What are "Managed Services"?

20 June 2018

I had an interesting discussion with a client this morning about Managed Services. He is working with a supplier who say they are a Managed Service Provider, but was a little disappointed with the quality of service he was receiving. Specifically, he felt he was doing all the proactive work, and they only actually started to provide a service when he notified them there was a problem. It’s not an uncommon situation.

Maybe I’m old skool, but the term Managed Services should be treated with respect. For about 30 years, its been bandied around as mechanism to rebadge IT and Telecoms companies in the hope it will increase their multiple value at exit. The truth of the matter is however that many of the companies in the channel who started off as resellers have found it difficult to be able to offer true managed services because it needs to be fundamentally engrained in the culture of an organisation. And this is the problem – it you haven’t got the organisation and culture to support a Managed Service, you ain’t no MSP.

I could wax lyrical about the virtues of ITIL and how clear the definitions of Service Management are, but that makes things a bit theoretical. I absolutely subscribe to the theory that MSP’s should adhere to ITIL core principles. If they aren’t creating the Service Strategy with the client, owning the Service Design, effecting the Service Transition, driving the Service Operation and supporting Continual Service Improvement, they are not managing the service using best practice and therefore it is questionable as to whether the service is “managed” at all.

But in a world of shades of grey, I think its sensible to cut a little slack to companies who aren’t this academic about it. Many suppliers I work with have superb Managed Services, not necessarily because they adopt ITIL, but they have people who genuinely care and are interested about the service they are delivering. So ITIL cannot be the true bar by which MSP’s should be judged.

So I’ve drawn a view on what I think the most fundmental service processes should be within a typical IT service, and put a line where I think a basic reseller is differentiated from a true MSP. It actually, in my view, hinges on the word “proactive”. The further right on my noddy little diagram you go, the better the quality of service.

The point at which you are so aware of the service you are providing that you can identify where there is likely to be a problem, and fix it on behalf of the client, is the point at which a service is “managed”. This is the point at which the client can defer responsibility to the MSP, which is where the value is. If a client needs to call you every time something needs fixing, you are not providing a managed service – you are a log and flog call centre with some engineers, and this does not warrant a significant premium over the hardware maintenance that the client would pay anyway NOR does it make your business multiples too interesting. I feel an M&A impacts on the MSP model blog coming up….

There could be some debate about how you can deal with potential spikes in capacity requirements, therefore making proactive problem identification difficult, but I would argue that a true MSP would understand the “Service” well enough to understand likely seasonal peaks and work with the client to navigate them. The “Service” is not just "problem" and "availability" – its change, release, patch, security, identity, event and all the other “stuff” that allows you to understand technology in the context of a business process.

In the world of cloud, these principles apply even more. Managing a self healing / self upgrading / self securing cloud environment may be easier for the Service Provider using it, but fundamentally the same ownership and proactive points apply. Despite the tooling within a cloud infrastructure being a lot better than on-premise or hosted hardware facilities, you still need to work with the client to understand how the technology supports a business process and configure the service to support this.

I will be advising my client to review his contract, and review his options at the point of termination. I fear part of the problem will be finding a replacement supplier who provides genuine Managed Services, but providing my noddy diagram is adhered to, and the proactive ownership of the service is a core principle, it should be easy to spot the Managed Service Providers from the Managed Service Pretenders.

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