure that services and payments are governed by a service level agreement (SLA). The SLA should require that MSPs deliver regular reports on the type, scope and frequency of services provided and standardized metrics to measure efficiency and productivity. Ask for guarantees of specific service parameters and the ability to tailor services according to your company’s needs. Check to see if the MSP can meet compliance standards and whether its reporting capabilities can help meet regulatory requirements
Get strategic IT planning. Gordon Tan has blogged about how to choose the right MSP.⁽³⁾ He recommends including strategic planning as part of the managed service contract. The planning should include a roadmap of what they intend to do for the next 12-24 months, including improvements to IT infrastructure and software upgrades.
Check qualifications. Vet MSPs to make sure they have a solid track record delivering proactive service and measurable outcomes. Check references, ask about their client list and whether they have experience dealing with similar companies. Look for security expertise and capabilities that exceed what your company can do on its own, to ensure that workloads and data remain accessible at all times.
Assess current IT costs. IT managed services are supposed to save money and increase productivity. Calculate what your business is currently paying for IT support, combined with the cost of lost productivity and any downtime. Make sure IT managed services make financial sense.
Request an audit of your current systems. Have the shortlisted MSP candidates perform an audit of the business’ entire IT infrastructure, software and systems. Request support for multiple hardware types and hypervisors. Ensure that any MSP can match the workload to the infrastructure that can best support it.
Select the MSP. It’s best to choose the MSP on whether they meet all or most of the company’s requirements, instead of based solely on price. Check to see if the vendor has the bandwidth to go beyond basic needs and assist in larger tasks, such as workload selection and migration, environment configuration, governance and management of specialized workloads—such as SAP. Look for a provider able to understand your business needs, suggest the best solutions and then execute in a way that ensures success.
Case studies for IT Managed Services
LiquidPower and IBM: A cloud migration journey
See how LiquidPower is using IBM Cloud for SAP Applications to fuel their business growth.
G2 Tecnologia and IBM: Improving customer service
See how G2 Tecnologia is using IBM Cloud for SAP Applications to quickly roll out services and improve their customer relationships.
XP Investimentos: A Cloud Migration Story
See how one of the largest investment brokers in Brazil migrated their SAP environment to the IBM Cloud.
More resources for IT Managed Services
Find a Strategic Partner: How Managed Cloud Services Can Facilitate Your Digital Transformation
Learn why businesses rely on their managed cloud service provider based on a recent survey by analyst group Frost & Sullivan.
Everest Group Blockchain Services PEAK Matrix 2019 – Focus on IBM
Learn why IBM was named a Blockchain Services Leader by Everest Group.
Migrating mission-critical applications using Cloud Managed Services
Read this analyst white paper to discover how the right managed cloud provider can help you overcome cloud migration challenges.
Cloud Managed Services: A comparison guide
Find out what to look for when choosing your cloud provider.
Overcoming 4 common concerns about Managed Cloud Services
From this infographic, learn why managed cloud services can be a boon for business, but many IT leaders fear the switch.
IBM products related to IT Managed Services
IBM has probably the largest range of IT managed services offerings in the world. It provides IT managed services to clients directly and supports other MSPs. Here is a sample of its offerings:
1. Markets and Markets. “Managed Services Market by Service Type.” October 2018.
2. Enterprise Management 360°. "Top 10 managed service providers." February 2018.
3. Gordan Tan. “Managed IT Services: What it is and why it matters.” R&G Technologies.