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Managed Services model requires commitment from all levels if it is to work for the Organisation

Managed Services is not a ‘hire-and-forget’ option and the use of third parties has a multitude of considerations that must be borne in mind  

London, 4 April 2007: Managed services – the use of specialist third parties to deliver IT services, generally on a one-to-many basis – are set to increase significantly over the next five years according to a new report by Butler Group, Europe’s leading IT research and advisory organisation. However the report, entitled ‘Managed Services’, confirms that although many organisations have developed sourcing strategies, they have lacked the discipline of managing third-party relationships as closely as they should be. According to Butler Group commitment is required from all levels to make the Managed Services model work, and if there is no in-house management team, customers are putting their organisations at risk.

“The management of a Managed Services agreement should not be left to chance”, says Maxine Holt, Senior Research Analyst at Butler Group and co-author of the Report. “Organisations must understand that they need to commit time, effort, and money to looking after these contracts and this is usually undertaken by having an in-house management team.”

 

Organisations must undertake Managed Services as part of a considered sourcing strategy

Organisations of all sizes are today making more intelligent sourcing decisions, enabling the procurement of discrete services to be a part of an overall organisational sourcing strategy. The benefit of increased business and financial flexibility, through the reduced need to commit to a long period of involvement with a single supplier, can make the proposition attractive to SMEs and larger organisations alike, although the importance of commitment from all levels within the customer organisation should not be forgotten.

Some organisations look towards outsourcing to assist them in achieving their business objectives, and some prefer to retain the delivery of IT services in-house. However, Butler Group is seeing an increasing number of organisations not only using outsourcing to complement the services they are delivering in-house, but also implementing a multi-sourced model – that is, having a number of different providers deliver various aspects of IT requirements.

Large enterprises, in particular, are bringing back the ‘mega-deal’ – these are long lists of outsourcing requirements, but within these lists are smaller sets of requirements, many of which can be individually delivered through Managed Services. Essentially, where once characterised by the ‘one-stop-shop’ approach to outsourcing, large and enterprise-class organisations are requesting the delivery of more discrete Managed Services, which overall is a more effective sourcing strategy.

“The benefit of increased business and financial flexibility, through the reduced need to commit to a long period of involvement with a single supplier, can make the proposition attractive to SMEs and larger organisations alike”, says Holt. “However customers need to retain control of their Managed Services contracts, through the provision of an in-house management team.”

The marketplace for Managed Services is still quite fragmented

Network, voice/data convergence, and security services are the highest growth markets for Managed Services, being driven by the need to roll out next-generation networks and secure them (a key activity for many organisations), in order that they are subsequently able to attain the many business benefits.

Managed Services for security and privacy is a key piece of next generation network roll out. These include business continuity services, and are also attracting high rates of growth, at roughly 15% per annum through 2010.

Almost 40% of organisations are likely to outsource aspects of their infrastructure in the next two years. Research by Datamonitor shows strong interest in outsourcing infrastructure in the next two years, across the range of technology, and that network and voice/data convergence, and storage, are the key priorities.

Holt concludes:

“Ultimately, Managed Services can provide benefits and deliver added value to public and private sector organisations alike, but only by being properly prepared can organisations hope to realise these benefits.”

 

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