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April 3, 2007

Managed services model requires commitment from all levels

The use of managed services is set to increase significantly over the next five years. However, although many organizations have developed sourcing strategies, they have lacked the discipline of managing third-party relationships as closely as they should. This needs addressing as commitment is required from all levels to make the managed services model work.

By CBR Staff Writer

The management of a managed services agreement should not be left to chance. Organizations must understand that they need to commit time, effort, and money to looking after these contracts and this is usually undertaken by having an in-house management team.

Managed services must be part of a considered sourcing strategy

Organizations of all sizes are today making more intelligent sourcing decisions, enabling the procurement of discrete services to be a part of an overall organizational sourcing strategy. The benefit of increased business and financial flexibility, through the reduced need to commit to a long period of involvement with a single supplier, can make the proposition attractive to SMEs and larger organizations alike, although the importance of commitment from all levels within the customer organization should not be forgotten.

Some organizations look towards outsourcing to assist them in achieving their business objectives, and some prefer to retain the delivery of IT services in-house. However, an increasing number of organizations are not only using outsourcing to complement the services they are delivering in-house, but also implementing a multi-sourced model – that is, having a number of different providers deliver various aspects of IT requirements.

Large enterprises, in particular, are bringing back the ‘mega-deal’ – these are long lists of outsourcing requirements, but within these lists are smaller sets of requirements, many of which can be individually delivered through managed services. Essentially, where once characterized by the ‘one-stop-shop’ approach to outsourcing, large and enterprise-class organizations are requesting the delivery of more discrete managed services, which overall is a more effective sourcing strategy.

The benefit of increased business and financial flexibility, through the reduced need to commit to a long period of involvement with a single supplier, can make the proposition attractive to SMEs and larger organizations alike. However, customers need to retain control of their managed services contracts, through the provision of an in-house management team.

Marketplace for managed services still quite fragmented

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Network, voice/data convergence, and security services are the highest growth markets for managed services, being driven by the need to roll out next-generation networks and secure them (a key activity for many organizations), in order to ensure that they are subsequently able to attain the many business benefits.

Managed services for security and privacy is a key piece of next-generation network rollout. These include business continuity services, and are also attracting high rates of growth, at roughly 15% per annum through 2010.

Almost 40% of organizations are likely to outsource aspects of their infrastructure in the next two years. Research by Datamonitor shows strong interest in outsourcing infrastructure in the next two years, across the range of technology, and that network and voice/data convergence, and storage, are the key priorities.

Ultimately, managed services can provide benefits and deliver added value to public and private sector organizations alike, but only by being properly prepared can organizations hope to realize these benefits.

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