In order to provide complete functionality, this web site needs your explicit consent to store browser cookies. If you don't allow cookies, you may not be able to use certain features of the web site including but not limited to: log in, buy products, see personalized content, switch between site cultures. It is recommended that you allow all cookies.

This content is currently only available to TSIA members.

If you believe you are seeing this message in error,
please let us know.

It appears we’re in for a pretty exciting year for managed services, as more and more businesses are looking to MS providers to assist in their day-to-day-operations. While this is an up-and-coming trend, there are still some companies that are looking into implementing managed services within their organizations, but are uncertain of exactly what it is and how it can help. Here’s a quick rundown of the many ways managed services can assist you in your daily processes to keep your organization running like a well-oiled machine.

Just What is Managed Services?

Managed services has a pretty simple definition: it is the practice of outsourcing day-to-day technology management responsibilities to a third party as a strategic method for improving operations and accelerating a return on technology investments.

This means that when a company realizes they can’t do everything themselves, they hire outside help, and that’s where managed services comes in. Like the old Greyhound slogan “Leave the Driving to Us”, this value proposition is driving many organizations to look into outsourcing some of their management to MS providers who can take on some of their work load so they can get back to focusing on the more specialized aspects of their business. The portfolio of the average MS provider is pretty broad, and can consist of anything from basic monitoring services, to hybrid managed services, and everything in between.

The Different Ways Managed Services Can Help Your Business

Managed services can provide a lot of help in many areas. Here’s an overview of the different capabilities of an MS provider. 

managed service offers  

(Click image to enlarge.)
Types of managed services offers: Monitor, operate, optimize, transform, hybrid/XaaS.

Monitor: With rising software centricity and network propensity, customers are facing an increase of challenges when trying to operate their own solutions. Rather than struggle on their own, they will ask for outside help, and this is where managed services comes in. A managed service provider can perform technology monitoring services and assist customers as questions crop up.

Operate: After monitoring and notification services, a customer might wish to transfer the actual operation of a solution over to a third party. The customer still owns the technology, but would rather someone else run it for them.

Optimize: Once a solution is up and running, a managed service provider can then begin to really help improve overall performance of solutions through optimization.

Transform: This function is when a MS provider can help a customer transform from legacy platforms, or older solutions, and take them to next generation solutions, as well as operating them on their behalf.

Hybrid/XaaS: This function is where we see the most growth, as this is where the managed service provider does everything for the customer. It could be in any area, ranging from communications, to network infrastructure, where they offer networking infrastructure and collaboration-as-a-service. The customer doesn’t have to buy the switches and routers, they just tell their MS provider what services they need and pay on a per-user or per-month basis. There’s no professional services fees for the design consulting and integrations, its all bundled into a single turnkey managed service solution. This function is quickly becoming the most popular solution for many companies.

What is Fueling Services Growth?

Comparing to Q1 2011, services represented just a little bit more than 1/3 of the revenues in the tech industry. Fast-forward to Q3 2014, services is now higher than product revenue and represents 52% of the revenue in the tech industry, making services revenues more important in the tech industry than tech revenues. 2014 has really been the year that we’ve seen that, and as we go into 2015, I really suspect we’ll see more of this trend.

products versus services  

(Click image to enlarge.)
Services are becoming more important than products.

MS is growing on average of 44%, while standard attach services is growing at only about 2-4%. We really do expect this trend to continue, as the number one offer that’s fueling that growth is the final capability mentioned above, hybrid/XaaS, or what we refer to as managed XaaS.
service line growth rates chart: professional services, education services, field services, support serivces, managed services  

(Click image to enlarge.)
Managed services is growing at an incredibly rapid rate.

More and more businesses are now showing a preference for an option where everything is bundled into an MS contract, including the professional services, field functions, the technology itself and the day-to-day operation of that technology. 

Want to know more about emerging trends in managed services and how these capabilities can help your organization? Watch the free recording of my webinar, "The State of Managed Services: Emerging Trends in 2015" for a more detailed look at the concepts mentioned above, as well as a preview of what we can expect for the future of managed services as we continue through 2015. If you have any questions about what MS solution is best for your business, or even just about managed services in general, feel free to drop me a line in the comments. I look forward to hearing from you! 

Download Now

George Humphrey

About Author George Humphrey

George Humphrey is the vice president and managing director of service and delivery research and advisory for TSIA. Given his extensive background, George also directly supports the managed services research practice. He is a networking and communications industry veteran with over 25+ years of experience. Throughout his career, he has held several leadership positions in managed services, including global strategy, product line management, marketing, operations, and client management.

George's favorite topics to discuss

Topics discussed in this post