Managed services traditionally involve the provider lending the client manpower to carry out specific tasks, acting as an extension of their business and complementing the in-house resources. This can be via basing staff on site, by bringing in people when needed, or by providing support from provider premises.
A typical model might see iQues managing datacenter operations while the client performs architecture and engineering functions and looks after customer and user support. Or we might provide a managed desktop support function, where the client has the capacity to do the work in-house but prefers to enlist our help, saving their resource for other projects. Or a client might have an IT manager who creates and directs the IT strategy, while we implement it.
For instance, we currently provide engineering, management and support of a large scale Citrix implementation for one of our managed services clients. Here we deployed part of a team of staff into the client’s office, while the other part is based overseas so we could easily provide support at any hour, in all client’s offices across the globe. While we fully manage the Citrix environment, we rely upon all other services like infrastructure, database and help-desk which are still fully staffed and managed by the client.
On the other hand, outsourcing typically sees the client hand over all IT responsibility to the provider. Outsourcing has become a catch all; an umbrella term for pretty much anything you can throw over the fence to a third party provider to the extent that its meaning is diluted to the point of being meaningless. For many, it is now considered a legacy term for increasingly commoditized (cost-centric) services.
This is why the term Managed Services is growing in significance. It reflects the growing demand for outcome based models such as SLAs that have a business meaning, delivered on a subscription basis. It is a more descriptive term for specific solutions that go beyond just cost savings to align with growing expectations.
But another important distinction for Managed Services vs Outsourcing is that Managed Services is a ‘management’ option, not a ‘deployment’ option. It’s really about people, processes and tools. This means that the technology used is pretty much irrelevant.
A great analogy for this is a chef. Yes, a chef. Think about it. A great chef can cook anywhere; in your garden, your kitchen, their own restaurant, a marquee or a ship; it really doesn’t matter. That’s because a great chef has the skills and employs the right people for the job. They have great tools (knives, pans, etc) and, of course, great processes (recipes).
The same is true of a Managed Services Provider (MSP). A great MSP can provide their service regardless of how the technology is deployed. They could be delivering the service remotely for technology deployed on premise or hosted in a third party data center. It could be delivered out of the provider’s data center or the cloud (public or private). Increasingly, it will be all the above as we move more into the hybrid world.
The important thing from the perspective of a consumer of these services is the ability to choose because one size does not fit all and the deployment technology matters to businesses for a myriad of reasons. So, when does Outsourcing become Managed Services? It’s all in the sauce!