Just What is Managed Services?
Managed services has a pretty simple definition: it is the practice of outsourcing day-to-day technology management responsibilities to a third party as a strategic method for improving operations and accelerating a return on technology investments.
This means that when a company realizes they can’t do everything themselves, they hire outside help, and that’s where managed services comes in. (Tweet this!) Like the old Greyhound slogan “Leave the Driving to Us”, this value proposition is driving many organizations to look into outsourcing some of their management to MS providers who can take on some of their work load so they can get back to focusing on the more specialized aspects of their business. The portfolio of the average MS provider is pretty broad, and can consist of anything from basic monitoring services, to hybrid managed services, and everything in between.
The Different Ways Managed Services Can Help Your Business
Managed services can provide a lot of help in many areas. Here’s an overview of the different capabilities of an MS provider.
Monitor, operate, optimize, transform, hybrid/XaaS.
Monitor: With rising software centricity and network propensity, customers are facing an increase of challenges when trying to operate their own solutions. Rather than struggle on their own, they will ask for outside help, and this is where managed services comes in. A managed service provider can perform technology monitoring services and assist customers as questions crop up.
Operate: After monitoring and notification services, a customer might wish to transfer the actual operation of a solution over to a third party. The customer still owns the technology, but would rather someone else run it for them.
Optimize: Once a solution is up and running, a managed service provider can then begin to really help improve overall performance of solutions through optimization.
Transform: This function is when a MS provider can help a customer transform from legacy platforms, or older solutions, and take them to next generation solutions, as well as operating them on their behalf.
Hybrid/XaaS: This function is where we see the most growth, as this is where the managed service provider does everything for the customer. (Tweet this!) It could be in any area, ranging from communications, to network infrastructure, where they offer networking infrastructure and collaboration-as-a-service. The customer doesn’t have to buy the switches and routers, they just tell their MS provider what services they need and pay on a per-user or per-month basis. There’s no professional services fees for the design consulting and integrations, its all bundled into a single turnkey managed service solution. This function is quickly becoming the most popular solution for many companies.
What is Fueling Services Growth?
Comparing to Q1 2011, services represented just a little bit more than 1/3 of the revenues in the tech industry. Fast-forward to Q3 2014, services is now higher than product revenue and represents 52% of the revenue in the tech industry, making services revenues more important in the tech industry than tech revenues. 2014 has really been the year that we’ve seen that, and as we go into 2015, I really suspect we’ll see more of this trend.
Services are becoming more important than products.
MS is growing on average of 44%, while standard attach services is growing at only about 2-4%. (Tweet this!) We really do expect this trend to continue, as the number one offer that’s fueling that growth is the final capability mentioned above, hybrid/XaaS, or what we refer to as managed XaaS.
Managed services is growing at an incredibly rapid rate.
More and more businesses are now showing a preference for an option where everything is bundled into an MS contract, including the professional services, field functions, the technology itself and the day-to-day operation of that technology.
Want to know more about emerging trends in managed services and how these capabilities can help your organization? Watch the free recording of my webinar, "The State of Managed Services: Emerging Trends in 2015" for a more detailed look at the concepts mentioned above, as well as a preview of what we can expect for the future of managed services as we continue through 2015. If you have any questions about what MS solution is best for your business, or even just about managed services in general, feel free to drop me a line, either in the comments or via email. I look forward to hearing from you!
About the Author
George Humphrey is senior director of managed services research for TSIA. He is a networking and communications industry veteran of over 20 years with extensive experience in managed infrastructure and application services. Keep the conversation with George going. He may be reached at firstname.lastname@example.org.