Managed services

Not to be confused with Service management.

Managed services is the practice of outsourcing the responsibility for maintaining, and anticipating need for, a range of processes and functions, ostensibly for the purpose of improved operations and reduced budgetary expenditures through the reduction of directly-employed staff. It is an alternative to the break/fix or on-demand outsourcing model where the service provider performs on-demand services and bills the customer only for the work done. The external organization is referred to as a managed service(s) provider (MSP).

Definitions

A managed IT services provider is a third-party service provider that proactively monitors & manages a customer's server/network/system infrastructure, cybersecurity and end-user systems against a clearly defined Service Level Agreement (SLA). Small and medium-sized businesses (SMBs), nonprofits and government agencies hire MSPs to perform a defined set of day-to-day management services so they can focus on improving their services without worrying about extended system downtimes or service interruptions. These services may include network and infrastructure management, security and monitoring. Most MSPs bill an upfront setup or transition fee and an ongoing flat or near-fixed monthly fee, which benefits clients by providing them with predictable IT support costs. Sometimes, MSPs act as facilitators who manage and procure staffing services on behalf of the client. In such context, they use an online application called vendor management system (VMS) for transparency and efficiency. A managed service provider is also useful in creating disaster recovery plans, similar to a corporation's.

The managed services model has been useful in the private sector, notably among Fortune 500 companies, with potential future applications in government.

History and evolution

The evolution of MSP started in the 1990s with the emergence of application service providers (ASPs) who helped pave the way for remote support for IT infrastructure. From the initial focus of remote monitoring and management of servers and networks, the scope of an MSP's services expanded to include mobile device management, managed security, remote firewall administration and security-as-a-service, and managed print services. Around 2005, Karl W. Palachuk, Amy Luby, Founder of Managed Service Provider Services Network acquired by High Street Technology Ventures, and Erick Simpson, founder of Managed Services Provider University, were the first advocates and the pioneers of the managed services business model.

The first books on the topic of managed services: Service Agreements for SMB Consultants: A Quick-Start Guide to Managed Services and The Guide to a Successful Managed Services Practice were published in 2006 by Palachuk and Simpson, respectively. Since then, the managed services business model has gained ground among enterprise-level companies. As the value-added reseller (VAR) community evolved to a higher level of services, it adapted the managed service model and tailored it to SMB companies.

In the new economy, IT manufacturers are currently moving away from a "box-shifting" resale to a more customized, managed service offering. In this transition, the billing and sales processes of intangible managed services, appear as the main challenges for traditional resellers.

The global managed services market is expected to grow from an estimated $342.9 Billion in 2020 to $410.2 Billion by 2027, representing a CAGR of 2.6%.

Advantages and challenges

Adopting managed services is intended to be an efficient way to stay up-to-date on technology, have access to skills and address issues related to cost, quality of service and risk. As the IT infrastructure components of many SMB and large corporations are migrating to the cloud, with MSPs (managed services providers) increasingly facing the challenge of cloud computing, a number of MSPs are providing in-house cloud services or acting as brokers with cloud services providers. A recent survey claims that a lack of knowledge and expertise in cloud computing rather than offerors' reluctance, appears to be the main obstacle to this transition. For example, in transportation, many companies face a significant increase of fuel and carrier costs, driver shortages, customer service requests and global supply chain complexities. Managing day-to-day transportation processes and reducing related costs come as significant burdens that require the expertise of Transportation Managed Services (or managed transportation services) providers.

Types

General services

Name	Functions	Providers
Information services / Cloud	* Software – production support and maintenance * Authentication * Systems management * Data backup and recovery * Data storage, warehouse and management * Cloud transformation * Network monitoring, management and security * Human Resources and Payroll	managed IT services provider, managed security service provider, HCM software
Business-to-business integration	* Supply chain management * Communications services (mail, phone, VoIP) * Internet * Videoconferencing	Internet service provider, Video managed services provider
Supply chain managed services	* Supply chain planning, monitoring and control * Sourcing and procurement * Logistics and distribution	Supply chain managed services provider
Transportation	* Daily transportation planning * Process execution and enforcement (freight audit/accounting & payment)	Managed transportation services provider
Marketing	* Marketing strategy, planning * Integrated marketing / advertising agency services (graphic design, copywriting, PPC, social media, web design, SEO)	Marketing managed services provider, outsourced marketing providers
Media	* Systems operation and support services * Broadcast managed services	Media managed services provider
Water	* Water quality testing * Water storage and transfer systems management * Smart irrigation monitoring, scheduling	Water managed services provider
Power	* Advanced metering infrastructure * Smart grid deployments	Power managed services provider

IT services

In the IT industry, the most common managed services revolve around connectivity and bandwidth, network monitoring, security, virtualization, and disaster recovery. Beyond traditional application and infrastructure management, managed services may also include storage, desktop and communications, mobility, help desk, cloud solutions and technical support.

Main providers

Main managed service providers originate from the United States (IBM, Accenture, Cognizant), Europe (Atos, Capgemini) and India (TCS, Infosys, Wipro).

Company	Country	2017 revenue
IBM	United States	$79bn
Accenture	United States	$35bn
Cognizant	United States	$18bn
Tata Consultancy Services	India	$18bn
Atos	Europe	$16bn
Capgemini	France	$15bn
Infosys	India	$10bn
Wipro	India	$8.5bn
HCL Technologies	India	$7bn
ATEA	Europe	$4.7bn
Computacenter	United Kingdom	£4.4bn
Datapipe	United States	$2.4bn
ALTEN	France	$2.4bn

See also

• Application service provider – Business providing software via the web
• Customer service – Provision of service to customers
• Enterprise architecture – Business function methodology
• Information technology outsourcing – Contracting formerly internal tasks to an external organizationPages displaying short descriptions of redirect targets
• Managed service company – Company structure in the United Kingdom
• Managed private cloud – Aspect of cloud computing
• Remote monitoring and management
• Service (economics) – Activity for which payment is due
• Service provider – Organization that provides services to other organizations
• Service science, management and engineering – Term introduced by IBM
• Service level agreement – Official commitment between a service provider and a customer
• Technical support – Maintenance service of electronic consumers
• Web service – Service offered between electronic devices via the internet

Further reading

• Palachuk, Karl (16 September 2014). The Managed Services Operations Manual: Standard Operating Procedures for Computer Consultants and Managed Service Providers – a Four-Volume Set. Great Little Book Publishing Co., Inc. ISBN 978-0990592310.
• Managed Services in a Month, 2nd edition. Great Little Book Publishing Co., Inc. 2013.
• The Guide to a Successful Managed Services Practice, January 2013. Intelligent Enterprise.
• Palachuk, Karl (1 July 2006). Service Agreements for SMB Consultants. Great Little Book Publishing Co. ISBN 978-0976376026.