Managed services key to recovery following green shoots

Nursten: Get ready now for the green shoots

As the supposed first green shoots of the recovery emerge, channel businesses need to be poised to take advantage of the upswing. A question lurks in most business owners’ minds, however, as to whether this is a real or faux recovery.

Only time will tell but the channel can help bring about a real recovery by ensuring their service offering is what customers truly want. It is up to the channel to provide compelling reasons for customers to re-open their wallets by giving them flexibility, additional value and transparency.

Cost is always key in any tactical operational change, but organisations must not only address the business plan as a reaction to the short-term macroeconomic climate, they must also consider how best to take advantage for the future.

An effective managed service offers customers the chance to reduce costs, improve operational performance and stability, add agility and mitigate risk. But achieving a managed service that delivers real value requires some tough questions both internally and of potential suppliers.

Yes, organisations are looking for ways to cut costs fast. For many, this has already resulted in a reduction in IT staff and attention is now turning toward IT systems and services.

But every organisation is now also aware of the risks of underfunded IT systems around stability, productivity and customer service. So while increasing numbers are looking to assess the value of a managed IT service, there is a near universal focus on cost – sounding alarm bells.

Basing a key operational decision such as outsourcing IT solely on cost is not sound business practice. Not only are organisations potentially putting untenable pressure on channel suppliers, which is likely to lead to reduced levels of service and increased risk, they are severely constraining their ability to react to any upturn.

The channel must understand the changes occurring to customer mindsets if its players are to sell managed services.

A key consideration is the level of talent and experience that exists within the customer’s IT team. While cutting costs is a primary goal today, business decision makers will be considering which actions best support the medium- and long-term key business strategies.

Only through a broader and more holistic approach of both financial and strategic implications/drivers can any business arrive at the right decision.

When making any radical operational change such as outsourcing, the IT function organisations will be asking themselves about the medium-term strategy.

Does that include a new product or service launch that will require considerable IT input and support? Would a managed services provider be in a position to provide that level of insight? Indeed, would the organisation be happy to even share that strategic vision with a third party?

And, critically, what is the risk associated with in-house IT versus a managed service?

Flexibility is key to success in this volatile new economic climate. Many contracts hide massive costs and cannot be scaled up or down without incurring huge penalties – making the deal just as inflexible as an in-house resource.

Furthermore, most contracts are designed from a legal rather than service-level perspective. Understanding the business requirements and determining the right service level agreement (SLA) is crucial – from the coverage required to the location of the support staff.

If the overnight cover is in India, will the problem really be resolved by 8am?

Some organisations are struggling to keep afloat. In their bid to raise finance, many are cutting corners and failing to pay attention to service provision.

Before entering into any new contract, organisations will be looking hard at supplier cash reserves, as well as the number and qualifications of staff, and how these figures compare with 12 months ago.

A good provider should also be innovative as well as transparent. Costs today are an obvious driver and organisations should offer not only contracts that flex up and down in line with business needs but also newly designed, lower-level services, with less reporting, for example, to provide additional customer choice.

Cost should not be the only focus. Organisations will be asking: "Will a managed service deliver return on investment?"

Will the company be brave enough to outsource all IT functions to a third party, or will it opt to keep a couple of key staff ‘just in case’ – a move that may increase costs and undermine the new managed service offering of its channel supplier.

Understanding customers’ expectations in terms of up-time, resolution time and business goals is key before – not during or after – discussions with potential providers.

And channel businesses need to ensure they have the right blend of people, processes and technologies to live up to these expectations.

Scott Nursten is managing director of S2S