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How IT Managed Services Provide Solutions for Midsize Enterprises

November 27 2019
Author: Blogauthor

As per Statista, the managed service market is expected to reach 190 Billion USD by the end of 2019 with a forecast number reaching a whopping 300 billion by 2023!

What are Managed Services?

Managed IT service is a proactive approach where a company manages its customer's IT infrastructure and/or end-user systems.

Before we dive deeper into managed services, let us first look at the traditional support services and where they are used.

The traditional support services had a “break-fix” approach. This implies that the IT support services would be contacted by an organization only in case of a breakdown or failure of their IT systems. The support services would then resolve the issue for the organization, and it would be back on track.

This was a reactive approach. It had several drawbacks. One of them being the downtime until the systems were repaired. Another being that the IT support services could be contacted only during their business hours. Traditional IT support could be in-house or could be outsourced to an external agency.

The in-house model is quite predominant in small businesses. It can also be seen in medium and large-sized businesses that are not technical in nature and do not rely heavily on the availability of IT infrastructure 24/7.

Traditional IT support services are well-suited for businesses that are not growing in complexity. It is also an optimal choice in businesses with a customized application base that does not require frequent upgrades. Traditional IT support services are a good option for businesses where applications do not require specialized skill sets or regular training to maintain.

Managed Services (MS)

Using Managed services a third party performs support and maintenance of some or all your applications.

The major difference between managed services and traditional services is that managed services are proactive instead of reactive. They are “always on.” The managed services team does not wait for a breakdown to occur. Instead, it works in the background to predict a breakdown and take steps to remedy it. MS provides coverage during regular business hours or 24/7 as required by the business. In addition, it offers scalability to the business wherein it can include additional solutions based on business needs.

In Managed Services, you leverage a highly technical pool of experts for specific applications. This implies that you have the relevant skill-sets available to you without paying for resources that are not required. This helps save your expenses related to training and up-skilling required in case of an in-house support team.

One advantage of MS is that the service is governed by contractual service level agreement (SLA) which covers both the responsiveness and issue resolution.

Although Managed Services currently have a large market, there are still some businesses that use traditional support systems. The decision to continue with the traditional systems or to shift to Managed Services lies with the business owners. However, there are a few signs that indicate that it is time for the business to shift to Managed Services.

Signs for a Business to shift to Managed Services:

  • In case your business is finding it a challenge to keep up with the security patches required for their applications, shifting to MS will ensure that your applications are secured from vulnerabilities.
  • If your business is experiencing poor adoption of new applications either because of inadequate training or organizational change control, shifting to MS can help resolve this issue. This is because a managed service provider is competent to implement a comprehensive service and support models from application launch through the run.
  • If you notice performance gaps in your business, MS can resolve the issue. Performance gaps in a business are a result of inadequate monitoring to detect issues and patches. They also result from upgrades not being performed in a timely manner. MS ensures that all these activities are performed regularly. It also minimizes the possibility of downtime.
  • With the IT landscape undergoing continuous changes, it is necessary for the business to invest in up-skilling and training its in-house IT support team. This can be a large cost factor which can be eliminated by engaging MS.

Managed Services are provided by Managed Service Providers (MSPs). If you decide to choose a managed service provider, ensure that you choose one whose values are aligned with your organizational goals.

An MSP monitors and manages the network and systems of its clients. They track the clients' networks and systems 24/7 and update and maintain them from any location.

What are MSPs used for?

  • Managed Network and Infrastructure
  • Managed Security
  • Managed Communication Services
  • Managed Wireless and Mobile Computing
  • Managed Print Services
  • Managed Support Services
  • Data Analytics
  • Managed Cloud Infrastructure
  • Managed Software-as-a-service

Pricing Model of Managed Services

Managed Services are generally offered with a fixed fee model. This implies that the price is static over a predefined period. For instance, Managed Services for ITSM for a 3-year period for a mid-sized business can cost 40% less than traditional in-house IT support.

As more and more businesses are migrating to the cloud, there is a need for cloud MSPs. The cloud MSPs provide guidance to their customers throughout their journey. They support their clients through migration, to management, support to cloud, cloud cost optimization, expand cloud services, etc.

With most businesses looking to outsource their IT services to MSPs, MSPs are facing certain challenges in catering to these demands.

Some Challenges that MSPs face are:

1. Rapid cloud adoption

Businesses are migrating to the cloud on a large scale. Hence, there is a need for MSPs to manage different cloud-based solutions while providing value-add to customers. Besides, cloud migration also requires additional training which is time-consuming and expensive.

2. Changing Customer Behavior

With easy access to data, the customers of today are better informed, and they demand more compared to their predecessors. It has become a challenge for the MSPs to satisfy the new breed of customers who “over-analyze” before placing an order.

3. Competition

All MSPs are offering similar services at comparable prices. It has become a challenge for an MSP to differentiate its services and make a market for itself.

4. Pricing Policies

To remain competitive in the market, many MSPs are lowering their prices.

This results in two problems:

  1. The MSPs are unable to raise the rate to match the market rate at the time of contract renewal once they have bagged the contract at a low fee.
  2. In a competitive market, the competing MSPs drive each other’s rates down.

5. Employee Churn

One of the challenges faced by MSPs is high employee churn rates. It is quite common for employees to leave the MSP to work for the end-user.

Looking Ahead

The fact remains as technology grows at a breakneck pace; IT spending grows along with it. Managed Services help to keep the IT expenses of a business in check. Another extension in Managed Services is virtualization. Virtualization can be understood as software that directly impacts the hardware. It allows multiple applications and operating systems to run on the same server at the same time. Virtualization simplifies the process of managing multiple servers. It offers a business the flexibility required for the 21st century!