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Why IT Outsourcing and Managed Services Are Suddenly All the Rage

Jan 12, 2016 Managed Services Dennis Junk

Managed Services and IT OutsourcingTo understand how Managed Services started gaining in popularity, you'll likely need to look at what happened with the cloud. At first, the idea of handing your computing over to a third party probably sounded like a security disaster waiting to happen. Over time, though, it became clear that many businesses were enjoying enough benefits to offset the perceived risks. For all the early handwringing, it seems clear now that the cloud is at least as secure as on-site datacenters. Now that so many companies are becoming more competitive by taking advantage of offerings like infrastructure as a service and software as a service, a good number of them see the next step as IT maintenance as a service.

A recent CompTIA survey found that only 40% of businesses are satisfied with their current IT management. The other 60% believe their IT needs some form of improvement. Only a year prior to the most recent survey, similar studies showed that just 30% of companies were working with a Managed Services Provider (MSP), as reported by CIO magazine. But the latest survey found that two-thirds of businesses have turned to third-party IT companies sometime in the last six months. Though a portion of the engagements were likely for single projects as opposed to ongoing management, these numbers still demonstrate a rapid upward trend.

But isn't outsourcing still a dirty word?

The growing popularity of Managed Services then is probably a result of the cloud helping businesses get used to the idea of handing over at least some of their IT management to outside providers, combined with some persistent dissatisfaction with in-house IT. Of course, however frustrated you may get when you can’t find the file you’re looking for, or when your entire system crashes, your response usually isn’t going to be anything as drastic as laying off your entire IT staff so you can bring in outside experts. 

MSPs are well aware of all the unsavory connotations the word outsourcing carries with it (which is why they started calling it Managed Services instead of IT Outsourcing). Not many business leaders would be eager to replace a team that’s familiar with their systems and responsive to their plans just to pinch a few pennies. But what CompTIA found is that 72% of businesses end up keeping all of their existing IT staff after signing up for Managed Services. So outsourcing in this case isn’t about getting rid of internal personnel so much as allowing them to focus on other projects.

Infrastructure Assessments 

It’s also important to note that not every engagement with an MSP involves an ongoing maintenance contract. One of the services many MSPs offer is network and infrastructure assessments. Any issues identified over the course of these assessments can often be handled internally. This type of assessment is valuable because when a business’s IT department is busy fixing problems and handling routine maintenance, they’re probably not doing things like planning hardware updates and diagnosing vulnerabilities in firewalls. There could be any number of dangers lurking in your system, and your IT staff may not have the time or the resources to devote to tracking them down.

Two-Speed IT

But in many companies the MSPs actually do stick around to provide maintenance assistance to the current IT staff. Dave Carmichael explains on the Avanade blog how advanced businesses are incorporating Managed Services into their IT strategies on an ongoing basis. The idea is that tech projects usually fall into one of two categories, operations or innovations. The operations side includes “stable, mission-critical systems,” the ones that you rely on for daily functions and try to avoid having disrupted in any way. Operations have to be kept in optimal working order at all times, so IT has to address any issues that arise before they can get around to innovating anything.

The innovation side, according to Carmichael, is “agile, fast, just-good-enough to explore, adopt and adapt to new opportunities.” In deciding whether to augment your IT staff with Managed Services, you have to ask, would it make your business more competitive if you freed up your existing tech people from worrying about routine maintenance and crisis management so they can focus on more strategic, forward-looking projects?

In many industries, competition comes down to which company can out-innovate the others. The CompTIA survey found, for instance, that 60% of companies that labeled their technology usage as “advanced” are using Managed Services to protect their physical servers. A slightly larger percentage of this same group of advanced users said they relied on an MSP for application monitoring.

Key Driving Factors

Mary McCoy on the Continuum blog does a good job breaking down the results of the CompTIA study to show what factors are driving businesses’ decision to contract an MSP. In order of importance, these considerations include:

  • Improvement of efficiency/reliability
  • Proactive approach to maintenance
  • ROI/cost savings
  • Freeing IT staff to work on strategic projects
  • Predictable pricing

Even though predictable pricing is high on the list, it may still be an underappreciated variable. One of the key benefits of infrastructure assessments, for instance, is that they’ll give you a good sense of when you’ll need to plan for things like hardware upgrades. By simply knowing which parts of your system are aging to a point approaching obsolescence, you’ll be in a much better position to plan for the inevitable overhauls. You’ll also be in a much better position to budget for them. And by staying ahead of the issues that may arise with your system—through proactive maintenance—you can often deal with them before they get too out of hand and lead to runaway costs.

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Posted in: Managed Services

Topics: Managed Services IT Outsourcing MSP