Understanding Managed Infrastructure Services
Managed services can be defined as outsourcing management responsibilities, functions as well as strategic methods on a pre-emptive basis. This is usually done to improve operations as well as cut down expenses.
Alternatively, this can be done through the fix on-demand outsourcing model. This model requires the service provider to deliver the on-demand services and then charge the customer only for the services delivered.
Under this subscription model, the client owns or has direct oversight of the infrastructure being managed, but the services provider offers the managed infrastructure services. A contract usually binds the client, and the service provider and the service level agreement states the performance and the quality standards of their relationships.
Managed infrastructure services usually differ from other business models in the IT solution provider as well as the channel partner space. Recurring revenue here is usually one key departure.
Here, solution providers charge their services on the basis of time and materials used. That is, the bills are charged on an hourly rate for repairing clients IT infrastructure and charging for parts or replacement gear.
Service providers offering IT projects, like computer systems installation and integration can at times charge fixed prices for products and services. Either way, the MSPs generate revenue from each project on a one-time basis. However, larger projects with numerous milestones and associated payments are normally exempted.
Generally, the conventional service provider business is typically transactional. That is, the service provider’s revenue stream somehow provides a more stable and predictable base of business.
Many traditional solution providers, like value-added resellers, have been attracted by the recurring revenue model. However, growing service providers are struggling to establish themselves in the market.
The managed infrastructure line of business requires companies to adopt different technology infrastructure components, different performance metrics, and sales compensation programs amongst others.
Consequently, many service providers earn their revenue from business lines other than managed infrastructure services, like IT project work or break/fix the business. Pure play managed infrastructure service providers are very rare in the IT services sector.
Common customers of managed infrastructure services are the small and medium-sized businesses. Most of these businesses have limited in-house IT capabilities, and so, they take contracting the service providers as a way of gaining experience.
Larger enterprises also contract the MSPs, but in scenarios where they are facing budget constraints and hiring limitations. These scenarios force the enterprises to hire MSPs to supplement the in-house IT staff.
The MSP subscription model offers different customers the benefits of predictable IT support costs. Also, because the service providers take a pre-emptive approach, they assist in preventing problems from occurring thus preventing disruption of business operations in the long-run.
The following are some of the benefits enterprises have enjoyed from managed infrastructure services.
- Adopting managed infrastructure services has enabled many enterprises to be up to date with the technology which is ever growing.
- Businesses have been able to address cost-related issues as they have been able to receive services at a cheaper cost.
- Also, enterprises have been able to access the necessary skills which they lack in-house.
Many small and medium-sized businesses and even large organizations are migrating their IT infrastructure components to the clouds. Because of this many managed infrastructure service providers are facing the challenge of cloud computing. Some service providers are offering in-house cloud services while others are acting as brokers with established cloud providers.
A recent survey has revealed that many managed infrastructure service providers lack the knowledge and expertise in cloud computing. This has made the service providers reluctant when their clients want to make the transition. Thus they have become obstacles to this change.
For instance, in transportation, many organizations are facing the challenges of the rising fuel costs, transportation costs, complexities in the global supply chain and the shortage of experienced drivers.
Additionally, the organizations have a burden of reducing related expenses and managing the day-to-day transportation processes. All these require the expertise of managed transportation services providers.