seven major obstacles on the road to managed services

8/14/2019 Seven Major Obstacles on the Road to Managed Services

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The Seven Major Obstacles on the Road to ManagedServices

Whitepaper

The Seven Major Obstac les on the Road to Managed Servic es

Table of Contents

Introduction ... ... 3

Defining Managed Services... .. 4

The Challenge of Managed Services ... . 6

Obstacle 1: Insufficient C-level commitment... . 7

Obstacle 2: Lack of a standardized remote monitoring and management toolset... . 8

Obstacle 3: Failure to adopt or properly implement best practices... .10

Obstacle 4: Poor value illustration to the customer ... ...11

Obstacle 5 : Absence of demand generation sales ... .12

Obstacle 6: Lack of targeted marketing ... ...13

Obstacle 7: Lack of service au tomati on and managem ent software and processes... .14

Conclusion ... ..16

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Introduction

Virtually every IT serv ices business in North America is claiming to be somewhere in the evaluation, planning

or implementation phase of a managed services program, and y et only a v ery f ew have y et to deliver high-

v alue services to cust omers in the small- and medium-sized business (SMB) market. H ow is it that a business

model that has so much potential to revolutionize the way that SMB businesses consume IT servic es, a

business model that has captured so much attention within our industry , remains so elusiv e? Just as

importantly , why are so many IT serv ice organizations content to settle f or merely re-labeling their existing low-v alue break-fix and reactive serv ices when the business benefits of managed services are so critical to their

v ery surv iv al? Why do so many of these organizations underestimate the dif ficulty of transforming their

business to become a true managed servic e provider (MSP)?

In order to answer these questions, it is important to f irst clearly define what managed services are and why

this business model makes sense for both y ou, as the service prov ider, and the customer. Once a clear

definition of managed servic es is established we can begin to look at t he key components required to deliv er

real managed services v alue and subsequently the major reasons IT serv ice organizations f ail in their mission

to deliver that value.

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Defining Managed Services

Ov er the past sev eral years, t he phrase managed serv ices has morphed into an umbrella term to describe

v irtually any lev el of outsourced IT services - everyt hing f rom semi-automated break/fix activities all the way to

high-v alue, SLA-driven engagements. This dilution of the managed services intent is unfortunate f or both the

customer and the IT serv ice organization, as it will preclude both parties f rom achieving the f ull potential benefit

of a true managed serv ices program.

Many people believe t hat an MSP is any IT serv ice organization that prov ides remote monitoring capabilities t ocomplement more traditional break-fix and block serv ice engagements. While there is certainly a market f or

monitoring as a low-v alue serv ice, the real opportunity lies with organizations that have a greater dependence

upon IT. Though remote monitoring is a key piece to the puzzle, true v alue-based managed servic es is much,

much more. Managed services is a method of I T service deliv ery through which y ou can prov ide the same, or

more, v alue to a customer as an internal IT department delivers in a large enterprise - only in a consumption-

based model that makes f inancial sense f or even t he small business owner. To completely understand the

v alue the customer expects f rom y ou as an MSP, y ou must f irst review the fundamental purpose of IT within

the business env ironment.

The purpose of IT, in a v ery general sense, is t o automate or enable business processes, thereby allowing an

organization to do something that otherwise couldnt be done, or alternately would cost exponentially more to

accomplish. So its ultimately about creating productiv ity and business value - and the f unction of the IT

organization (internal or external) with respect to that v alue is two-f old: to ensure that existing sy stems continue

to appropriately support and enable the business processes, and to recommend and deliv er new solutions that

will help the business drive more productivit y and business v alue in new way s.

The second part of the equation - the deliv ery of new IT services - is well understood in the industry and

requires little discussion here, except t o say that as the relationship between y ou and your customer ev olves

into a true strategic partnership, so too will y our ability to ef f ectiv ely recommend and deliver solutions to the

customer ev olve. As y ou come to know y our customer at the strategic and tactical levels, y ou will be in a much

better position to make recommendations on IT solutions that will positiv ely impact y our customers business.

Similarly , the trust f actor that is inherent in a strategic relationship will mean your cust omer will have f aith in

y our recommendation and will more of ten incorporate the recommendat ion into their ongoing business

planning.

The f irst part of the equation - the support of exist ing syst ems within the customer infrastructure - is where the

problems generally arise. Many IT serv ice providers f undamentally dont understand (or dont accept) the

customers expectation of IT, which of course is that once t echnology is deployed it will continue to work

perfectly f orever. The f act that this is entirely unrealistic and flies in the face of logic is irrelev ant. The upshot of

this is t hat as soon as there is an IT f ailure, the serv ice provider has already f ailed and no amount of heroicswill change the f act that the sy stem s topped working. The reason customers expect (or want to expect) that IT

is inf allible is that the business has become so dependent on IT sy stems s uch as email that, f or many

businesses, operations v irtually shut down when a major IT f ailure occurs.

While the customer expectation of unstoppable IT is impossible to deliver, it helps us to begin to formulate a

conceptual idea of what a v alue-based managed serv ices program is: a collection of I T services t hat av oids

and mitigates the business impacts that arise f rom IT f ailure as much as possible. This is a good start, but

were not quite there because deliv ering higher and higher lev els of uptime cos ts more and more money . Logic

dictates that as the IT availability target approaches the unachievable goal of 100% uptime, the cost to deliver

the serv ice begins to increase logarithmically, which of course is neither af f ordable nor required by the v ast

majority of customers. So then we update our concept of managed services: a collection of IT services

designed to av oid and mitigate the business impacts that arise f rom IT f ailure to an acceptable lev el f or the

customer.

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Were v ery close at t his point, but there is s till one other major element to consider and that is IT-enabled

business risk. It is ironic that while IT enables so much productiv ity , it is also a source of incredible business

risk. C onsider that while we hav e database sy stems that allow us to store and manage customer information,

that inf ormation is now vulnerable to exposure in way s that it nev er was bef ore; while email allows us to

communicate globally in near real-time, it is a constant source of v iruses, spy ware and other f orms of malware.A f ailure to manage these risks may result in huge amounts of IT downtime (of which the customer deems any

amount to be unacceptable), information loss and theft or worse - civ il or even criminal penalties. A f inal

revision to our concept of managed servic es provides a solid working definition: a collection of I T services

designed to minimize the inherent risks associated to IT as well as avoid and mitigate the business impac ts

arising f rom IT failure to acceptable levels f or the customer.

Hav ing nailed down the v alue that the customer is looking for in a v alue-based managed services engagement,

we can begin to understand how y ou, as an MSP, prov ide that v alue in a scalable, cost-eff ectiv e manner. The

answer is simpler than it seems; t he ty pes of servic es that combine to provide the desired business v alue are

actually f airly well understood in the enterprise. The key is re-inv enting the delivery model of those serv ices so

that they can be provided in the centralized, remotely managed model that is t he hallmark of managed

services.

The types of IT servic es that combine to deliver the v alue that businesses (large and small) are looking for

include:

User and desktop support

Emergency infrastructure support

Proactiv e maintenance

Security and risk management

Business continuity management

IT / business interconnection

Hardware as a Service

While the common approach (monitoring plus break-f ix) begins to t ouch on reducing the business impact of IT

f ailure, it does s o in an entirely reactive manner - which also happens to be the lowest-v alued component of

the off ering since IT shouldnt have f ailed in the first place.

Each of the above def ined components of a f ull managed services of f ering is complex enough in an enterprise

environment where the IT organization generally has the adv antages of proximity and a singular set of

corporate expectations. For y ou to prov ide the full range of required serv ices in a cost-eff ectiv e, highlyprof itable manner to a wide range of cust omers requires caref ul planning, attent ion to detail and excellence in

execution. Now it becomes clear why s o many IT serv ice organizations f ail in their pursuit of true managed

serv ices, or decide not to try at all. Simply put, building an organization that is actually capable of delivering that

v alue in a consistent, sc alable manner is really hard.

Fortunately we can be a little more specific. Hav ing worked with a large number of s y stems integrators, VARs

and IT service providers through the business transf ormation process, N-able has identif ied seven key

obstacles that stand in the way of true managed services:

1. I ns uf f i cient C -lev el com mit ment

2. Lack of a standardized remote monitoring and management toolset

3. Failure to adopt or properly implement best practices

4. Poor va lue i llustrat ion to the customer

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5. Absence of demand-generation sales activities

6. Lac k of target ed m ark et ing

7. Lack of service automation and management software and processes

The Challenge of Managed Services

We hav e discussed the def inition and rationale f or managed serv ices, as well as introduced the obstacles with

managed services. I f the benefit s of managed service delivery are so pronounced, why are so many s ervice

prov iders struggling with their transf ormation to becoming a true MSP? The core reason is that they are not

try ing to transform t heir business and this is the greatest challenge of managed servic es today. Too many

serv ice providers v iew transformation as being a problem solved by technology , when in f act the scope f ar

exceeds just technology t o impact every f acet of t he business. By f ocusing entirely on the technology

dimension, usually just on the remote monitoring and management aspect, it means t hey are overlooking the

other six obstacles that prev ent their success. As a result, they wonder why they are struggling in their

initiatives to sell and deliver profit able managed services. On the other hand, organizations that make a

successf ul MSP transf ormation recognize that they must address all seven obstacles.

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Obstacle 1: Insufficient C-level commitment

Unquestionably, one of the tenets of good business is that success begins at the top. This is certainly true f or

IT service prov iders making the mov e to managed services. Without the commitment of the owner, CEO and

entire management team, the shif t t o managed serv ices will f ail. Why ? Too often organizations approach

managed serv ices as if it was a mere extension of an existing business line and does not need management

time and commitment. Becoming an MSP is much m ore than an extension to an existing line of business.

Rather, it is a new line of business with v ery dif f erent drivers and success f actors that require the absolutecommitment of the CEO, partners and management team.

Top-level management needs to recognize the f ull business commitment required to build a successf ul MSP

practice. They m ust embrace and champion this new business model, leading the charge to transf orm the

company by incorporating proven operational and sales and marketing best practices f or managed serv ices

success.

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Obstacle 2: Lack of a standardized remote monitoring andmanagement toolset

The purpose of a tool, any tool, is t o automate and enable processes. The processes are those things that we

do that prov ide tangible results (v alue) to the customer. Most MSPs recognize the need for a remote monitoring

sy stem, but that is only one tool in the arsenal. Unf ortunately , a common practice f or many MSPs is to

supplement their lack of a standard toolset with whatev er tools the customer already has on hand - the

rationale being that s ince the customer has already paid for it, theres no reason to spend money on another

tool. In actuality , nothing could be further from the truth.

Adopting whatev er tools happen to currently exist at the customer location has sev eral dangerous ramific ationsf or MSPs interested in growing their business in a prof itable manner. This practice essentially destroys any

opportunity y ou have f or developing standardized processes that are essential to the delivery of high-v alueserv ices, it dramatically increases y our cost of doing business and it can have a signific ant impact on your

ability to deliv er a consistently high level of serv ice to your customers.

Standardized process es are essent ial to an organization that intends to grow in a prof itable manner because

only by doing things in a planned, structured way can y ou understand the cost of doing so. Additionally , y our

organization needs to hav e a single, structured approach in place so it c an sy stematically work t o improve and

optimize both the quality and ef f iciency of those activ ities. Tools support and automate elements of a process;

thats f undamentally all they really do. In doing so, they become an intrinsic part of those processes they

interact with. So much so t hat substitution of one tool for another (substituting one set of behaviors and

performance levels f or another) of ten means that the process is no longer the same - or at the very least the

execution time and cost characteristics c hange completely . Multiply t his eff ect across y our entire customer

base and youll f ind yourself reduced to a break-f ix serv ice organization once again.

Properly developing and maintaining subject matter expertise on any given t oolset has real and implied costsf or your organization. Those costs may be direct - in terms of act ual dollars spent on training courses - but

more oft en (and more insidiously) are the indirect costs , consumed in terms of ramp-up time, technician

research and worst of all incompetence in the f ace of y our customer. By and large, these costs cant be directly

passed on to a customer - they are simply a cost of doing business. A s tandardized toolset, however, m eans

y ou can minimize those costs by reducing the number of v ariations of a given tool to one.

Clearly y our company - just like any business - cannot justif y pay ing f or a solution that you do not need.

However, this happens frequently among many MSPs, as they acquire solutions with f unctionality that will not

be used because it is not required for a specif ic managed serv ices engagement. For example, y ou might have

a new customer whose infrastructure includes 20 routers, switches and other dev ices that c arry a minimal

management burden. However, y our remote monitoring and management solution includes remote support and

remote env ironment management capabilities. While v ery usef ul for PC and server support, this adv anced

management f unctionality represents a waste of money because it is not needed to ef f ectiv ely s upport routers,

switches and other low-management dev ices.

So, for a managed serv ices toolset to be truly cost-ef f ectiv e, it must prov ide flexibility so y ou can tailor y our

serv ice deliv ery t o address each customers unique needs. In the case of management specif ically, a standard

toolset is needed to prov ide core management capabilities, complemented by optional tools f or remote support

and remote env ironment management. This means y ou only pay f or the f unctionality needed to deliver the

appropriate lev el of management capabilities to each of y our customers.

Tools that are appropriate f or an IT administ rator to use within a LAN env ironment may not be applicable to the

MSP model because of security and operational ef f iciency . Networked tools that are designed for local use may

transmit and receive s ensitive data in an insecure manner. On a local network this may not present a problem

as the perimeter security infrastructure reduces the risks surrounding this. MSPs, on the other hand, rely on the

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Internet as the key v ehicle to connect their centralized network operations center (NOC) inf rastructure to their

v arious customer inf rastructures. Transmitting that same unencry pted information over the Internet may imply

risk that neither you nor your customer can aff ord to accept.

Additionally, many tools designed for use on a s ingle LAN just dont support t he MSP model in an ef f icient

manner. A good example of this is a tape-based backup sy stem. As an MSP, y ou cant change, rotate or storethe tapes f rom the comf ort (and ef f iciency ) of y our NOC, unless you rely on your customer to perform this

critical part of the process (risky ). This activity requires you to send a technician on premises to perf orm

backups. An MSP-friendly s olution, on the other hand, would allow y ou to provide the s ame serv ice to y our

customer - in this case, saf ekeeping of t he critical data - in a manner that removes the operational ov erhead of

a customer visit.

Another major issue when using these tools is t he cost and ef f ort of deploy ing remote monitoring to your

customers, as well as the ongoing administration of customers. MSPs of ten spend a great deal of time on

customer deployment because the process can be complex and requires technicians with considerable skill

and experience. The result: the cost of deploy ment is excess iv e and it is dif f icult to st andardize monitoring

policies f or similar dev ices at dif f erent customer sites. All of this combines to create a real impediment to rolling

out managed services t o y our customers

A larger issue over the long term is the continuing ef f ort required to administer your cust omers once remote

monitoring is deployed. When y ou need to make a change to a serv ice, such as establishing new thresholds f oralerts, the time and eff ort required is excessiv e. Every device that uses the serv ice has to hav e its settings

updated again, which increases y our service cost s. I n addition there is the risk that some dev ices will be

ov erlooked, so y ou do not have consistent rules. In the ev ent there is a change at the dev ice level that impacts

monitoring, all of t he dev ices hav e to be touched again. Each touch is not a recov erable cost, so it impacts y our

bottom line.

While these costs can be calculated and passed on to y our customer, it adds a degree of dif f iculty into the

sales and quoting process as t he operational impacts of the customers toolset need to be considered and

added to the price. More of ten, the MSP simply ignores the operational overhead and once again absorbs the

inherent cost s, jeopardizing the profitability of the engagement.

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Obstacle 3: Failure to adopt or properly implement best practices

True managed serv ices programs are based on value - not time. In other words, t here is no mention of the

number of tec hnician hours included in true managed serv ices programs. This is a fundamental change to how

IT servic e providers have behaved in the past, and it carries with it its own set of risks and rewards. The

reward: eff iciency improvements t hat reduce the number of technician hours required to deliver the v alue will

result in an improvement to y our bottom line. In a time-based model, the customer would notice that y our

technician was not spending as much time prov iding the service as before and, quite correctly, demand a pricedecrease. The risk: f actors that increase the amount of time required to provide the s ervice will lower y our

prof its.

The single largest f actor that af f ects t he amount of time required to provide a serv ice is the operational

management of serv ice delivery processes. Deliv ering true managed services in a prof itable manner requires a

v ery consist ent approach to serv ice deliv ery and service management. Without this lev el of control, it is

ef f ectiv ely impossible to ev en arrive at a cost to deliv er value-based serv ices, never mind consistently

achieving or exceeding the targets.

Ef f ectiv e processes describe how people perf orm v arious task s. Good process management ensures that

ev erybody who perf orms that task does so according to the process - in an identical f ashion, time af ter time.

As y ou can imagine, this giv e you the ability to accurately assess t he amount of t ime to execute the process

with very little v ariance f rom individual to indiv idual - and even that v ariance can be measured and optimized.

Clearly def ined processes provide y ou an opportunity to continually improve upon those processes f rom both a

quality of s ervice as well as a cost of serv ice perspectiv e. Regular process rev iews pave the way f or you to

reduce the number of m anual steps required, either through automation or process improv ement.

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Obstacle 4: Poor value illustration to the customer

Historically IT service prov iders hav e illustrated the v alue provided to the customer in terms of t he number of

technician hours provided. This is f ar f rom ideal f or your cust omer and downright problematic f or you. F rom the

customers perspective, it is dif f icult to draw a direct line between the business benef it of the servic e and the

time taken to deliver the service. From y our perspective, this model of v alue illustration doesnt prov ide a lot of

incentive to build eff iciency into the service delivery m odel, as this eff iciency would only serv e to erode y our

revenues. Since a key element of a true managed services program is the use of serv ice automationtechnologies and process optimization to reduce the overall cost of serv ice delivery , alternate means of v alue

illustration must be developed.

In a managed services world, v alue illustration is comprised of awareness activ ities, reports and report analysis

that perform the f ollowing functions:

Educating the customer about managed services

Illustrating achievement of serv ice-level commitments

Providing strategic direction to the customer

As previously discussed, the ty pical customer values IT in terms of t he number of hours required to deliver the

serv ice. The customer believes this because we, as an industry , hav e taught them that this is t he correct unit of

measurement. I n order to move f orward, y ou need to replace this unit of measurement with other units of

measurement to ensure that the customer will recognize the v alue you deliver. This is ty pically done by hosting

an initial orientation session f or all of y our customers stakeholders at the st art of an engagement,

supplemented by ongoing awareness and education newsletters.

Once the customer understands how to measure the v alue you prov ide, it is incumbent upon y ou to illustrate

that v alue on a regular basis t hrough serv ice lev el reporting. A serv ice lev el report provides a breakdown of

ev ery s ervice lev el objectiv e defined within the serv ice level agreement (SLA) and illustrates both thecommitment y ou made as well as the actual achieved performance lev els f or the reporting period. The

objective is to show customers that they are getting what they paid for - or alternatively , that the perf ormance

targets were missed and some def inable actions are occurring as a result (penalties, etc ).

Many smaller businesses av oid technology as much as possible, taking the approach that the more dependent

they are on technology, the more pain they ll be in when it breaks. Ultimately this giv es their rivals an

opportunity to lev erage a competitiv e edge to gain customers, reduce overhead and generally out-execute

them. Businesses tend to take t his attitude because historically the business impact f rom their existing IT

sy stems has prov en to be so problematic that they have little reason to adopt even more technology . Engaging

with an MSP will address these business impact issues , which allows the cus tomer (with help from their MSP)

to begin to look at new technologies as business innovations. This prov ides a key element of v alue-illustration

f or you as an MSP. By helping customers dev elop their IT strategy in terms of what ty pe of solutions may help

to drive rev enue and reduce operational costs, y ou can demonstrate y our true value as a trusted advisor to

y our customer.

Value illustration in a managed services engagement extends f ar beyond any thing possible in a traditional IT

serv ices model. By m aking a commitment and quantifiably achieving the targets set out in that commitment -

as illustrated by eff ectiv e service-lev el reporting - as well as providing strategic and budgetary direction to thecustomer, not only do you contribute to a better-managed business today but a much more successf ul

business tomorrow.

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Obstacle 5: Absence of demand generation sales

Selling managed services is a much dif f erent beast than selling hardware or implementation projects. In the

case of hardware and soft ware, it is t he v endor that traditionally generates most of the demand and it is the IT

serv ice provider who fulf ills that demand. Projects tend to be t he natural extension of selling hardware and

sof tware and, as such, f all into the same category. Managed servic es, on the other hand, are much diff erent

because they arent a product prov ided by a v endor but rather a serv ice provided by y ou as the MSP. You are

the v endor, so y ou must generate demand for the serv ice.

The other element that adds complexity to the s ituation is that prospects arent waking up in the morning

thinking about outsourcing managed serv ices - not because managed services arent a f it f or their business but

because they hav e no idea what serv ices are available or how they can be of benef it to t hem. This places the

selling of m anaged servic es in a category known as missionary sales where the sales people must preach the

gospel of managed servic es.

Ov ercoming these hurdles requires a dif f erent approach to sales - one that f ocuses on demand generation

activ ities supplemented by a reasonable approach to sales management. Sales management is ty pically an

area of weakness f or many I T service organizations that, due to their background, tend to have v ery s trong

technical management but m uch less management depth in sales or marketing.

A common f ailure among MSPs try ing to ev olve their sales f orce towards demand generation is to hire a killer

sales guy and expect magic t o happen. While a charismatic salesperson with a background in solution and

serv ice sales is important (especially f or missionary sales) to the overall success of the program, managing the

activ ities that lead to sales is just as important. Solutions/serv ices sales profess ionals who are charismatic and

capable of ex ecuting a miss ionary s ales program and who are also disciplined enough to self -manage theirown activ ities do exist, but they are definitely exceptional individuals. The thing about exceptional indiv iduals is

that they are (by definition) the exception, not the rule.

A better approach is f or you to manage sales by mandating your sales team to identif y what activ ities arerequired as part of the sales process and what quantities of each activ ity are required in order to drive t he

desired sales. Once these activ ity targets are established, the sales team needs to ensure that the planned

activ ities are happening and that the desired results are occurring.

Dealing with the lack of awareness within the market requires c lose collaboration between marketing and sales.

From a sales perspectiv e, a well-conceived sales process - probably longer than most IT shops are used to -

should aim to educate the prospective c ustomer on the benef its as well as mechanics of managed servic es. It

should culminate with y ou delivering an ROI (return on inv estment) presentation that illustrates the prospects

total cost of a managed services program as compared to their current cost of IT (in terms of business impact,

risk and actual IT spending).

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Obstacle 6: Lack of targeted marketing

Unlike many traditional IT serv ice providers t hat operate without a marketing f unction, an organization looking

to of f er true managed serv ices will hav e diff iculty f unctioning without a marketing department. In a traditional

VAR env ironment the v endor carries the load for market ing the product and generating demand. Since a

managed services program is, in eff ect, y our product as the MSP, it f alls to y ou to market your programs and

generate demand for y our serv ices.

In pre-launch mode, marketing acts in a product management capacity , prov iding the driv ing force behind they our MSP program dev elopment, determining what IT serv ices the m arket is looking f or and what price the

market is willing to pay . Marketing ev aluates the competitive landscape, defines a marketing strategy , dev elops

the business requirements of y our MSP program and the appropriate messaging, then works with sales to

create the sales pitch and appropriate t ools to s upport the s ales process.

In a post-launch env ironment, marketing is responsible for dev eloping a v erticalization strategy, generating

qualif ied leads f or sales and leveraging email, Web, phone or any other number of campaign strategies to keep

the pipeline full of good opportunities . Additionally , market ing works hand-in-hand with the sales organization to

ov ercome the lack of market awareness - dev eloping newsletters, email comm unications, educational

seminars and other end-user awareness t ools - all tactics to educate the consumer on the benefit of the

serv ice provided, establish y ou as a leading prov ider of the serv ices, and ultimately f uel demand generation.

Internal marketing is also a key f unction of a success f ul MSP. Incidents where the MSP fails to achiev e its

serv ice lev el commitments tend to be c ommon knowledge within the MSP sales organization (especially when

customers hav e a tendency to call their sales person to complain), but news and statist ics on success es and

wins are oft en generally unknown within that department. I f left unchecked, the natural tendency is f or salespeople to develop a jaded view of t he product they are selling. This is of course v ery dangerous, as sales

people need to believ e in their product and the mess age they re delivering. An internal market ing program aims

to ensure that y our employ ees have a more balanced view by prov iding the company in general - and the

sales team in particular - with inf ormation about the successes of the managed services program you of f er.

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Obstacle 7: Lack of service automation and management softwareand processes

Since managed services is a grass-roots movement, it is not surprising that many, if not most, MSPs have

ev olved f rom traditional IT serv ices organizations (VARS, sy stem integrators and resellers). Just as y ou havegone through an evolutionary dev elopment, so t oo hav e y our internal practices - not necessarily f or the better.

A common practice that is ineff icient, ineff ectiv e and potentially dangerous is that of delivering all lev els of

serv ice support through the use of named technicians. W ith this approach, y our customer has a relationship

with a specif ic t echnician within the IT serv ice organization. That technician is responsible f or providing v irtually

all ty pes of IT servic e support. The problems with this model are as f ollows:

Scalability

Quality of service

Cost of service

Misplaced relationship

No corporate memory

In the model where a technician is specif ically responsible for a def ined set of customers, t here are a f inite

number of customers that can be assigned to that tech bef ore the quality of servic e becomes detrimental to the

IT servic e organizations business. With this in mind, the only way of adding new customers is t o linearly add

more technicians, which creates a business m odel that has serious scalability concerns.

There are two main components to t he quality of IT service s upport - timeliness of t he service and capability of

the technical resource to deal with the specif ic problem at hand. Both of these components s uf f er under the

named technician model. Since I T f ailures are unpredictable, it is impossible to predict how many c ustomers of

a technician will be experiencing problems at a giv en time. As soon as that number climbs abov e one,

somebody is waiting f or service, meaning that timeliness (serv ice quality ) is immediately aff ected.

Regardless of how small or big a customer might be, there is a bare minimum level of complexity involv ed -

desktops, serv ers, networking, security and potentially much, much more. The practice of naming a single

technician to a customer immediately assumes that the technician is an expert in all required areas. N ot only is

this impractical, but it is essentially impossible. IT has ev olved to t he point where each of these areas is a

recognized specialty , each requiring its own set of skills, certif ications and background. So while its reasonable

to assume that a t echnician may be an expert in one, or ev en sev eral, of the IT disciplines, it is guaranteed that

the technic ian will not be an expert in all. This absolutely guarantees that y our customer will experience a

technical issue at some point that y our technician is not qualified to support - thus dramatically af f ecting the

quality of service.

The cost of serv ice support is a f unction of the total amount of t ime spent resolv ing the incident. The cost of

that time is t he f ully adjusted hourly cost of the technician and the ov erall technician utilization rate (somebody

has to pay f or unbilled time). Put another way, the cost of servic e support is directly aff ected by the scalability

of t he service, the rate of pay of the technician and the ef f iciency lev el of the incident handling process. The

named technician model inhibits t he optimization of each and every one of the contributing factors.

The named technic ian model is a monolithic process where by and large the single named technician performs

the entire serv ice support f unction. I t is well documented in the process-engineering world that monolithic

processes of this ty pe are orders of magnitude less ef f icient than modular processes t hat allow f or indiv idual

tuning of t he capacity , skill and cost of each component of the process.

Since the named technician must be capable of handling most, if not all, issues encountered, ev ery technician

must m eet a certain skill lev el and is presumably compensated according to their skill and capability . The truth

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of the matter is that m any, perhaps most, of the incidents t hat occur do not require a senior, or ev en

intermediate, resource but could easily be f ielded by a junior technician - at a f raction of t he cost.

In order to maintain any semblance of timeliness of serv ice, y ou must employ enough technicians to handle the

e net effectload. Typically this results in a technician utilization rate of between 40 and 60 per cent. This has th

of approximately doubling the cost of serv ice support.In the named technician model, the customer generally has a great relationship with the technician and virtually

s y ou at considerable risk. Should the technician decideno relationship with anyone else on y our staf f . This put

to leave the company , y our customer might be strongly tempted to f ollow.

In most cases, the only information that is tracked and maintained is the prerequisite data to substantiate billing

gh experience, y our company as af or the incident. While the individual may have an opportunity to learn throu

whole maintains little knowledge of t he problems or solutions that hav e occurred in the past or the nature of the

business relationship with the customer.

A properly implemented servic e management solution, including a managed servic e desk, solves all of these

into a series of modular processes (inc ident management, problemissues by breaking the monolithic process

management, change management) that can be staf f ed according to v olume and skill requirements at each

lev el and centralizing the relationship at the serv ice desk. I n other words, a pool of junior (inexpensiv e)

resources work on solv ing easy problems, while complex issues are escalated to a pool of senior resources

with the appropirateskill set. The net ef f ect of this change is as f ollows:

Driv es up technician utilization - By working with the f irst av ailable technician, as opposed to atilization rate.specif ic technician, y ou can generate a much higher technician u

Driv es up quality - By working with the first av ailable technician, timeliness is immediately improv ed,and by escalating issues to appropriate specialists, t he capability of the technician with respect to theincident is improved as well.

Driv es down cost - A number of f actors contribute to a dramatic decrease in the overall cost per

incident, such as the increased technician utilization rate, the number of incidents that are managed by

lev el 1 (junior) technicians and the reduction in the amount of time required to resolv e a problem due to

improvements in the ov erall process.

Relationship with y our customer - In this model of serv ice support, the v alue that y our customer

receives is prov ided by a number of people representing y our company as a whole, not by a single

resource. This dramatically reduces t he risk of losing customers if a specif ic technician decides to leav e

y our organization.

In addition to these c ore benef its, a centralized managed serv ice desk provides other opportunities f or you to

generate improv ements and cost sav ings. Initiativ es such as a s elf-help portal provide additional v alue to the

customer as well as help to reduce the ov erall number of incidents t hat are managed by y ourserv ice desk. A

well-conceived serv ice management solution will not only enable a self -help strategy but will integrate,

yautomate and underpin many aspects of y our business f rom the serv ice desk to the project activ ities all the wa

to generating billing f or the activ ities and serv ices rendered.

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The Seven Major Obstac les on the Road to Managed Serv ices

Conclusion

Many IT service organizations limit their serv ice off ering to a reactive v ariation ofmanaged serv ices, with thesole intent of adopting the label ofmanaged serv ices. This practice does little f or them and even less f or their

customers that act ually require a higher level of serv ice. Deliv ering a true, v alue-based managed serv ices

program is a complicated business model that requires careful planning and consistent serv ice delivery

execution. While the seven key obstacles are the most comm on points of f ailure f or those MSPs that do wish to

adopt a true managed serv ices model, they are not insurmountable, and awareness of the pitf alls is the f irststep to ov ercoming them.

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The Seven Major Obstac les on the Road to Managed Serv ices

About N-able Technologies

N-able Technologies is the pref erred global supplier of remote monitoring and management technology and

business transf ormation servic es formanaged serv ice providers. N-ables proven platforms of f er the right

combination of technology , people and processes, which help IT service providers to deliv er highly profitable

managed serv ices to small- and medium-sized businesses. www.n-able.com

Copyright

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