Progressive Business Technology Adoption Trends

Business leaders are still upbeat about the benefits of technology adoption. It's key to their market penetration, central to competitive differentiation, and vital to their supply chain and distribution strategies.

However, according to Forrester Research, they are less than satisfied with their own IT organization's contributions. In fact, reducing the cost of operations is believed to be one of the few attributes where expectations are aligned.

Members of the Forrester Leadership Boards (FLB) CIO Group recently discussed this challenge. Forrester presented results from their business technology survey of 600 executive leaders.

The study uncovered the following significant gaps:

IT teams rarely are aligned around key business priorities. When asked to rank business drivers by their importance to the firm's technology strategies, business executives identified customers, productivity, and costs as the most important themes.

But, when asked to rate their IT organization effectiveness, there was a wide gap between critical business drivers and the perception of IT's focus -- even in the key areas of cost reduction and workforce productivity.

Business executives consider several sourcing alternatives to fulfill the IT requirements of their enterprise. When asked to rate sources of technology solutions, leaders continue to rank their IT organization as a primary source.

However, they also referred to a wide range of other viable sources -- from their own staff, consulting firms, as well as out-tasked subscription-based managed service offerings.

Proven Strategies for Success
CIO Group members noted that these survey results accurately reflect the overall situation for IT organizations today -- an unfortunate scenario where many CIOs typically spend considerable effort.

These CIO Group members have adopted best practices for IT-business alignment ahead of the general population. Almost all have dedicated relationship managers, as opposed to only 37 percent of surveyed IT organization. All have a PMO dedicated to IT governance, whereas only 47 percent of the typical firms do.

Proven strategies to integrate business and IT include: formalizing IT's role in the overall planning process; formalize, embed, and expand the role of relationship managers; embed IT skills within business organizations; create centers of excellence for business change skills; and, separate business enablement functions from IT delivery and operations.

End of the Do-it-Yourself Era
Forrester concludes, the era where IT said "we can do it all for you" is no longer viable. Business executives see IT inflexibility as a detriment to their agility. They're aware that internal IT is but one of many options.

Therefore, CIOs who insist that their role is the "sole source for technology solutions" will be marginalized. The savvy IT managers have embraced a coexistence scenario, where selective out-tasking is a welcomed addition to their solution portfolio.

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Four Places to Find Managed Service Providers

We spend considerable time educating businesses about the value of managed service providers (MSPs). Now it's time to tackle the next logical question: Assuming you're ready to outsource some or all of your IT infrastructure, where can you find a qualified, reliable MSP?

The search for an MSP that fits your business is a bit like finding a doctor: There are thousands of qualified people ready to help you, but ultimately your choice may come down to personality and bedside manner.

In some cases, MSPs may serve as a virtual extension -- or complete replacement -- for your IT department. With that reality in mind, your service providers will need to have corporate cultures that blend well with your own business culture and working style.

Treat your search for an MSP similar to an employee search. Interview the candidates carefully, ask about past successes and failures, and ask for plenty of references that you can contact directly.

Step One: Finding MSP Candidates

I still need to answer the most basic question of all. Where can a small, midsize or large enterprise find qualified MSPs to manage some or all of their IT systems? Here are four potential starting points:

1. Your Existing IT Partners: Chances are, your current IT consulting firms, solutions providers and integrators have launched -- or will soon launch -- managed services practices.

If you already depend on external firms for IT project work, ask those firms if they offer hosted applications, remote monitoring and IT management, and other ongoing, fee-based monthly services.

2. The MSPAlliance: This association has roughly 7,000 member MSPs from across the globe. I'm not suggesting that all of the MSPs are top-notch, but a growing number of them have earned so-called MSPAlliance Accreditation, which means the association has inspected their data centers, network operation centers and business processes. Check in directly with the MSPAlliance to see if they have any member organizations in your areas that offer the IT services you need.

3. MSP Partners: This vendor-driven organization -- originally launched by Cisco Systems, Ingram Micro, Intel, Level Platforms and Microsoft -- educates MSPs across North America. Chances are, they can direct you to qualified MSPs in your region. You'll find MSP Partners contact information here.

4. The MSPmentor 100: The annual MSPmentor 100 list identifies the world's top managed service providers. The research is based on a global MSPmentor reader survey, and it ranks MSPs according to more than a dozen metrics (including annual revenue growth and number of devices remotely managed).

Disclosure: I'm MSPmentor's founding editor, and even top-ranked MSPs can stumble in a bad economy. But if you check the MSPmentor 100 list, you can search for MSPs in your area.

Let me know how your search for an MSP goes and best wishes for a successful 2009.

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Videoconferencing Enables Sales For Global Consulting Firm

The business case made the argument for Kline & Company, a management consulting and research firm about to celebrate its 50th anniversary, to investigate hosted videoconferencing. A global company, it handles approximately 40 projects at any given time. Three to six people collaborate on each project, which last three months on average. About three-quarters of its projects are global.

To collaborate and share knowledge, team members confer approximately 20 times over the duration of a project. That's thousands of in-person meetings over the course of a year, between colleagues and clients who are unlikely to be in the same location. The cost -- both financially and in terms of time -- was becoming prohibitive.

Serving Client Needs
Companies benefit from management consulting firms' insight because of their aggregated experience. But that insight needs to be shared because not every consultant can join every engagement. That's why John Hadley, Kline’s director of IT, is so bullish on WebEx's hosted videoconferencing service.

He investigated other services before settling on WebEx, impressed by its platform independence; other solutions required software to be installed on their (and clients') computers, which can be problematic in these security-conscious days.

WebEx Meeting Center, launched from a Kline-branded portal and integrated with Microsoft Outlook, provided a fully integrated Web collaboration solution that offered easy set-up of meetings and a virtual meeting experience, "as if we were all sitting in one room," Hadley says.

The improvement WebEx brought to collaboration on client engagements was so clear that Kline began deploying it elsewhere within the company. Its market research group began using it for pre- and post-sales activities, hosting 30-minute WebEx seminars for each study it produces. This lets the company reach up to 50 prospects at a time and help generate sales leads for its consulting group.

Improving Sales and Collaboration
Kline also started using WebEx internally for communication. It's used for quarterly staff meetings and sales meetings, among others.

Because of its global reach, the company also uses WebEx for sales presentations. This helps when clients are geographically dispersed as well, because the team can make presentations to up to 12 people at the same time.

When the research team launched a new database capability, using WebEx for demos helped reduce the sales cycle: the company converted 100% of its prospects to sales within 30 days.

With all companies running leaner these days, it's impossible for key personnel to cover the ground they did in the past. Think about how videoconferencing can speed up not only collaboration and information sharing in your company, but also help reduce your sales cycle.

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Five Ways to Avoid Business Travel Expenses In 2009

Novell has canceled BrainShare. Apple is ending appearances at MacWorld. And thousands of businesses continue to cut their travel budgets for 2009.

I've got some unconventional advice for you: Stay on the road in 2009, and make sure you're meeting face-to-face with your best business prospects and sales leads. I plan to be on the road at least 40 to 50 percent of the time in 2009.

But on the other hand, our business continues to embrace a range of online technologies that drive conversation and collaboration with employees, customers and partners. Here are five options that can enable your business to save money and cut travel costs in 2009.

1. Hosted TelePresence: Yes, TelePresence (next-generation video conferencing) is a great way to drive communications. But building out TelePresence studios (they resemble executive boardrooms for the digital age) can cost $300,000 or more. Lower-end TelePresence solutions can cost about $12,000 and prices continue to fall.

Still, you can avoid the capital costs entirely by embracing hosted TelePresence. Much in the way that some on-premise applications are shifting into the cloud and SaaS (software as a service) model, TelePresence is gaining momentum in a hosted or pay-per-use model.

Take a look at AT&T's work with Cisco Systems, as well as Cisco's efforts to develop Public Rooms TelePresence. Over time, you will see more and more hotels, airports and public gathering places offering TelePresence rooms that you rent by the hour. And increasingly, the back-end services will involve hosted VoIP mixed with TelePresence.

2. Skype: An oldie but a goodie. Although eBay hasn't managed to monitize or fully profit from its Skype acquisition, the Skype platform continues to deliver big cost savings to my own business.

During a recent trip to Australia, I used Skype to make free VoIP calls to friends, family and my business partner in New England. The call quality made it sound as if all participants were down the hall from one another.

However, here's the challenge: To make free skype calls with your fellow employees, your peers also need have Skype accounts. Otherwise, you need to pay to "dial" from Skype to employees' traditional phones. At our business, Skype is a mandatory, cost-saving tool. And we find we communicate with many of our clients in Europe, India and Australia using the Skype platform.

3.WebEx: In February 2007 I visited Cisco Systems for an IT channel briefing. When we got on the subject of Unified Communications, I told Cisco they needed a stronger applications story to help show the power of Unified Communications. "You need an application like WebEx," were my exact words.

Two weeks later -- and by pure coincidence -- Cisco acquired WebEx. Clearly, I believed in WebEx for online meetings and Web conferences even before Cisco opened its wallet.

4. FreeConference.com: A great way to organize free conference calls with internal users or external sources. Many businesses spend thousands of dollars on conference bridges and other group-oriented phone conferences. But Free Conferences pushes the cost out to each dialer. And that cost is typically covered by each dialer's existing long-distance plan.

5. Be A Guest: Before you register for an event, conference or trade show, check in with the conference host to see if they need guest speakers for panels and breakout sessions. Then, see if those event hosts will pick up some -- or all -- of your travel costs.

If you're a dynanic speaker with unique views to share, some conference hosts will tap their own travel budgets to cover your trip expenses. But, pick your spots wisely. Plenty of conferences aren't worth your time, and many conferences will face light attendence in 2009.

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Hosted Phone System Saves Time, Money and Hassles

If you've ever had to add or move employees, you know that one of the biggest hassles is dealing with the telephone system. While many companies are deploying IP-based phone systems to ease their PBX hassles, still others are turning to hosted phone systems to eliminate their ongoing operation and management responsibly altogether.

Hosted phone systems work especially well for companies that have highly mobile employees. With a hosted system, employees can just log into the system to automatically forward calls to another designated number.

One big advantage: employees need only give their clients one phone number. This eliminates the complexity of dealing with multiple phone numbers and voice mail systems.

Helios Realty, part of Real Living, the Midwest's largest independent real estate firm, has taken advantage of this concept. Helios relies on Cisco-Powered partner Geckotech to provide a scalable voice and data infrastructure for its highly mobile workforce of real estate agents, while still providing the highest level of professional service.

How Hosting Saves Time
Helios Realty has no assigned desks. When agents arrive in the office, they sit down at any open desk and type in a 3-digit code. This reprograms that phone as their office line while they're there. When agents leave the office, they can log in again and automatically forward calls over to their cell phone or voice mail.

Without ever investing in a new phone system, Helios can add agents simply by adding phone numbers. The company never has to worry about having enough "lines," because VoIP is based on bandwidth, not phone lines. The real estate firm also has itemized billing through Geckotech, so it can budget based on the number of agents.

How Hosting Saves Money
The Geckotech system saves Helios money in two ways. "Geckotech's mobility saves us money each month on rent and infrastructure," says Andrew Magliochetti, a principal with Helios Realty. "When employees are in the office they are instantly connected. We never have to pay for onsite maintenance to move a phone around, and we only need room for one-third of our workforce."

By using an outsourced IP phone system, Helios has said, its employees are completely mobile and free to communicate at will with their customers. Access to voicemail, intercoms, conference bridges, and 4-digit company-wide dialing is easier as well.

Though phone systems are crucial to most businesses, it is not crucial that they own them, as Helios has discovered.

If the responsibilities of owning, operating, managing and updating a phone system are an unwelcome hassle, then perhaps you should consider a hosted solution for your business.

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The More Things Change, The More They Stay the Same

I received an email the other day congratulating me on a column I wrote for NetworkWorld nearly three years ago entitled, "Why Managed Services Fail."

The 'shelf-life' of web content always amazes me, but it is gratifying to have people stumble across my past writings and still find them timely.

What struck me as I revisited this 2005 column was how many of my points were still true,

• "...Almost every supplier and service provider I talk to admits that selling managed services has been harder than expected."
• "The first problem these managed service providers face is packaging."
• "The second issue is pricing."
• "The third challenge is positioning these services properly."
• "But the biggest obstacle to selling managed services is poor sales skills."

Sound familiar?
Although industry research clearly shows that customers are becoming more receptive towards managed services and the economy is even driving an increasing number of customers to actively pursue managed service alternatives, many MSPs are still suffering from poor sales and marketing skills to respond to these opportunities.

They are still thinking in terms of selling products rather than services. They are still promoting the 'speeds and feeds' of their technical capabilities rather than the business value of their service capabilities.

As a consequence, many MSPs end up selling their services to IT managers who are only interested in continuing to buy systems and software rather than selling solutions to higher level decision makers who are interested in the business impact of their services.

Worthy of Your Business?
So, if you are an IT or business decision-maker who is seeking to acquire managed services, don't be surprised if your potential MSPs are talking to you in the wrong terms and trying to sell you the wrong value propositions.

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Exploring Managed Services - Key Performance Indicators

All business has become global. Companies of any size can now market products and services worldwide over the Internet. At the same time, competition has intensified because customers can investigate global competitors with ease.

To compete effectively in the global networked economy, companies need new capabilities:

• Global procurement and sales 24 hours a day.
• Integrated internal and external business processes.
• Up-to-the-minute access to sales, order processing, production, and other business critical information required for informed decision making.
• Flexible processes that can adapt dynamically to changes in the business climate.
  

The application of Business Technology is now a primary enabler of strategic advantage. However, chief executives have become impatient, as their companies have failed to keep pace with these advances. There are alternatives, for those who choose to act. The managed services model can be applied to accelerate this much needed change.

Review the following common business needs to decide if managed services can provide benefits to your business. If you answer yes to these key performance indicators, then perhaps there are areas where out-tasking could help drive change.

Are you a candidate for managed services? Consider these scenarios.

Our business is facing challenges:

• Staffing IT professionals.
• Staying up-to-date with evolving technologies and IT skill sets.
• Managing and maintaining current infrastructure, hardware, and software.
• Securing data, transactions, and communications.
• Responding quickly to time-to-market demands.
• Remaining flexible enough to maintain competitive position.
• Reducing network overhead costs.
• Operating in real time in order to meet 24-hour demand.
• Delivering services to branch offices and remote workers.
  

Our business is in transition:

• We need to upgrade, refurbish, move, or relocate existing infrastructure.
• The scope or scale of current business operations is changing.
• A merger, partnership, or acquisition is altering operations.
• We need to increase the range and level of service.
• Our growth targets depend on implementing new technologies.
• We are expanding into new markets.
  

Our business must increase profitability:

• We prefer to dedicate resources to our core competencies and mission critical processes rather than network support activities.
• We view managed services as a good strategy for gaining efficiencies and reducing costs.
• We need to implement a global network service but lack internal global resources.
• We are concerned with our ability to keep up with the latest security threats and to meet privacy or security regulations.
• We are experiencing dynamic business growth while undergoing downsizing and hiring freezes.
  

Initiate a dialog with a managed service provider, and you can begin to explore the possibilities of how to effectively adopt Business Technology as a Service.

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How Web-Based Training Delivers Business Impact

There's a touchy little secret about call centers: their employee turnover is atrocious; it can reach as high as 26 percent per year, according to one expert's estimates. As a result, companies strive to ease the stress of their customer service agents.

Continental Airlines, the fourth largest airline in the U.S. with $14 billion in revenues, realized that by deploying VoIP technology with personal computers, it could route reservations calls to agents' homes. This not only reduced the need for call center real estate, but it also gives reservations agents the ability to both telecommute and time-shift their work. Today, almost 1,100 agents work at home.

Turning To Videoconferencing Technology
Unfortunately, even good ideas sometimes have bad side effects. Continental found that they could easily keep employees up-to-date on staff issues with regular teleconferences. But for training and evaluations -- activities that required visual interaction -- agents still had to get into their cars and drive to a call center location.

Continental solved the problem by turning to technology a second time, implementing the WebEx hosted system for improving communications with its remote employees. By using hosted WebEx Meeting Center sessions, supervisors can easily update small groups of employees on policy or process changes. They can also schedule one-on-one training sessions.

"Using WebEx, supervisors share their desktops to show agents how to use a specific feature on our reservation program," says Leslie Colbert, Continental's director of training and communication. "WebEx gives all of our agents direct and frequent contact with management."

Saving Time and Fuel
Continental estimates that it's saving more than 10 million miles of car travel, 9 million pounds of emissions, and about 500,000 gallons of fuel annually. The airline is also implementing WebEx eLearning for new hires.

Overall, it's benefiting both internally and externally. "WebEx helped us create an incredible remote worker program which aids us in our recruiting practices," says Colbert. "Our telecommuting program is now a huge draw for potential hires."

That's a double advantage for Continental. At the same time it's increasing employee satisfaction, it's also gaining a better reputation for being environmentally sensitive.

If you haven't already embraced Web collaboration tools in your organization, consider it as an appropriate New Years resolution to boost your team's productivity.

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Managed Services Momentum Shifts to Mid-Market

While traveling across North America in recent weeks, I've heard about the same two-part trend from multiple sources: Some small businesses are reducing their IT service contracts and delaying outsourcing decisions. But on the flip-side, mid-size businesses are accelerating their move to managed services. These trends are pretty easy to explain.

Consider this: 18 percent of small-business owners in October said they were at risk of going out of business because of economic conditions, up from 9 percent in August, according to an American Express survey involving 602 businesses with 100 or fewer employees.

Even worse:

• 79 percent of small-business owners said sales are decreasing.
  
• About two-thirds of the respondents said the tightening of credit has affected their business.
  
• 51 percent said they have had to tap personal assets in order to pay business expenses.
  

With those concerns in mind, it's increasingly difficult for small business owners to focus on their IT strategies. They're so consumed by cash-flow issues, that they overlook the fact that managed services can deliver predictable, reliable IT services at a fixed monthly cost.

Let me be clear: Small business owners should embrace managed services as a way to improve their own cash flow. But many entrepreneurs will hesitate to do so because they are afraid to make any long-term financial commitments in today's economy.

Mid-Market Managed Services Boom
In stark contrast, mid-size businesses are accelerating their move to managed services. I hear this again and again from CXOs within mid-size organizations, and from managed service providers themselves.

The explanation is simple: Mid-size companies are eager to trim costs. Big, sprawling on-premise application projects are out of fashion. Instead, easy-to-deploy software as a service (SaaS) engagements are the rage.

But that's not all. Mid-size companies are investing in managed security, managed storage, and other basic services that no longer require full-time internal IT employees.

Yes, some mid-size IT staff members are going to lose their jobs as companies outsource more functions to managed service providers. But that was a trend even before the recession kicked in.

Fearless Migration to Managed Services
Instead of fearing managed service providers, IT staff members should closely evaluate their skill sets and develop expertise in such emerging areas as unified communications, telepresence and open source applications.

Nobody is immune to the recession. But mid-market IT managers who keep their skills sharp will mitigate the risk of losing their jobs, and wind up working more closely than ever with managed service providers.

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A Boom in Managed Services - How to Prepare

New studies demonstrate the pros and cons of Business Technology deployments, especially as they relate to IT investments strategies.

First, the downside: in a recent study of IT management excellence, the results showed the continuing disconnect between finance and IT roles, and the value each one brings to the organization.

As the report states: "The lack of alignment within organizations is exacerbated by a lack of awareness on the part of both IT and finance about their own contributions to the problem. Nearly one quarter of the respondents report that discord between IT, business and finance is a frequent occurrence when making IT investments."

Why Clear IT Processes Matter
Lack of alignment is triggering a bigger cascade of problems relating to IT investment. For instance, sometimes companies excuse their lack of IT investment due to limited budget and resources.

In reality, "companies are unsure how to define or implement management processes, therefore they are unwilling to make significant changes and they allow other investment priorities to step to the front."

The temptation in this scenario might be to outsource the contentious area to a third-party to save money. This is exactly the wrong time to act.

Clearly, you have to get your own house in order before you take advantage of out-tasking, and then you have to apply strong governance to the service provider relationship. If you can't manage the process internally, you surely can't manage it externally.

Foundation for Competitive Advantage
Why do you need to get your house in order? Assume your competitors are going to act, and thereby gain an advantage from deploying managed services.

Forrester Research analyst Henry Dewing predicts in The Broad Opportunities in Managed Services that "macroeconomic factors, including rapid technology evolutions, a coming investment wave in IT, and market constraints on capital, increasing the attractiveness of managed services over the next 24 to 30 months."

In fact, Dewing proscribes the managed services model, represented by the confluence of faster technology change, a new technology investment cycle, and capital constraints. It's a proven way to take advantage of new technologies without capital investment -- while still having a hedge against increasing change.

Even more important, Dewing continues, "Given limited prospects for growth and the high cost of capital, Forrester believes that many businesses will turn to managed services to limit capital investments while increasing the flexibility of IT infrastructure."

Now, the upside: if you want to be in a position to take advantage of technological advancement to spur new growth -- while still hanging onto precious capital -- then managed services is likely the way to go.

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Global Enterprises Opting for Managed Network Services

I'm going to pull a Paul Harvey on my colleague Joe Panettieri. He wrote a couple of weeks ago about the managed service offerings of companies such as Verizon and Cablevision. For those readers outside the U.S. who don't know radio commentator Harvey, one of his catchphrases is to talk about "the rest of the story."

In this case, it's the number of global enterprises who are signing deals with carriers to manage their networks. Since the time of Joe's story, there have been at least five announcements by major U.S. or global entities opting for large managed services contracts -- and those represent only the customers who were willing to announce the deals.

The first deal to catch my eye was Indianapolis Power & Light's three-year contract with AT&T for integrated network solutions between multiple offices and generation plants, announced November 24th.

Now, managing a network in central Indiana may not seem earth-shaking, but IPL is a subsidiary of AES, a $13.6 billion company based in Arlington, Va., that has a global workforce of 28,000 in 29 countries on five continents.

Then I saw that, four days earlier, AT&T had announced a $346 million contract to manage the WAN, LAN, and VOIP capabilities for the state of Georgia. And the week before that, online investment firm Scottrade had expanded a deal with AT&T for both network services and business continuity.

New Market Momentum
And the announcements keep on coming. This week alone, two more billion-dollar global entities announced managed services deals.

Daimler AG, the €99.4 billion manufacturer of Mercedes automobiles and Freightliner trucks, among other vehicles, hired Verizon Business to deploy and manage an IP network for its operations in Africa, Europe, the Middle East, and North America.

The Elster Group, based in Luxembourg, hired British Telecom to manage the network for its operations in 38 countries across North and South America, Europe, and Asia.

Moving Further into the Mainstream
The moral of the rest of the story is clear: when billion-dollar companies start signing up for managed services contracts, the days of early adoption are over. These entities don't sign contracts like these unless they're more than confident about the ability of the aforementioned providers to keep them up and running in a 24-hour world.

As the analysts like to say when a market takes off in a sharp upward angle, it looks like we're heading into the hockey stick portion of the show.

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Managed Service in Search of a Market

There's a new term in the managed services space -- Desktop-as-a-Service (DaaS), and it's an obvious extension of the SaaS model. Desktone is a company that provides DaaS capabilities to service providers. Its customers, according to CEO Harry Ruda, currently include Verizon and Softbank Telecom.

Ruda characterizes DaaS as a service whereby users obtain their computing services through a remote connection over a network. The physical compute power, if you will, is delivered through a service provider and paid for on some usage basis.

In other words, users can access operating system and applications through a completely hosted system, and the service provider would be responsible at the back-end for storing data, upgrading applications, updating virus protection, among other activities.

Computing Power of a Utility
It relies on the whole concept of utility computing, in which compute power is delivered the same way electricity is -- when you want it in a metered fashion. DaaS proponents even promise that their service, like electricity, is instant-on, because there's no booting of an operating system.

I'm skeptical about a technology that even its proponents admit doesn't work well over wireless connections, when you consider that laptops now outsell desktops because of their ability to work even when users are disconnected.

However, proponents insist that by handing management of PC resources over to a service provider, companies of almost any size can cut maintenance and technical support costs, as well as increase security because the service provider can focus more on patches and virus protection.

Another pioneer in this new category, MokaFive offers a DaaS subscription service for $100 per user per year that uses a virtual machine, which they describe as "centrally managed but locally executed."

That means end-users can choose from among any number of devices -- laptops, Macintoshes, smartphones, tablets -- and have corporate data protected, but can still use their chosen device for other applications or personal information.

Evolution is Easier than a Revolution
The arguments and variations of DaaS go on and on. One of the biggest stumbling blocks to the DaaS model may be the fact that it requires extensive re-thinking of one's infrastructure -- either by replacing desktop computers with disk-less computers or significantly upgrading the network bandwidth, or both.

In contrast to DaaS, most of the current "fill-in-the-blank" as a Service models have been tried and proven, because they're a logical evolution from existing operational models. My skepticism remains intact.

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Making Sure The Numbers Favor Managed Services

As industry analyst forecasts mount predicting the rapid growth of managed services, an increasing proportion of IT and business decision-makers are taking a closer look at how these alternatives can impact their operations.

The challenge is effectively measuring the costs and benefits of these options.

Gartner kicked off 2008 predicting, "By 2011, early technology adopters will forgo capital expenditures and instead purchase 40 per cent of their IT infrastructure as a service." And with today's unprecedented economy crisis, THINKstrategies believes the shift to managed services will be faster and more pronounced than predicted.

As a consequence, every responsible IT and business decision-maker is obligated to carefully reassess their current operations and thoroughly evaluate all of the available alternatives to better manage their IT environments so they can better support their business objectives.

Substantive Cost Comparisons
However, many of the current methods for evaluating the financial impact of today's managed services fall short because they don't effectively measure the full cost implications and additional business benefits of these services.

For instance, many managed service providers (MSPs) utilize web-based total cost of ownership (TCO) or return on investment (ROI) calculators to help potential customers understand the cost-savings they can generate using managed services.

Yet, these calculators often include generic cost comparisons which are irrelevant or of little value to specific companies. Or, they suggest that managed services can eliminate valuable staff positions which raises fears among potential customers that they will lose their jobs by hiring a MSP.

Comprehensive Assessments
What thoughtful IT and business decision-makers need instead are interactive tools which enable them to work with MSPs to more thoroughly measure the real cost-savings and additional business benefits -- both tangible and intangible -- that managed services can produce for their organization.

This requires more sophisticated calculators and skilled salespeople who can work with customers in utilizing these tools effectively.

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Managed Services for Every Type of Organization

Do you believe that the growth of managed services adoption will have little impact in the government sector, or other non-profit organizations? Think again.

Let's consider the facts. Clearly, all organizations benefit from improving their processes.

Government Insights, a global independent research and advisory firm, released a report focusing on Service Level Agreements (SLAs) and their use in managing the delivery of IT and network services.

As IT and network technology are embedded further into business processes, the apparent need for productive cross-organizational partnerships becomes evident. The state of these Business Technology partnerships can be either an enabler or an inhibitor -- when negotiating an SLA.

Demand for Service Level Agreements
Organizations may develop SLAs with internal IT staff and/or with external IT service providers. In both cases they set guidelines and minimum standards for the delivery of IT services to the end-user community.

Jan Duffy, research director, Government Insights, said "SLAs should be beneficial to the IT/business partnership, contributing to transparency and to developing objectives that are achievable. Given the large number of relationships and alliances involved in modern IT, governments can benefit substantially from developing expertise in preparing and maintaining SLAs."

As we've stated previously on this forum, relevant metrics and SLAs are a key ingredient of most managed service provider offerings, and the associated inherent benefit of an out-tasked solution.

According to the Government Insights market assessment, demands are increasing for internal IT departments to provide a combination of "invisibility and level of responsiveness" that is considered a hallmark of the seasoned managed service provider.

Imperative for Improved Accountability
To meet this strategic imperative, many IT leaders have moved their organizations toward a service delivery model. Translation: this means that the performance of IT is being judged based upon the way it is valued by the end-user community -- and not by internal IT indicators.

Government Insights describes the main characteristics of developing successful service level agreements for use in managing relationships between public sector organizations and their internal IT departments and/or with external IT providers.

As a result of their analysis, they recommend that public sector organizations -- including central, regional and local -- acquire competencies that will enable them to:

• Define, measure, and continuously improve the services that IT delivers.
• Continuously monitor user expectations and satisfaction, and provide timely education.
• Deliver IT services aligned with the needs and priorities of current and future mandates.
  

A managed service provider can enable a government, or other not-for-profit, entity to select and implement business technology to improve the effectiveness, efficiency, and quality of service performance that's delivered to their constituents. The need for on-demand service transcends all sectors of the marketplace.

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