Feb 28 2020

A Guide to Finding the Right Managed IT Services Partner

As outsourcing IT becomes commonplace, businesses must know how to use it effectively.

IT outsourcing is on the rise as businesses look to streamline operations, reduce complexity and lower costs. As noted by CFO Magazine, spending for IT outsourcing hit a five-year high in 2019, with just under 13 percent of total technology budgets earmarked for third-party services. Today, 34 percent of companies are outsourcing at least some of their network operations, and almost half have plans to spend more on outsourced security.

But with increasing market maturity and service availability comes a new challenge: finding the ideal outsourced option. While there are clear-cut advantages to the shift away from break-fix IT, are businesses better served by tackling the scope of IT issues with staffing augmentation, targeting the scale of solution complexity with managed IT services, or adopting a mix of both?

What Are Managed IT Services?

Simona Rollinson, CTO for international IT governance association ISACA, offers a simple definition for managed IT: “packaging and delivering a third-party relationship where a company outsources services to another provider.”

These services aren’t fixed in stone; some companies prefer to outsource IT service requests, while others want help managing their transition to the cloud. Some are looking for adaptable security architecture beyond their current skill and scope, and many want help managing the sheer volume and variety of applications now required to retain their competitive advantage in a technology-first world.

Rollinson notes that while “this is a very mature market, there are a lot of entrants, a lot of companies providing both broad and boutique services.” She predicts a significant uptick in managed service spending — recent research offers a similar perspective, suggesting “tremendous growth” over the next five years.

Why Are Managed IT Services Needed?

Rollinson cites two top reasons for managed IT service adoption: cost savings and peace of mind. “CIOs want to make sure they can sleep at night,” she says, and that’s increasingly difficult thanks to cyberattacks, tech outages and data breaches. In fact, 56 percent of CIOs and CTOs now report stress-related illnesses tied to ongoing IT issues, according to CIO Dive.

Rollinson also points to the growing “war for talent” as the IT skills gap continues to widen and many organizations find themselves understaffed and underskilled, even as technology offerings diversify. When it comes to rapidly evolving technologies such as cloud computing or Big Data analytics, many businesses, especially small and midsized organizations, don’t have the time or budget for in-depth training. The result? They’re often aware they need to adopt new IT services to stay competitive but aren’t sure of the best approach. Managed IT services can help bridge the gap.

MORE FROM BIZTECH: What small businesses need to consider before moving to the cloud.

What Are the Benefits of Managed IT Services?

Deploying managed IT services offers multiple business benefits, including:

  • Improved cost management: Fixed monthly costs help CIOs manage budgetary allocations and clearly articulate spending needs to C-suite executives.
  • Increased staff availability: Local staff can tackle critical in-house issues while managed IT providers handle regular maintenance, upgrading and performance monitoring.
  • Reduced complexity: Issues such as new service implementation and software integration are handled by providers, removing a critical layer of IT complexity.
  • Enhanced scalability: The as-a-service nature of managed IT services makes it possible to scale up or down as business requirements evolve.
  • Streamlined response: Managed service service-level agreements include specific response time guidelines and ticket escalation expectations, providing a clear path from issue identification to resolution.

Managed IT Services vs. Break-Fix IT

Break-fix IT response is familiar — but not always effective. Waiting for services and technology to fail before creating tickets and deploying IT resources ensures specific problem resolution but also costs time and money. Software and infrastructure left unmonitored until its next breakdown doesn’t just carry the potential costs of failure; companies must also deal with concerns about data breaches, compliance obligations and regular system updating.

As noted by Rollinson, the problem management framework offered by break-fix IT “is table stakes for managed IT services.” While managed services include problem response and remediation, they also include proactive systems monitoring to solve for potential problems before critical services suffer. 

Put simply, managed IT services provides support for technology breakdowns but puts the emphasis where it belongs: on the solution.

56%

Of CIOs and CTOs now report stress-related illnesses tied to ongoing IT issues.

Source: Sungard AS

Managed IT Services vs. Staff Augmentation

Another option for businesses looking to enhance service delivery with limited time, budget and talent is staff augmentation. Outsourcing staff rather than specific services provides a more generalized approach: businesses can leverage skilled professionals to tackle top-priority tasks without overtaxing internal staff.

For Rollinson, there are clear benefits to both managed IT service and staff augmentation, and they don’t exist in isolation. She points to ISACA’s own use of a managed services contract on top of an Azure cloud deployment, combined with a professional services agreement. While she notes that it’s critical to define “a line of demarcation” between outsourced services and staff, leveraging both in concert can help address mission-critical efforts more effectively.

The Cost-Benefit Analysis of Managed IT

Cost is a critical factor in managed IT service adoption. Rollinson makes it clear: “If there’s a level of IT maturity internally, managed services are more cost-effective.” For Rollinson, realizing these budget benefits demands detailed and thorough contracts. “The more work, the better,” she says. “Don’t hurry. You need some type of checklist. What is the scope? What are the services exactly? What are the support hours? The locations? What are the penalties if SLA expectations aren’t met?”

She likens service contracts to prenuptial agreements. They must define the rights and responsibilities of both parties and articulate what happens if there are problems. Rollinson recommends reassessing the contract annually and ensuring that it always contains a way out that won’t break the bank. While failure to meet SLA requirements often forms the basis of no-penalty termination, Rollinson advocates for “clauses of convenience” that permit an easy exit if things simply aren’t working out.

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Ensuring ROI on Managed IT Services

Ensuring return on investment lives up to expectations means making sure that providers are delivering on SLA requirements for operational uptime, ongoing upgrades, application support and timely ticket response.

But Rollinson also notes that it’s critical to build in room for growth. While the first few months of service delivery offer peace of mind for CIOs, innovation is now the IT service mandate. Just keeping pace isn’t enough to stay competitive. She recommends creating a contract that builds in room for growth rather than locking businesses into the same service pattern for months or years without the ability to evolve. In the same way that in-house IT solutions must adapt to changing end-user expectations, managed IT services must offer continuous improvement to deliver on ROI.

How Businesses Can Manage IT Service Providers

The availability of both niche and generalist IT service providers has created a contract-dense IT landscape; Rollinson notes that many companies now have between 70 and 100 contracts at any given time with multiple cloud, application, security and storage vendors — each with its own clauses and complexities. 

Her recommendation? Hire an IT vendor management professional. While IT education is evolving to meet new industry mandates, “no one teaches you about SLAs,” she says. “No one teaches you about vendor management, sourcing and procurement.” As a result, she notes that only 30 to 40 percent of SLA expectations are enforced because businesses lack the time and skill to manage multiple contracts in real time. Vendor management professionals help identify potential issues, ensure contractual obligations are met and articulate the need for new agreements — or new providers.

IT managed services deliver technology expertise on demand. But ensuring outsourced adoption meets cost and ROI expectations requires detailed documentation and regular evaluation to deliver ongoing IT innovation.

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