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Managed Services

  1. Managed Services Transitions

The long-term lifeline for a large segment of today’s IT channel depends upon them cultivating a business that sells and delivers technology services on a recurring revenue basis. This objective marks a shift away from conventional reliance on product-based transactions and/or one-off project engagements to a more predictable operational model that charges customers much like a utility company bills monthly for services-rendered. Burgeoning trends such as cloud computing and mobility, combined with expanded customer choice for procuring technology, are factors hastening this transition urgency in the industry.

For many channel firms, a change in tack has meant a foray into managed services – either as an add-on part of an existing business or as a complete overhaul from what is being done today. The managed services model typically takes of the form of an ongoing contractual arrangement in which the third-party provider (or MSP) remotely monitors, manages and updates a customer’s technology infrastructure, systems and services such as email, network and security software, or increasingly more complex pieces of technology such as line of business applications and analytics. IT functions once commonly handled in-house become outsourced, effectively.

After nearly a decade in fruition, managed services is becoming more commonly practiced across the channel and generating demand among end users. It’s a steadily growing market – roughly half of IT channel firms today report offering at least some managed services, according to CompTIA’s recent research study, Trends in Managed Services Operations. This growth comes despite some uncertainty about the overlap and/or impact that newer cloud-based models may impose. (Though it should be stated that the top reason channel firms NOT doing managed services today give for staying out of the market is that they are waiting to see what the impact of the cloud-based business model is going to have).

As companies add or transition to managed services they face significant challenges in terms of operational structure and efficiency. Sales team restructuring, including hiring, retraining and the development of a new type of compensation plan rank very high on the to-do lists of firms moving away from product-based transactions to sell and market themselves around IT services that are provided remotely. Sales considerations aren’t the only challenge. Determining how to price managed services is another tricky hurdle, for example. Getting processes – technical and business – working efficiently is also an imperative. Without process efficiency, the managed services model tends to fail.

The data for this quantitative study on Trends in Managed Services Operations was collected via an online survey conducted during October 2012. The sample consisted of 400 IT solution provider or channel firms. The full report is available at no cost to CompTIA members. Visit  www.comptia.org/research or contact research@comptia.org for details.

CompTIA members can read the full report here