Is Managed Services the right model for supporting production IT applications in your area?

A managed service is certainly not a new concept being applied to a production support and maintenance service, It has been successfully used as a delivery and sales model in various other areas right from Finance, Transportation, Power, HR, Accounting, IT etc. IT, being a cost center in the firms which are on the buy side of technology, is a clear candidate for binding your cost through managed service. Essentially the important part of the question then becomes is this the right solution for me. The IT organizations of the larger and smaller firms alike, have gone through waves of changes in the last decade, right from being up to speed with the effect of the cutting edge technologies in the market and the ever changing base platforms and versions, to the packaged platforms and software with a complex customization potential, to ever changing business needs, cost pressures, do more with less and these organizations trying to develop a niche carved by IT in delivering unique solutions to the market. These changes have often increased the resident IT workload on top of the strategic activities and raised a debate in a firm of how much I want to do myself, which is not my core-competence, and can I give the tactical work to an external party and deal with the part which is strategic and close to my business and will help me maintain the niche in my business, because nobody knows my business better than I do. Additionally a lot of this non-core work is to Keep the lights on or what is a popular acronym in the Banking industry, is to RTB - Run the bank. Firms would want their FTEs to concentrate on the strategic work or CTB Change the bank but cannot ignore the continual importance of keeping the systems running. Organizations across the board spend upwards of 75% of their software budgets on ongoing operations and maintenance. - Forrester Managed service in application production support addresses this problem of effectively taking away your non-strategic work to free up key resources (People, Infrastructure, floor space), which are at premium locally. Among a lot other reasons, like, to drive down the overall costs of maintenance and support of the IT systems and applications to effectively reuse the funds on managing the growth of the business. Many organizations have successfully outsourced their IT operations to many low-cost centers across the world and have realized huge benefits. Especially, under current situations, CxOs are compelled to find newer ways to further reduce their costs while maintaining the service levels agreed upon with the business users. Managed services are a part of your overall outsourcing strategy but it has to spell more to you rather than just supplying manpower at a low cost location.

Managed Services bring in additional cost savings through improvements due to efficient and standardized processes, leveraging the productivity gain due to the knowledge acquired in supporting multiple other customers, bringing support tools and library of templates, methodologies to the table, and optimum resource utilization with overall being able to achieve significant cost and efficiency benefits in the long run. Alongside the vendor you have to ask yourself if you are ready internally to implement a managed service model, can the IT support and maintenance in your area be packaged and bound with "effective" service levels, can you extract out the support component from the entwined development work, reducing the dependencies on other groups etc? Some Vendors can help you assess your current organization and portfolio and the resultant model to define a target model and a plan to reach there, this is also called Application Portfolio Assessment (APA) services for outsourcing or modeling future support and maintenance structure. Essentially I would put down the success factors of the managed model to

Setting continuous SMART goals (specific, measurable, attainable, realistic and timely) for the output service. Assigning proper Ownership and Accountability for your internal managers, managed services vendor and any third party vendors. Involvement of the Senior Management. Commitment. Setting up efficient communications/reporting Engagement model and Control Framework to effectively mitigate the risks. Plan for a continuous Optimization model, Define, manage, measure and improve. Defined SLA metrics and improvement goals for performance measurement. Develop framework, define repeatable processes to improve application onboarding. Independent review and continuous improvement. Bonus/penalty Pricing, Linking output performance to input price. Investment in divesting/Mining Knowledge for IP, transparency and continuity.

Having said that, I can sense still the question in your mind.. 'Is it the right option for me?' Let us look at some of the key situations that could be the criteria or the trigger point to kindle your thoughts on moving to this innovative service model...

My team provides good support right now, what I can do more to optimize. Application landscape has too many applications/modules but does not need FTEs for each one as ticket #s are low. I spend a lot of waking hours to answer one query or a production issue in the night or week-end, I want somebody to be on call. I spend a lot of my bandwidth with the current outsource vendor managing people, training their people and defining the way support is being done, I just

want somebody to take care of this without my developers spending time on support. I am looking for extending coverage to 24x7 but I am concerned on the additional cost involved for the extended coverage or can I get the right talent for the same. I want to implement segregation of duties, and improve my model of support, but I dont necessarily want to maintain the experts forever, but might need them time to time. I have a large team to support entire portfolio across my business unit and I am looking for a model to pay for average volumes of work and not for peak volumes of work. Looking for a scalable model to include occasional Minor Enhancements work but does not need dedicated FTE all the time. Looking for a Flexible model to address sudden surge or fall in tickets due to business dynamics. Looking for any low-cost option to Keep-the-lights-on while maintaining service levels?

Etc... Does your current application landscape fit in any of the above, or you just simply looking for options to reduce your TCO (total cost of ownership) and drive operational efficiency? IT Managed Services model could just be the right option for you.