Managed services: Words to the wise

Look before you leap, says Ken Presti

By now you're used to large telco carriers coming at you with a variety of managed service offerings. That field of options is about to get much bigger as integrators, resellers and a host of other channel partners enter this lucrative area, typically aimed at small and mid-size customers.

A managed service package can be a very viable option, especially for companies that don't have a deep bench when it comes to IT talent. However, there are plenty of landmines to look out for when evaluating options.

First, which services do carriers intend to deliver? Consider the rationality of the services mix and compare it to your own IT needs and internal technical talent. What's missing? Can you plug any gaps in an effective and economical way? The answers will vary based on your vertical market and particular circumstances.

Second, what is their track record and plan? This translates to: Can they do what they say they will do? Get beyond the marketing collateral here. Talk to the technical people to get your own read on their actual expertise. How much redundancy is built into the system? How many customers do they have, and is there sufficient infrastructure to meet the need? Do they have sufficient technical support resources? What about customer references?

Third, can you get out of the contract if you need to? This is especially important if the provider is new to managed services but only minimally less so if they're veterans of it. An important balance is required here. On the one hand, managed service providers need a predictable revenue stream, as well as the ability to profit over time from the initial setup. But this imperative can lead them to lose sight of the fact that the customer essentially has its whole business in the palm of the provider's hand. This should be acknowledged in no uncertain terms and used as a bargaining chip in negotiating the terms of early termination.

Fourth, what is the provider's strategy for the adoption of new technology? With so much happening in technology these days, it's important to know the provider will continue to invest in its own value. This can be difficult to ascertain, because the self-serving answer is always the easy one: Yes, we do intend to invest. One way of addressing this topic is to ask about the related technologies the provider considers to be evolving fastest and in the most important ways. Then judge their ability to engage the issue from there.

Managed services can offer many benefits in terms of capabilities and efficiencies, but not all offerings are created equal, and it's up to the buyer to carefully pick and choose. With an ever-expanding field of options on the horizon, those choices will become far more complex.

Presti is research director of IDC's Network Channels and Alliances service. He can be reached at kpresti@idc.com

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