Managed Services the manifestation of share economy in IT
This past decade has witnessed a booming of the share economy (a.k.a. the collaborative economy or collaborative consumption). This economic system—highlighted by decentralization of marketplaces—makes it possible to unlock the value of underused assets and resources, matching those who have them with those who need them.
Uber, Airbnb, ZipCar, and Cohealo… they all revolve around the same concept: why should you invest in assets and resources (a car, a house, or even medical equipment), when you can easily “rent” it from someone who owns it and is willing to give it to you for a price?
While this model is nothing novel—people have been doing that since antiquity—it has witnessed a surge in popularity over the past ten years, and is spreading into more and more industries as time goes by, proving to be a robust model for maximum utility, cost-cutting, and increasing productivity.
The Share Economy in IT
IT outsourcing has been a standard operating procedure ever since telecommunications boomed in the late 1990s. As IT systems became more complicated, businesses would often find themselves needing to contract outsourced specialists to install, configure, maintain, troubleshoot, and secure their increasing infrastructures and convoluted networks. This work would usually require the specialist’s presence on-site.
Increased capabilities of communication networks enabled the remote execution of many of these functions, which allowed for the emergence of offshoring. By moving IT functions to competent professionals in developing markets, businesses could cut costs significantly, acquiring IT services without having to hire personnel, but rather contracting the time and expertise of IT service providers when they need them. These resources would actually be “shared” among several organizations.
Managed Services: The New “IT Outsourcing”
Traditionally, businesses employed what was known as the “Break/Fix” model of outsourcing: they would report their IT malfunctions to their provider who would come over and fix them. However, with today’s constantly connected businesses, this lag of a few hours results in a loss of business continuity, which may have devastating effects. Furthermore, this model was also frustrating to IT service providers, because they had to expend numerous technical support hours to fix these problems.
It was clear that this model was fast becoming obsolete and it was time to use a new model.
This is where Managed Services entered the picture. With a Managed Services approach to IT outsourcing, businesses and service providers both started viewing IT as an investment, working to prevent it from breaking. This meant increased productivity and ensured business continuity for the organization, and saving of technical support resources for the provider.
Different Models of Managed Services
Owing to the varying needs of different businesses, different service models were created to allow each organization to contract IT services in the way that best fits its business operations. These models can also be administered in different formats according to the nature of the service and needs of the business, from fully on-site, to fully remote, to a hybrid model of remote with onsite support.
Operations Management
Businesses could delegate any number of functions of their IT departments (such as security or server management) to providers. This meant that they didn’t have to hire or train personnel, but they would “rent” the service from certified professionals who were well-versed in providing it.
Full IT Outsourcing
In the true spirit of the share economy, a business could choose not to “own” an IT department at all, but to “rent” it from a provider that shares it with many organizations, similar to an Airbnb. Businesses get the functionality of an IT department without the hassle of managing its resources.
Staff Augmentation
Rather than “renting” the function, businesses can “rent” the time and expertise of a single resource (or several). The surge in digital transformation of business operations means that IT resources are in very high demand, and very short supply. This model allows a single expert to serve many different organizations, each of whom doesn’t need to bear the full brunt of having this expert on the payroll, while at the same time, the expert is capable of allocating their time to prevent idleness and achieve maximum productivity.
The Benefits of Managed Services: How Can a Managed Services Model Help You?
The share economy emerged as a means to permit people to benefit from assets that they didn’t want to invest in. Likewise, in the IT sector, businesses are now able to benefit from IT services without having to invest in hiring an IT department. This offered several benefits including:
Decentralization: IT functions are operating almost autonomously under a managed services model. They are no longer hampered by decision bottlenecks or clunky workflows.
Specialization: Your core competency is probably not IT… but your service provider’s is. You may hire competent individuals that form a capable department, but no IT department will ever match an entire organization that has been dedicated to delivering these services for years or even decades.
Affordability: Having a full time IT professional (or several) on your payroll could cost you a hefty sum. Not to mention the cost of benefits, training, lost work due to vacations and sick days, and other hidden costs and opportunity costs. If you could get the net benefits of these professionals at the engagement level you need and can afford, wouldn’t it be prudent to do so? That’s precisely what you get with managed services: you pay only for the services you need, so the price tag matches your utilization.
Efficiency and lean operations: One of the hidden costs in organizations is idle or underutilized resources. A managed services approach allows you to set the bar at the level of utilization your organization needs, and your cost matches your use. You don’t have to burden yourself with underused resources, but rather let your managed services provider mete out the resources as you need them.
Low Management Burden: In addition to the costs of the resources themselves, your organization’s management becomes burdened with having to manage them. With managed services, your provider is managing the resources, relieving you of this cumbersome task.
Scalability: If your business is growing, you don’t want your IT to become a bottleneck. But growing securely might require massive hiring in IT, which is a slow, painstaking process. With a managed services provider you simply need to alert them of your growing needs and recalibrate your contract to scale your IT capacities.
Reach: If your operations extend across multiple locations in different continents, you’ll need to handle the logistics of transporting your IT team to each location. This isn’t a cost-effective method and it might not serve you in times of crisis, when business continuity requires quick intervention. A managed services provider with transcontinental reach will handle your multiple locations without you having to worry about logistics.
The Bottom Line…
is precisely what a managed services model will help you elevate! A lean organization, whose management is unburdened with unnecessary loads, and whose IT is preemptively managed—rather than reactively—is an organization whose management is free to capitalize on strategic opportunities, and whose IT simply doesn’t break… This can save significant costs, which—in turn—raises profits.
If you’re not in the business of IT service provision, then it might be a good idea to focus your attention, energy, and resources on your core business competency, outsourcing your IT needs to those who have IT as their core business competency.
As the old Arab saying goes: “Give the bread unto its baker!”