Explanation of Managed Services

3/22/2009 MANAGED SERVICE IS OUTSOURCING To Be Considered for Broadcast NRCS | James Rowe March 22, 2009 MANAGED SERVICE IS OUTSOURCING Managed Service Is Outsourcing To be considered for broadcast nrcs James Rowe A managed service is outsourcing. Information technology treats the phrase “managed service” differently than other industries offering a version of outsourced services. Dr. Gerard Macioce is credited with coining the phrase in his analysis of United States government information systems. Managed services, according to The Free Dictionary, is an umbrella term. The definition is thirdparty monitoring and maintenance of computers, networks and software. InfoTech Update newsletter in a two year old edition, that introduced managed services, denotes it by what is expected from an MSP (managed service provider). “Any defined set of proactive services that are remotely delivered and prepaid for on a recurring basis.” Dr. Macioce calls managed service “the practice of transferring day-to-day related management responsibility as a strategic method for improved effective and efficient operations.” By its very nature a managed service is proactive according to the web site Channelpro. Typical vendor support models for newsroom computer systems are just the opposite. NRCS vendor support is reactive: when it’s broken they fix it. Proactive is preventive. A managed service has someone watching your computer network all the time. The InfoTech newsletter predicted many information technology providers would become managed service providers. The efficiencies and cost savings a managed service bring will be viewed more favorably in these days when managers look for creative ways to cope with fewer resources. Managed services are another cost saver. Typically broadcast newsroom computer systems have always been managed on site by someone on staff. In a number of cases the person responsible had other duties – either full-time IT employee or someone on the news or engineering staff took the responsibilities of systems management. Outsourcing for newsroom computers has been verboten. Vendors sell newsroom computer systems with integration, installation, one time user training, initial systems management training, and a hefty emergency support agreement. They require, by contract, a systems administrator hired by the customer. You are left to train new hires, retrain new systems managers, and little or no assistance in planning technology deployment integrated with newsroom computers. IMHO, business partnerships or customer/vendor relationships under such arrangements are guaranteed to be troublesome. The concern delivering a managed service is called a managed service provider or MSP. An MSP offers a number of world class services for businesses or newsrooms at a fixed cost for a negotiated period of time. It’s similar to AP’s wire service contracts. MSPs refer to vendor support models as break/fix. Sort of like a three act play that keeps repeating. 1. something breaks 2. you call support 3. they fix it When it breaks again the process repeats – break/fix. 2 March 22, 2009 MANAGED SERVICE IS OUTSOURCING A managed service should provide ten features reports Gen Wright at Articlesbase. No repeats on her list. Most sources usually cite the same ten things an offerer, that’s how Dr. Macioce defines the purchaser, should expect from an MSP. I will attempt to cull the list of ten expectations of a managed service to five: 1. 2. 3. 4. 5. Pro-active service, program of regular preventive maintenance Quick and appropriate response to issues Advice on technology and threats Backups – data protection schemes A fixed price for proven knowledge and expertise I cheated. I combined some to make five. Only a couple I showed remorse so please show me mercy. The Articlesbase link will take you to the list of ten things a managed service should offer. Peter Sandiford over at LevelPlatforms writes about choosing a managed service. Sandiford has a similar list of ten expectations. However the lists cited exclude ownership of your enterprise or computer system. You, the offerer, own the system and has the hardware and software vendor relationship for support. An MSP is your liaison to the vendor to some extent. You signed the purchase order for the system so you own it. If hardware fails it’s a cost you can only avoid with some insurance usually provided by the hardware vendor. A managed service provider becomes your intermediary with the vendor but everyone knows power rests with the one who paid for the show. A managed service provides more features than traditional software and hardware support agreements, which by the way still need to be maintained. Usually vendor support contracts are reduced when a managed service is employed. MSPs offer better and more services for a fixed cost. The expense is far less than the cost of ownership required by a support contract. Two simple take-aways 1. managed service offers more for less cost 2. you are still owner and have some responsibility Outsourcing systems management of broadcast newsroom computer systems is rare. However these are very different times. A managed service for information technology is generally a monthly subscription with a contracted duration. Subscriptions are used for all kinds of services purchased in newsrooms so the concept is familiar. What does it cost? What is the value? Those are two good questions for a managed service provider. An MSP may have several pricing models for the routinely annuity type service. Pricing is usually a fixed fee. It could be a flat fee for what InfoTech Update calls an “all you can eat” model. The managed service under such an arrangement negotiates a flat fee for a set of services agreed upon by management and the service provider. The “per device” model is also a flat fee but it’s a bite for every device managed and more interesting. The model provides simplicity for the MSP and easy calculation of fees. 3 March 22, 2009 Example: MANAGED SERVICE IS OUTSOURCING $199 per server (usually two) $75 each desktop (100) $35 per printer (10) $100 per network --------------------------$100,176 in fixed annual fees That’s almost $8400 in fixed monthly expenses for the per device plan in our example. The model focuses on price more than benefit to the newsroom. There is the gold/silver/bronze model - several bundled packages of services. The setup scales so each level offers more services. Usually the lowest bundle proposes basic services and the next levels add benefits to the elemental package. Three traditional ways to pay for a managed service: 1. All You Can Eat – Negotiated package of utilities at a fixed rate 2. Per Device – Services charged by computer and other devices managed 3. Gold/Silver/Bronze – Scalable bundles - each a flat fee increasing as the level accrues The per-device example might be curious in times to bring down expenses. Understand though, the main goal of MSPs, as defined by wiseGEEK, is “to fill certain needs that are met more cost effectively by outsourcing….” A managed service trims expenses and boosts efficiency in the same process. Business.com has a list of MSPs. The primary goal of a managed service is to save the customer money. Cost saving is first on the list of at least ten expectations from a managed service provider. Here are just ten features of an MSP: 1. Fixed price for projects or services 2. A proactive scheme to prevent problems 3. Oversees a robust back up plan 4. Easy point of contact for users’ problems 5. Assists with other technology providers 6. Advises on impact of other technologies 7. Helps plan IT strategy 8. Tailors solutions for you 9. Provides quick response where appropriate 10. Saves expenses compared to in-house costs In the spirit of integrity, this paper was written by a partner in Rowe and Company, LLC which offers a managed service for newsroom computers. Some myth busting in regard to managed services is attempted at ChannelWeb where Scott Campbell last fall wrote “Dispelling The 10 Biggest MSP Myths.” I like his Myth 2 in which he promotes ChannelWeb’s monthly customer reviews as opposed to quarterly post mortems. And the other self-serving myth that remote monitoring of a system is very different than managing a system. The topic of managed service is often confused and misunderstood. The purpose of this article is to demystify managed service and make the topic plain. 4 March 22, 2009 MANAGED SERVICE IS OUTSOURCING Cisco is in the managed service game and has the most documentation I’ve seen written by a single provider. In one doc Cisco asks “are managed services right for your business?” Absolutely the first question you should consider. Then there is the other document on how “managed service helps you thrive” written by Cisco. Sort of like you decide you want to get married, so it's right for you, and then you work to make the marriage. The InfoTech Update newsletter details six benefits a managed service offers the customer: 1. 2. 3. 4. 5. 6. Reduced operating costs Increased efficiency of the enterprise or system High level of expertise in regard to services provided Reductions in system down time Managers can focus on managing their business instead of their system Peace of mind there’s someone to call 24/7/365 Of all features and benefits of a managed service reduction of cost of ownership of an enterprise is the key one. 5 March 22, 2009 MANAGED SERVICE IS OUTSOURCING Dr. Macioce coined managed service and is also heralded as a hero when on Sept. 11, 2001 he stayed inside the Pentagon to help those injured in the terrorist assault. Rowe and Company, LLC 275 Grove Street Suite 2-400 Newton, MA 02466 617.663.5747 Telephone 617.663.4801 Fax www.roweandcompany.biz 6