Why Managed Services Make Sense for Traditional IT and the Cloud

by Michael Halperin
Date Published May 23, 2012 - Last Updated May 11, 2016


I remember the first time I encountered the term “managed services.” I had a tough time wrapping my head around those two words put together that way—to me, the meaning was not intuitive. And even though “managed services” has been in common usage for well over a decade, many people still struggle with understanding what it really means. I believe this is because the term itself is an awkward one for describing this particular concept.

So, when people ask me to explain managed services, I tell them to substitute a different term: IT Management as a Service.

In today’s world of Anything-You-Can-Think-Of-as-a-Service, is this just jumping on the bandwagon? I don’t think so. Because just about any _aaS you can come up with is a managed service.

Consider the following definition: Managed services is the practice of transferring day-to-day IT management responsibility to a third party as a strategic method for improving the effectiveness and efficiency of operations.

Of course, this definition raises another flag: what does “IT management” mean in this context? For the purposes of this discussion, we can think of it as all of the functions associated with the IT lifecycle, including: 

  • Planning and acquisition; 
  • Provisioning and configuration; 
  • Ongoing operations and maintenance; 
  • Issue identification and resolution (this includes IT support); and 
  • Capacity management.

Performing these functions requires the support organization, whether it is internal IT or a third-party (i.e., external) service provider, to have: 

  • Staff with the skills and bandwidth to perform the functions in the IT lifecycle; 
  • The platforms and tools to support these functions; 
  • Processes that allow these functions to be performed efficiently and consistently; and 
  • The appropriate facilities—be they physical or virtual—to bring all of these functions together.

Why Hire an MSP?

Managed service providers (MSPs) have already invested in the staff, platforms/tools, processes, and facilities that enable them to execute the IT lifecycle better, faster, and/or cheaper than an organization could. MSPs are typically centralized facilities that support multiple organizations, so the investment required to build and evolve an MSP’s capabilities is shared by the entire base of organizations the MSP supports.

Steady-state organizations that are happy with their IT management performance are unlikely to say, “Well, this is working…let’s try something else.” Rather, the decision to consider outsourcing IT management to an MSP is often triggered by some sort of compelling event. Here are a few examples: 

  • Sudden loss of critical staff: This could be as simple as the departure of a critical technical resource. I know of an organization that had two key IT staff members quit on the same day. Rather than backfill those positions, that organization decided to hire an MSP. Beyond voluntary departures, budget cuts may force an organization to downsize its IT staff and leverage managed services to replace the lost skills and improve bandwidth. 
  • Exposed weaknesses in existing IT functions: Disasters, security breaches, or extended customer-impacting outages can put IT operations in the spotlight. The postmortem following a painful operational incident may reveal gaps in the organization’s processes or tools, or find that IT’s resources are stretched too thin to prevent or respond to incidents effectively. I’ve seen many organizations bring on an MSP in the aftermath of such incidents. 
  • Rapid growth that IT can’t accommodate within its existing structure: A happier scenario is the organization that is encountering rapid growth, either organically or via acquisition. Firms that outgrow their staff, tools, and processes can adapt faster, at lower cost and at lower risk, by outsourcing. 
  • Frustration with IT’s ability to execute proactive projects: Increasingly, organizations are looking to IT to help drive the core business. Staff productivity improvements, improved customer-facing processes, and faster time-tomarket are some of the demands on today’s IT organizations. But the typical IT organization spends 70 percent of its resources managing and maintaining existing infrastructure and applications, leaving just 30 percent for the proactive projects that help the business grow. Outsourcing enables IT to refocus on these strategic opportunities. 
  • The introduction of new technology: Managing a new technology can mean retraining staff, introducing new tools, or revising operational processes. Any firm that is evaluating such investments should consider outsourcing as an option for quickly assimilating new technologies. As we shall see, cloud computing has many organizations considering MSPs.

Considerations for Selecting an MSP

MSPs are typically capable of supporting an array of technologies, including servers, storage, networks, security, IP telephony and service desk. But the decision to use an MSP is not necessarily an all-or-nothing thing. While many organizations outsource all of their IT operations to an MSP, this is usually typical of smaller organizations. Larger organizations often use a “cosourced” approach, in which internal IT retains ownership of some aspects of the IT lifecycle while outsourcing others. Similarly, some organizations may outsource only part of their infrastructure (e.g., only server management, only network management, etc.).

Evaluating an MSP is like any other hiring decision: fit is key. The right MSP doesn’t just deliver tactical services; it’s a strategic partner that helps clients achieve their business objectives. Is the MSP’s culture and approach a good match? If the hiring organization has some key strategic initiatives, does the MSP have any unique expertise that can help? For instance, some MSPs have developed processes or tools to address specific compliance requirements. Others may have unique experience with industryspecific applications. I know of one highly successful MSP that has carefully developed expertise in applications used by ssmall accounting firms. Be aware, though, that some specialized MSPs may charge a premium for that added expertise.

Something else to keep in mind is that the majority of MSPs focus on small businesses (five to twenty-five users), so larger organizations would be wise to make sure prospective MSPs really have experience supporting organizations of their size and understand how enterprise organizations operate.

When it comes to coverage, most MSPs provide 24×7 coverage, though customers need to determine whether or not a given provider is truly “eyes on glass” 24×7, or if their 24×7 coverage consists of an on-call engineer with a cell phone on his nightstand. A customer that needs true 24×7 coverage is unlikely to be satisfied with the latter, while a firm that needs coverage only during business hours might not want to pay for the former. Many MSPs also offered “tiered” services, allowing clients to get more or less support (with a corresponding adjustment in price) depending upon their needs.

One final consideration relates to the MSP’s long-term direction. A long-term relationship is best for both provider and client, so the hiring organization should be confident that the MSP it’s chosen is ready to invest in new capabilities as the industry changes. Cloud computing, for example, is likely to have a significant impact on
how MSPs operate in the years to come.

Managed Service and the Cloud

There certainly is a lot of hype in the industry about “the cloud.” So, let’s first make sure we are clear on what we mean when we talk about cloud computing.

Cloud computing means leveraging the IT infrastructure, not as physical or virtual devices, but as the capacity required to accomplish specific functions. Most organizations today make some use of SaaS, and this is a good example of cloud computing. The focus is on gaining access to the required application; the underlying infrastructure is invisible to the customer. Cloud computing extends this approach below the application layer to the underlying platforms and infrastructure. These are provisioned under a utility model, whereby the organization acquires capacity (e.g., computing power or storage), instead of servers and storage devices.

In many ways, cloud computing is simply a new way of managing traditional IT resources. But it provides many business benefits. These include: 

  • A dramatic increase in the efficiency of computing resource utilization, enabling organizations to reduce spending on new capacity; 
  • A dramatic increase in resource elasticity, allowing organizations to scale up and down at will, as opposed to building for peak volumes and having excess capacity the rest of the time; 
  • A dramatic increase in resiliency, improving reliability and reducing downtime; and 
  • A dramatic increase in the automation of IT processes (cloud computing can’t really be effectively implemented without automation), increasing speed and consistency.

Cloud computing impacts managed services in two ways. First, as we discussed, organizations consider managed services when a compelling event occurs, and the adoption of cloud computing is a very compelling event for any IT organization. Second, cloud service providers are, by our own definition, MSPs.

Let’s consider why the adoption of cloud computing will be a compelling event for IT, with profound impacts on all aspects of IT. As an example, let’s consider the provisioning and configuration step in the IT lifecycle, comparing the traditional and cloud approaches.

Traditionally, when an IT organization needs additional capacity, a new server is acquired, installed (or simply spun up, in the case of a virtual server), and loaded with the appropriate OS and software. When the organization needs to add or expand an application, it goes to its fleet of servers and chooses the appropriate device(s), adding more virtual servers or physical capacity as needed.

In a cloud computing environment, the organization doesn’t care which server(s) it uses, and it may not even care if it’s the organization’s server or part of a cloud provider’s infrastructure. The organization simply defines the capacity it needs and the platform does the rest. The specific physical and virtual servers and the associated storage are neither apparent nor relevant.

Few organizations have the capability to accomplish this today, so organizations that want to take advantage of cloud computing must establish the functions required to enable it. Some organizations will build it all internally; this is what’s referred to as the private cloud. In reality, only large organizations will have the resources to invest in the staff, processes, and (especially) the platforms and tools required to create and manage a private cloud.

Most organizations will instead deploy a hybrid cloud approach, in which existing IT resources are brought into the cloud in conjunction with service providers that specialize in delivering cloud-based solutions. Such providers fall squarely within our earlier definition of managed services. Small wonder many traditional MSPs are currently exploring options for migrating to the cloud.

Implications for Support: It’s About Transparency

Cloud computing will clearly have a big impact on all aspects of IT, including support. In fact, the cloud compounds one of IT support’s most complex challenges: gaining infrastructure transparency in a way that allows for issue analysis and remediation.

By definition, cloud computing makes the relationship between system behavior and the underlying infrastructure less transparent, not more. The issue becomes even more difficult when using an external cloud provider—as most organizations will—because service providers are unlikely grant their clients much access to the underlying infrastructure.

Even organizations that aren’t yet pursuing cloud computing should begin thinking about how they will accommodate the significant changes it will bring to IT support. Cloud computing will use sophisticated platforms to automate many aspects of the IT lifecycle. These platforms will also collect critical information about the environment that will be needed to deliver effective support. For instance, there are tools and techniques for monitoring critical processes from the end-user perspective. These can raise alarms when issues anywhere in the chain impact the user experience. But that can happen only if we first identify those key points and make sure we gather the right information about them.

If support requirements are kept front-of-mind as cloud management platforms and processes are planned, it can greatly enhance both the support team’s productivity and the end user’s experience. On the other hand, if support is just an afterthought, its quality and efficiency will suffer. Clearly, support organizations need to be involved in planning their organizations’ migration to the cloud. This includes understanding how cloud service providers can help or hinder the support team’s view of what is happening in the environment.

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Whether your organization has recently experienced a compelling event or is planning a shift to the cloud, more and more organizations are looking to managed services (IT Management as a Service, if you will). But they need to understand what managed services do and don’t do, and how MSPs fit their particular situations. The keys for any organization are understanding what its unique requirements are and finding an MSP that possesses the capabilities, approach, and culture to be a true business partner.


As the VP of managed services at Green Pages, Michael Halperin leads the operations teams supporting diverse client infrastructure topologies, including virtualization, unified communications, networks, servers, and desktops. He is responsible for the development, marketing, and overall delivery of GreenPages’s managed services portfolio. Michael has more than ten years of experience in the managed services industry, and was named to the MSPmentor 250 list three years in a row (2009–2011).

Tag(s): process, practices and processes, desktop support


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