There’s agreement amongst industry analysts that the use of the managed approach to delivering network service will increase significantly over the next few years, as the technology becomes ever more sophisticated, ever more quickly.

But managed services is not a ‘hire and forget’ option’ according to a recent report by the Butler Group, an IT research and consultancy company. The report warns that too many companies do not manage their relationships with service providers well and are losing money as a result.

THE MARKET - WHAT'S AVAILABLE

There’s an important distinction to be made between ‘managed services’ and ‘strategic outsourcing’; the latter involves a transfer of assets in a long-term or permanent arrangement.

Managed Service Providers (MSPs) deliver a wide range of IT-based services to their customers using a business model that enables them to focus narrowly on particular technologies and service offerings. At present, the greatest demand according to the Butler Group is for network and voice/data convergence services.This focus allows the more efficient MSPs to maintain a position at the head of the wave – so they are always offering the benefit of state-of-the-art services.

With the economies of scale available to them, this means that MSPs are generally able to provide their customers with more effective services at a lower cost than they could achieve by themselves. The increasing success of the MSP market suggests that this is true, as does the growing number of SME and SOHO users regularly using managed services. The managed services provider also benefits from a closer and stronger relationship with the end customer – becoming an integral part of the customer’s business that is able to respond quickly to developing needs.

But this kind of outsourcing is not a panacea. Managed services can be a business risk to organisations that go about it in the wrong way. To achieve maximum benefits organisations need to avoid using managed services as a way of addressing an immediate problem and should buy only as part of a properly considered strategy. BT Wholesale has reviewed its own business strategy to increase the focus on managed services and can bring this experience to aid other providers in delivering new, managed services to their own end user customers. What does this mean in practice?

DO WHAT YOU DO BEST

Using managed services allows you to concentrate your efforts where they really count – focusing on your customer relationships and your sales and marketing activities, rather than running technical and operational services. A good quality, responsible MSP will give you cost savings as well as ensuring that you are making optimal use of what they’re offering.

FULLY SUPPORT YOUR MANAGED SERVICES CONTRACTS

Too many companies, says the Butler Group, find an MSP, hand over responsibility and breathe a sigh of relief. But experience proves that companies get the most from their MSP relationships if they are actively managed, with nothing left to chance. That means creating an in-house management team tasked with active vendor management – from selecting the MSP all the way through to exit management, taking in the negotiation of an SLA, monitoring of service delivery and managing change requirements along the way. Companies taking the decision to buy managed services may not be able to define precisely when the need will come to an end – but laying down definite exit plans is an important part of the contract.

BASE THE DECISION TO BUY ON THE WHOLE COMPANY'S NEEDS 
 
The value of managed services can be undermined when departments are allowed to make autonomous technology decisions that don’t take full account of either the wider needs of the company or of its systems. A report published by the Kirkman Company, an independent consultancy specialising in outsourcing, observes ‘Sourcing is no longer optional and a strategic approach has become a precondition for business success and even survival.’ Taking the whole company’s needs into account is as important when buying managed services as it is for buying technology generally. Maximum costs and benefits are realised only in the context of a company-wide strategy.

Another perspective on this is to recognise that the use of managed services needs active commitment from all levels in the organisation and not simply from the departments most closely affected. Commitment from the top is, of course, vital.

READ BETWEEN THE LINES

BT Wholesale is responding to the changing needs of the market as Damon Wheaton, Director, Managed Services, BT Wholesale explains: "We’ve seen the benefits of using managed services in our own business and now offer a wide range of managed services ourselves – from white label managed services that take you straight to market with an instant multi-product portfolio, through to fully managed network services. We understand the concerns of Communications Providers who want to offer managed services to their end user customers and we can help you to success, using our experience to help you avoid the pitfalls."

You can trust the day-to-day running of your mission-critical core transmission and switching networks to BT Wholesale's cost-effective, fully managed network management solutions. As the UK's most experienced operator of large telecommunications networks, BT Wholesale has all the skills necessary to run your network efficiently and to enhance the service you receive and can offer your customers.

Click here to read more about BT Wholesale’s Managed Network Solutions in an interview with Brian Fitzpatrick, BT Wholesale’s Managing Director.