Are your ICT managed services cost-effective? Part 1

Let’s just deal with the first topic today – what delivery model is your MSP using to deliver your managed services? There’s a few choices, and variants thereof:

  1. Dedicated. Your Managed Services Provider (MSP) has a team largely or entirely dedicated to servicing your organisation’s ICT needs. Typically, they’ll co-locate with your organisations’ staff and the operational services will be paid for with a fixed monthly charge.
  2. Shared. Your ICT services are provided by a centralised ICT skill pool. The MSP leverages the central skill pool to service multiple customers’ operational IT needs in parallel. Under the shared model service fees will, again, be generally charged on a fixed monthly basis.
  3. On demand. Also known as consumption-based. Another centralised service model, but this model allows the customer to pay for services used as they need them. Payment models include pre-payment of blocks of service hours, or literally payment of a fee per request.
  4. Combinations of 2 and 3.

There are no absolutes when it comes to the merits of the alternative delivery models: each has pros and cons.

In considering which model will deliver IT services to your organisation most cost-effectively you need to understand your organisation’s specific business and IT needs – financial and other.

In general, though, the unit cost of services delivered using a dedicated service model will be a multiple of that of the other models. So, no absolutes, but here are some considerations:

Scale: increasingly only very large organisations may continue to get the best value from a dedicated ICT delivery model. Advancements in support technologies and increasingly powerful networks mean that many components of ICT services can be very cost-effectively delivered by centralised, shared-service teams using electronic infrastructure monitoring, support and deployment capabilities. Effective support across state and national borders for even large organisations is now demonstrably available.

The move to the Cloud: we’ll talk about selecting alternative platforms later. But, as organisations increasingly adopt Cloud platforms, the relevance and value of dedicated, local support teams diminishes: ICT engineers increasingly don’t need to work in the local data centre or on the customer’s premises. They can deliver cost-effective services from anywhere, and more efficiently.

Flexibility: Businesses are operating in an increasingly dynamic and globalised world, where 12 months is starting to feel like a long time ahead to predict ICT needs. Many businesses need to regularly flex, in terms of their operational activities, to support acquisitions and other business changes made to remain competitive. The shared and on-demand ICT delivery models inherently offer the most flexible and responsive models to support modern businesses, operationally and cost-wise.

By the way, just to be clear, no one’s suggesting that all aspects of IT service delivery can be provided remotely: understanding customer needs requires local interaction. But the core ICT service delivery components increasingly are location-independent.

Stay tuned for the rest of Steve’s Series, published weekly here and on his LinkedIn page.

About Steve Richards, General Manager

Steve is an experienced General Manager with over 35 years’ experience, and a demonstrated history of delivering outcomes. He bring extensive experience to the Frontline Services Executive team, particular in the information technology and services industry, as well as Finance and Oil & Gas. Skilled in Sales Management, Change Management, General Management, Program and Project Management, Steve’s breadth of knowledge makes him a welcome leader for our expanding team. 

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