Managed Services and the Digital Revolution
By Adrian Beer, Senior VP, ABB
Since the early 90’s, Managed Services has been associated in one form or another to the provision of outsourced IT related services. Whether fully outsourced, partially, or in a hybrid form through one of the many different types of Managed Service Providers (MSPs), the intent has generally been the same – the optimisation of IT budgets, to ensure the necessary technology support services are available for an organisation to achieve its business objectives.
It was the economies of scale that attracted customers to leverage MSPs in adopting the latest in technology capabilities, without having to heavily invest themselves in building out their own infrastructure, not to mention maintaining a complex set of evolving skills often unrelated to their core business. As a result, highly customised Managed Service offerings allowed end users to clearly define the level of services required, qualifying the cost, and “locking in” the benefit of each specific element of that service.
Today, with the rapid development of cloud based platforms and solutions, and with organisations themselves adopting both digitisation and digitalisation strategies, we are seeing a blurring of lines between services offered and value delivered. Transformation is taking place at the heart of many companies, right at the very core of their value offering. Whilst many firms talk of digital transformation – the role of technology is very much as an enabler, allowing organisations to learn and adapt more quickly and easily to changes in their competitive environments. This revolution has fundamentally changed the technology requirements of their organisation, and so too impacted the corresponding offerings from Managed and Cloud Service providers.
Organisations adopting MSPs today are often looking well beyond their application specific or general IT needs, seeking greater insight into the overall performance against their broader business objectives. Where historically the IT department responsible for the technical relationship with the MSP, IT have now become a much more integral part of setting the overall strategic objectives of the organisation; in addition to defining how technology can enable that strategy.
The future business models for the Managed Services market will need to find the balance between passing on the reducing cost of data and storage, and the Ongoing Challenges Of Cyber Security
This further extends the more recent trend of larger MSPs expanding their offerings to management consulting and business performance initiatives. Where the vertical integration of services has become increasingly prevalent amongst vendors, today it is more often the end customer’s organisation that is gaining (and seeking) greater visibility and insight into their operational performance. In the same way that Business Process Improvement ultimate reaches a point of diminishing return, so too external service providers can only deliver a certain amount of value to the end client by offering the same services. With the heightened awareness of what is possible within end user organisations, the traditional MSPs are under increasing pressure to become more adaptable in their service offerings, evolving into more collaborative operations based partnerships – which in turn is driving a new set of commercial models for the industry.
As the boundaries of responsibilities become less clear and as organisations embrace digitalisation as a functional part of business as usual, the impact of challenges such as security and vulnerability become much more far reaching. Cyber-attack, ransom demands as well as the loss of intellectual property places a great demand for trust between service providers and vendors. Whilst these have always been a challenge, the flow of information becomes more prevalent throughout a broader footprint of the end users’ organisation, so too does the significance of any breach of their environments.
This may also explain why we are starting to see the increasingly levels of “co-opertition” between MSP vendors and Cloud Platform providers. Lessons learned in terms of managing and responding to threats is defining both emerging standards and the definition of best practices, for the next level Managed Services and Cloud Services offerings.
For organisations who have truly embraced the potential opportunity digital transformation brings to their business, the new market opportunities that they are creating will require a more collaborative approach to managed and cloud services. The MSP industry will need to run fast to keep up with its potential customers, who are becoming increasingly demanding for a greater range of flexible solutions to meet their emerging needs, at a pace never seen before.
The future business models for the Managed Services market will need to find the balance between passing on the reducing cost of data and storage, managing the increasing prevalence of cloud based applications and platforms, and addressing the ongoing challenges of cyber security, whilst maintaining a flexible and adaptive set of service offerings that can meet rapidly evolving customer needs. It is certainly an exciting time for the sector, which in many ways could take credit for what has now become a massive digital transformation - that is taking place across a broad range of sectors; in some ways keeping up with these demands might be the biggest challenge of them all.