Why Managed Services?

This is a two-part article on the business case for managed services.  In the first part I will examine why managed services means better service for the SMB end customer.  In the second part, I will discuss why managed services means better business for the solution provider.

To start today’s discussion-- and to enter into the mind of an SMB end customer-- I’d like to tell you the story about my broken furnace on a cold November day in Canada. Being the resourceful person I am, I confidently turned to a local service company and discovered that a critical (and expensive) part was broken, and the replacement would take 45 days to get. For those of you lucky enough to live in the South, the gravity of this situation may be a little hard to understand; but facing the first part of a Canadian winter with no furnace is akin to losing your air conditioning in August in the Deep South, except in the winter in Canada your water pipes freeze. Trying not to panic, I called a number of companies, discovering that the problem was universal, and no one could provide me with the part I needed in under a month.  I pleaded my case, suggesting they surely must have spares on hand, to which they all replied, “Yes, for our customers on a service contract.” With no alternative, we made it through a very chilly November and early December, and finally the day came when the part arrived and the furnace was soon humming back to life. Just before the service tech left my house, he turned to me and says “Mr. Hamilton, what you really need is our annual service plan. For one payment per month, you will get priority service, access to spare parts and regular maintenance on your furnace; all ensuring this will never happen again.” Was I sold?  You bet!  This story nicely underscores the value-add to the end user of managed services over break/fix. Managed services, just like a furnace maintenance plan, ensures that the customer gets the service they need in an affordable and predictable manner, so they can focus on their business.

The first of three core business drivers for the end customer is managing cost. Business reality necessitates that a business control its expenses and IT is an expenditure that needs to be managed. Due to the inherent efficiencies of the managed services model (economies of scale, use of remote technologies, aligned business interests between the MSP and customer that reward cost reduction, efficient use of experts, etc.), the cost of providing IT-- when done right-- is lower. The solution provider can choose whether to pass these savings on to the customer. Regardless of whether the cost reduction is passed on, a business under managed services also benefits from price predictability. Since MSPs provide service to an SLA at a fixed rate, the customer benefits from a “no surprises” IT cost and this predictability allows them to accurately forecast the cost of IT services and plan accordingly.

The second core business driver for the end user is the predictability of service. When you are looking for a doctor, what is foremost in your mind? It’s certainly not “where can I find the cheapest doctor to provide my treatment.” While cost is a consideration, far more important is the quality of service and whether or not the physician can successfully treat your condition. An IT services provider relationship to business is akin to that of a doctor and patient. What the business really wants is reliable IT services that continue to work and meet the organization’s needs. Because managed services provide a long term relationship that aligns the MSPs interest with that of their customers (the MSP wants a trouble free network to reduce expenses), it inherently provides a better service to the end customer. Additionally, because an MSP supports many customers, it can afford to make resources available to its customers that they could not justify on their own. Recall the example of the furnace service company that stocks spares for the customer; the net effect is better service.

The last business driver for the end user is managing chaos and complexity. A small business does not want to be preoccupied with a myriad of IT decisions. An MSP helps a small business navigate the difficult world of technology decisions, upgrades, architecture strategies, etc. Their expertise and single-minded focus on IT frees the SMB customer to focus on what matters most to them – their business.

Thinking back to my cold and furnace-less November, what I wanted was a working furnace,  a cheap solution and to be doing anything but worrying about how to keep my house warm at the start of a Canadian winter. The solution to my problem was managed services. When the technician offered me an affordable plan that would ensure this would never happen again, was I sold?  You bet!