What is a Managed Service?
In this section, we'll provide a core definition for Managed Service, give a high-level overview of the concept of Managed Service and describe the reason why companies use Managed Services.
Definition of Managed Service
Managed services relate to outsourcing the responsibility for supporting, and anticipating the need for, a range of processes and functions to improve operations and reduce internal costs.
A typical Managed Service leverages economy of scale with a Managed Service Provider (MSP) who has the skill, expertise and cost base of providing an essential business service cheaper than a customer organisation can perform where it is not a core activity of their business.
A Brief History of Managed Services
Managed Services typically associate with technology outsourcing and out-tasking. Additional Managed Service offers have developed for key areas such as catering, waste recycling, materials handling, vending machines and point-of-sale (POS) equipment.
We will focus on the areas of IT and Network Managed Services as the crucial areas within this article.
Fully Managed Services
Fully Managed Services cover everything from alerts to problem remediation. They assess your existing IT environment and management requirements to help you decide what services and service levels you need. It will include an audit of infrastructure and an assessment through Consulting and Professional Services.
The overall design will be reviewed for business relevance and to mitigate costs for further expansion or repurposing assets congruent to business needs changes. It will then map into the service requirements for how to maintain and manage this posture.
The transition into a Fully Managed Service will be that the provider will perform these tasks for the contracting organisation and be subject to key performance indicators to measure the performance and demonstrate value for money.
What is an IT Managed Service?
In this section, we’ll provide a definition for IT Managed Service and describe some of the technical areas that Managed IT Services can cover.
It’s good to understand that the various services and providers are available. It's also important to remember, not all providers provide all services and cover you from end to end. One MSP may include all the services as described below, while another might only offer a sub-set of these services or potentially specialise in just one. Regardless, if your business wants to utilise an MSP, it’s good to know what infrastructure is available.
Managed Networks and Infrastructure
With this type of service, a Service Provider (SP) or Managed Service Provider (MSP) generally takes on the entirety of network tasks. It includes establishing a Local Area Network (LAN), Wireless, Wide Area Network (WAN), Collaboration and various interconnections for your business. They may also manage backup and storage options.
Managed Security Service
It is an overarching statement of service for remote security infrastructure. It encompasses backup and Disaster Recovery (BDR) solutions through user and application segmentation, Firewall policy management and anti-malware options, keeping them updated in real-time.
Managed Support Services
Managed support services are common in managed services providers. It usually covers myriad services concerning IT help, from troubleshooting to dealing with advanced issues. It may also involve dealing with additional 3rd party suppliers of hardware, software and cloud infrastructure.
Managed Print Services
With this managed service, a Managed IT Services Provider will remotely assist with data and file infrastructure. It’s often best for organisations with complex file management needs.
Managed Cloud Infrastructure
Managed cloud infrastructure is one of the more complex services regarding cloud infrastructure management, handling compute power, storage, network, and IT in general. Some providers may also offer virtualisation services for applications, software, operating systems, or virtual devices.
Managed Software as a Service (SaaS)
Providers typically offer a software platform that can be consumed as used and is subscription-based for businesses. A few examples include Office 365, Microsoft Teams, WebEx Teams, Salesforce.com, universal communication software, and anti-virus software.
Managed Mobile Service
An MSP that offers managed mobile connectivity will implement wireless connections. This service is helpful for businesses that don’t have the capital to invest in setting up their own. Additionally, organisations can utilise this service for internal networks. These solutions typically include Mobile Device Management (MDM).
Managed Communication and Managed Collaboration Services
They range from unified communications infrastructures such as video conferencing, instant messaging, presence, VoIP (voice over internet protocol), data, voice recording and contact centre. An MSP, in specific scenarios, can operate as a third-party call centre and/ or service desk.
Companies interested in monitoring services specific to data management and its consumption may require data analytics. The service encompasses business intelligence to target particular trends, creating roadmaps for increased business performance.
The managed service market is diverse. There is flexibility in how a customer chooses to approach the management of technologies internally or use a specialist organisation to provide domain-specific services. It is excellent for businesses because it means customers can find coverage for every aspect of their IT. Customers can use a Managed Service Provider to cover their needs without needing the staff or capital to build them independently.
Customers can find specific or tailored solutions appropriate for small, medium, or enterprise-level businesses (especially with flexible service-level agreement plans). There are alternative methods to consume and pay for the Managed Services too. These can be full-term upfront, annual billing, true forward, monthly and pay as used.
The Benefits of Managed IT Support
Beyond specialised, domain-specific services, it is also possible to implement support via staff-based services. IT support is an especially critical area, as problems of varying severity occur every day. However, it may not be possible to address all of them with your current staff model, or existing solutions lack long-term stability and/ or consistency.
This is where Managed IT Support Services are relevant. As the types of managed services, we previously mentioned, the implementation of IT support services are through a third-party provider. However, the difference is that this type of outsourcing is at the staff level. For example, Patching and cabling changes require a person to be on site physically.
The benefits of Managed IT Support, when you outsource to a managed IT services provider; it releases time and resources within your company. This outsourcing of non-core business activity allows the company to focus on growing its core business. The internal IT team has more time and is free to work on the projects that deliver results and contribute to the success of your business, instead of spending their time troubleshooting or answering staff queries. MSPs also provide robust security and firewalls, so you can relax and focus on your business' core competencies, knowing that your IT infrastructure is protected from malicious threats.
One main benefit of managed IT support services is filling employment gaps. However, there are many more advantages beyond the scope of employment.
For one, an MSP has a wide range of experience and knowledge from career specialists and IT experts. This broad range of expertise means they can deploy solutions and strategies which can elevate performance across the board.
Managed IT support also has the benefit of cost savings when structured correctly. Because a company does not need to hire and maintain their staff, businesses can avoid additional costs when new technology deploys. Additionally, by proactively addressing IT problems, which can cause downtime or performance issues, a company can ensure that it works as efficiently as possible.
Expertise from the MSP is readily available. Using managed IT services gives customers access to a whole pool of talent that would otherwise be unavailable. Most MSPs have numerous employees who specialise in different areas of IT; except for the largest of global businesses, it would be virtually impossible, and not cost-effective, to hire such a varied range of skills in-house. Using an MSP, customers benefit from the experts they have working for them, leading to another critical impact on the customer's business, reducing recruitment costs. Utilising the expertise from the MSP team means customers can defer having to hire as many people in-house, which saves time and money on recruitment, training and HR-related administration. It does not replace an in-house IT team. Many businesses adopt a hybrid approach to IT, combining an in-house team with a managed services provider. By taking this approach, your in-house team are free to work on high-impact projects, while the MSP can keep critical infrastructure optimised in the background.
Financial planning and budgeting is another reason why IT outsourcing is cost-effective. It is because it allows customers to budget for the year ahead accurately. By paying a monthly fee, there are little or no unplanned costs that could disrupt the IT budget's accuracy. The known impact with this cost accurately calculated is that customers have the flexibility to invest in other areas of their business.
Defined within the scope of the Managed service, the MSP will update software as soon as the updates become available, which saves customers time from researching and implementing themselves. The software will always be the most pertinent version, and customers will not have to pay for repeated updates. The further hidden aspect to this, for many companies, is where there is a mix of different manufacturer's devices interoperating as part of the solution. The cost of the time for general staff to research the interdependencies, decide upon which versions are compatible, potentially verifying with numerous vendors can be very time-consuming. It has a magnified impact when a software patch is a result of a highlighted security vulnerability. Managed Services covering Security, Networking and Cloud architectures will have the experience and knowledge from undertaking these tasks as part of their day-to-day business. It is a strong reason for utilising experts who undertake this type of work as their core business.
Using a managed IT service means customers can reduce the amount of IT infrastructure you have on-site by using provider data centres and servers through the Cloud instead. It can save customers office space as well as money on energy bills, hardware and equipment. It is a very current concern with the rise in flexible working due to what we have experienced with Covid-19.
What is Outsourcing?
In this section, we'll provide a core definition for outsourcing, give a high-level overview of the concept of outsourcing, and describe why companies use outsourcing.
Definition of Outsourcing
Outsourcing is where a company hires a third party to perform tasks, handle operations or provide services.
The hired company, also known as the service provider or a third party, arranges its employees and/ or systems to perform the tasks or services either on-site at the hiring company's facilities or external locations.
Companies today can outsource numerous tasks or services; they often outsource information technology services, including programming and application development and technical support. It is common to outsource customer service and call service functions. Companies can outsource other types of work, including manufacturing processes, human resources tasks and financial functions such as bookkeeping and payroll processing. Companies can outsource entire divisions, such as their whole IT department or just parts of a particular department.
Outsourcing business functions is sometimes known as contracting out or business process outsourcing.
Outsourcing can involve using a sizeable third-party provider, such as Verizon managed IT services or logistics supply chain services. Still, it can also include hiring independent contractors, temporary office workers and freelancers.
Reasons for Outsourcing
Companies often outsource to minimise or consolidate costs, drive further efficiencies, and improve pace. Businesses that outsource depend on third-party providers to performing expert tasks for their benefit. Fundamentally, the external party focuses on that particular task; hence it can likely do it better, more economically and faster than the hiring company.
With such compelling benefits, companies often decide to outsource supporting functions within their businesses to free up resources for company-specific core competencies, so they can yield significant competitive advantages in their chosen markets.
Some companies, however, outsource for different reasons. Some have recruitment challenges, with little access to full-time employees with the specialised skills and experience needed to perform specific jobs. Companies sometimes opt to outsource to avoid meeting regulatory requirements or commitments to other third parties. Increasingly, firms are looking to outsourcing providers to provide innovation and creativity.
Cloud-Based Managed Services
Beyond traditional MSP models, cloud-based services are growing in use as well. That is because the adoption of cloud models for tech businesses is increasing and need accompanying support.
Cloud managed services fit the model of crucial IT support but do so following a cloud model. Cloud-based managed services offer remote assistance with IT troubleshooting, application performance, network building, cybersecurity, responsive support, and data monitoring. Companies can augment their staff and infrastructure in areas lacking while also providing a proactive approach to their framework.
For example, data monitoring handled by a cloud-managed service can help monitor the use of company bandwidth. Or security monitoring keeps a business network safe by searching for unusual activity and malware intrusions.
The cloud is only getting more significant and more ubiquitous, and therefore so are cloud-based managed services.
Top Qualities of Managed Service Providers
If your organisation is interested in investing in a managed provider, it is essential to establish what you need. Understanding what makes a third-party provider a trusted source is critical. No one wants to adopt a long-term plan for essential elements of their business operations and not achieve the desired business objectives.
Here are some characteristics of top-performing managed providers:
- Responsive - A quality MSP will provide critical support well within a 24-hour framework. The faster, the better.
- Service Level Agreement Pricing - Every business has different resources and needs. That’s why a trustworthy provider will often offer flexible pricing models.
- Security - An MSP handling any kind of information must have robust security measures and responses to combat data loss.
- Backup Recovery Options - Downtime is always a possibility. If you experience downtime, you need to know your information is safe in times of crisis.
- Various Service Options - Many reliable MSPs will cover a range of services, meaning you can meet multiple needs all in one place.
- Accessibility - You should have access to your information from any secure point, whether the office or a mobile device.
Selecting a Managed Service Provider
The guidance for selecting a Managed IT Service Provider is to understand where the demarcation is for what the customer still wants to retain direct control over and where the assistance is required. This needs to be clearly articulated to avoid any misunderstanding, scope creep or expectation gap between the contracting parties.
Have a clear understanding of what the objective is for the Managed Service. Is this to provide consequential savings? Is it a deferral of cost to recognise the additional savings to be made through having a fixed-term contract without any surprises? The customer will not need to invest in new service management software, platforms or reporting tools. No training, development or recruitment. Also, Managed Services provide measurable value in terms of:
- Control - Contractual defined SLAs, monthly reporting, KPIs that can be defined by agreement.
- Business focus - The customer in house team can be focussed on delivering tangible business goals.
- Security - Utilising an expert company to provide a holistic approach across the various Security domains; it can provide highly secure identity-based services, prevent intrusion across multiple Security attack vectors.
- Flexibility - To provide scale and agility.
- Cost predictability - Costs that will increase or decrease in line with the customer growth.
- Risk management - Security, systems, changes to requirement – all these options can be included to augment the value through delivering against the business requirements.
The value of an effective MSP is also through knowledge savings. Once in a relationship and thorough knowledge of the customer infrastructure, they can assist customers with other IT challenges. An effective MSP can help a company transform and scale its IT platform and has IT experts to assist in projects or new technology. Think of it as an extension of the in-house IT team.
Return on Investment (ROI) is a key critical success factor. The simple view is that to have a successful relationship with an MSP, the cost of using the service must be less than the cost of delivering this service, to the same standard, utilising internal resources. However, ROI is not straightforward to calculate as the business environment is constantly evolving. The current state savings should facilitate the change to a managed services provider, but it is the desired state that delivers the significant financial benefit. The strength of managed services is really in the management of variation or change, or risk. They bring predictable costs that can flexibly change to meet a customer’s changing requirements, aligned to focusing the customer team on the core business goals.
Selecting the right provider. Customers are entirely reliant on their IT infrastructure for operations; the choice of managed services partner is critical. Pick the wrong provider, and this may have an impact on short-, and long-term plans for business growth.
What characteristics should a customer be looking for in an ideal MSP? A due diligence checklist could contain, from a technical view:
- Services offered - Does the MSP actually support the technology, function and features you need?
- Experience - A glossy brochure is one thing, but proof through case studies demonstrates that the MSP can fulfil their promises. Ask to speak directly to one of their existing customers as a reference.
- Pedigree - How long has the prospective MSP been in business? What is their heritage? How long have they been in the cloud/managed services game?
- Cultural fit - Ensure that your service provider shares your vision
- SLAs - Does the MSP share your priorities? Can they respond to issues and provide resolutions in the timeframes you specify?
- Technologies - If your business hopes to take advantage of the latest technologies, you need a partner who has experience – and uses them in-house.
- Cost - Does the contract quote fit your budget?
- Future proofing - Make sure your MSP can cater for your future transformational requirements and their view of innovation through automation matches your own aspirations.
Finally, consider how much it will cost to transfer operations to the Managed Service and then consider the possible ongoing savings. It will provide the opportunity to analyse the net savings. An anticipated outcome of this will be that it is more productive to utilise existing staff familiar with the business to work on projects that impact business profitability. A common issue when attempting to retain the support and management internally is that the company hire Contractors for projects to assist on projects to deliver to new business goals.
What is in a Managed Service?
In this section we will discuss the characteristics of the Managed Service.
All MSPs and Managed IT Service Providers will look to satisfy a customer’s basic needs of being able to resolve Incidents and complete basic Moves, Adds, Changes and Deletions (MACDs). Hardware that is found to be faulty or broken will be replaced within the scope of the service. This may be undertaken through Advanced Replacement, where a new part is sent before the faulty is returned. The other option is that the parts may be covered by a Vendor Warranty and to be cost optimised, the faulty part is returned prior to being fixed or a replacement shipped to the customer.
Understanding whose responsibility the physical work of undertaking the replacement is key to agreement whilst negotiating the Service Contract and will be defined in the scope and demarcations. A key point here is that using the MSP’s staff or subcontractor to perform onsite work will likely incur more cost than simply receiving the parts and being guided by the MSP’s experts.
The most common structure of a modern Network Managed Service will contain:
MSPs will deploy active and passive monitoring tools. Passive tools will receive information and provide an indication of whether a particular service element, normally a piece of hardware, is working and receiving data, or not. This is commonly referred to as up/down monitoring. Active tools are becoming more prevalent as both the hardware and now the applications that traverse the network are able to be monitored. Having this constant view of the network and the interconnected status’ of elements allows the MSP to be proactive and notice a service degradation before the failure occurs.
Service Management Practices
The MSP will frequently use the IT Infrastructure Library (ITIL) framework as a basis for operating processes. The latest version of ITIL is v4 and the emphasis for this over the previous versions is to assist Managed IT Service Providers to build their own processes based on the documented practices. Previously the emphasis was detailed on how the specific processes should work. The deployment of earlier ITIL was not flexible enough to interact with DevOps, Lean and Agile.
The main aim of the core principles is to focus the MSP on achieving the outcomes required by customer whilst delivering value.
The commonly understood practices described cover:
- Service Request Management - This process is used for treating repeatable and simple tasks, for example onboarding a new user.
- Monitoring and Event Management - This is the process to ensure that the customer environment can be monitored from the MSPs tools and when there is a status change to an asset, this is notified to the Management tools and can also trigger a ticket in the MSPs ticketing system.
- Incident Management - This is the process for restoring service once a failure has occurred.
- Problem Management - This process describes the method for undertaking an investigation to establish the root cause for a major incident or where there is a recurring failure leading to the same incident occurring multiple times.
- Change Enablement - This structure provides guidance on setting up the Change Management Process, whether this is just for the MACDs or more complex system and solution upgrades.
- Service Level Management - This is the process for setting up a structure of being able to categorise Incidents, Problems and Changes with a corresponding Priority and Impact. These will have differing priorities for resolution depending on the severity of the impact to the customer’s solution.
- Availability Management - This practice underpins the ability to offer SLAs. the aim to define, analyse, plan, measure and improve all aspects of the availability of IT services. The outcome is to ensure that all IT infrastructure, processes, tools, roles are appropriate for the agreed availability targets.
- Capacity and performance management - The purpose of the capacity and performance management practice is to ensure that services achieve agreed and expected performance, satisfying current and future demand in a cost-effective way.
- IT Asset Management - This practice joins the financial, inventory, contractual and risk management responsibilities to manage the overall lifecycle of these assets including tactical and strategic decision making. IT Asset Management is an investment that provides substantial and measurable benefits for short, medium, and long-term needs and goals. These may be Hardware or Software Assets.
There is a total of 34 ITIL v4 practices split between General, Service and Technical management practices. The most pertinent for Managed Services have been mentioned here.
Service Reporting is a key part of IT Managed Services as the MSP needs to be able to demonstrate their operational control of the solution that has been outsourced to them for service. This then leads to trends being identified and where there are repeated or systemic issues, continual service improvements can be highlighted between the MSP and the customer.
Furthermore, the MSP must provide activity reports to show how they have been performing against agreed SLAs (see below). Customers should also request regular reports that help you calculate the value of the service received.
- Ticket Reporting - Calls logged, tickets closed and on-hold.
- SLA Reporting - Performance against SLAs - response and fix times.
- Performance Monitoring Report - Performance of the managed infrastructure.
- Application Performance - Specific details on how application performance has trended through the reporting period.
- Proactive or Vendor driven activities - Other activities completed (software updated, security fixes applied etc).
- Capacity Reporting - Capacity utilisation to provide early warning of resource issues that will require additional funding or upgrades.
MSP will submit strategic recommendations on a regular basis. These recommendations may highlight where the solution requires updating beyond the current deployed capability. This can be classed as Lifecycle Solutions and can be simplistic tracking or they can utilise a methodology.
Lifecycle Services are the methodologies and practices that support the evolution of networks to business systems and ensure your customer the most return from their IT investments.
An example of a vendor Lifecycle Services phased approach is the one shown below from Cisco (the Cisco Network Lifecycle Phases):
- Prepare - Develop a business case for a technology investment.
- Plan - Assess readiness to support proposed solution.
- Design - Create a detailed design to address business and technical requirements.
- Implement - Deploy new technology.
- Operate - Maintain network health through day-to-day operations.
- Optimise - Achieve operational excellence through ongoing improvements.
These services are very pertinent when you want to build a trusted relationship which can be a great benefit when non-standard requests need to be serviced. When the relationship is very transactional and constrained by a very tightly constrained Contract, this is more time consuming and may require specific scoping, quoting, pricing and delivery terms. Having a long-term relationship with an MSP as a Partner to your business helps to build the operational flexibility and agility.
Customer Experience Management
Customer experience management (CEM or CXM) refers to the customer's overall experience and dealings with the supplier. CXM includes numerous facets where customers and suppliers interact. It could for example focus on proof of concepts (POCs), and following deployment consider service features like ease of use, dependability and reliability. There must be a shared view on how parties responsible for delivery focus their efforts to mould the customer experience. More detail on the topic of CEM or CXM can be found in our related article: What is Customer Experience Management?
An MSP will generally offer a standard service level; a four-hour window to fix general support issues for instance. But these SLAs are open to negotiation according to your operating requirements and strategic importance of the system in question.
The specifics of the SLA will vary between organisations. It is not uncommon to have a 15-minute response to incoming calls for support, and a 4-hour fix time for instance. Obviously, the quicker you require response/resolution, the more expensive the contract becomes – especially if you want on-site support included.
Before approaching an MSP you should seriously consider the service you are handing over to your MSP, its importance to your operations, and the maximum time you can tolerate an outage for. You are then prepared to negotiate the specific terms of your SLAs.
Other things to discuss when negotiating your contract include your contract period (1, 2, or 3 years), a termination clause, penalties for poor performance and service credits for failing to comply with SLAs.
Service Delivery Management
To provide a person to manage the Service relationship between the MSP and the customer, a Service Delivery Manager (SDM) is engaged. This is a service management professional who is ITIL qualified, has an understanding of the ITIL based practices and processes used by the MSP and can lead the governance meetings. Historical information is used to build the Service Reports. The SDM provides the explanations for the actions that have happened and also the SLA and KPI performance.
The SDM will also be a point of escalation during service outages and other activities relating to the service.
The SDM will be the route for consolidating all of the operational feedback. Where there are trends within the types of incidents, they may initiate the problem management process. From the resulting investigation of the root cause, continual service improvement (CSI) actions and recommendations will be made. It is important to understand that some of these may be configuration changes or software updates. Some issues may be lifecycle and supportability related which could require Consulting work, redesign of the solution and a purchase decision by the customer.