Managing the mid-market

While outsourcing is the preserve of large organisations, managed services are ideal for mid-sized companies

The term ‘managed service’ is often used incorrectly to mean exactly the same as outsourcing. In fact, the two terms describe quite distinct approaches to IT management.

Outsourcing involves transferring the entire IT function of an organisation to a third party to manage. It is most commonly practised by global organisations and is usually driven by a desire to reduce operating costs.

Managed services involves outsourcing the management of only certain parts of an organisation’s IT infrastructure, not the whole-scale transfer of people, assets or control to a third party.

This approach is usually driven by a desire not only to reduce costs, but to improve the performance, resilience and security of IT systems without increasing in-house skills and resources.

In contrast to the outsourcing approach, whose cost and scale can be prohibitive, the managed service model is ideally suited to the needs of the mid-market organisation where the pressure to deliver is high but resources are scarce.

The fact that IT systems have become increasingly complex presents another argument in favour of managed services in the mid market. The tools needed to manage these systems and ensure high levels of performance and security are expensive. Because they are difficult to use and require specialist IT skills, they are not an option for most mid-market organisations.

The use of managed services means that only one business, the service provider, invests in the software and skills, and the cost is spread among all its customers. They get the benefit of the tools, but not the hefty price tag.

So why, in light of all of these benefits, is it on the whole only large organisations that are using managed services, rather than medium-sized companies?

The answer is simple: there is a lack of understanding of what managed services are, how they are delivered and what they cost. The perception among many mid-market organisations is that managed services are not suited to their needs, so managed services simply do not appear on their agenda.

However, managed services providers are now emerging that have identified this gap and are determined to raise awareness of the advantages of managed services for medium-sized organisations. A change in the market can be anticipated as a result of their activities.

Alastair Kitching is a director at Esteem Systems.