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Managed Services - Avoiding Pitfalls


Managed Services is a key enterprise strategy to reduce IT opex costs. There are some obvious and avoidable pitfalls which the enterprises need to be aware of before embarking on this journey. The crux of managed services is managing by outcomes versus by resources. The mantra is to move the commodity services to low cost centers so that high cost resources can be leveraged for strategic initiatives. The biggest pitfall in a managed services program is the mismatch between IT and business expectations. A critical support ticket may have an SLA of 4 hours and in 95% cases (per SLAs ) the IT partner may be meeting these SLAs but this may not be enough from business perspective. Let us consider an example - A truck waiting on the docks, waiting for the manifest to be printed may seem as just another IT ticket which got resolved per SLA but the criticality from lost revenue and productivity was not measured here. End result is that IT feels that it is doing very well (per the metrics) but we have a highly dissatisfied customer (the truck was waiting for almost 2 hours without a resolution!) This is the gap which proves to be the Achilles' heels for the support program. So how was this being done prior to Managed Services? Well, by an experience IT person who was with the enterprise for over 15 to 20 years , who understood the technical as well as functional landscape and was also tightly engrained with the business needs and expectations. How do we bridge this gap ? For one, a proper transition and handshake. IT companies should ensure that the knowledge base in the team is constantly maintained. i.e. plan for attrition. Knowledge base should be covering both technical and business aspects. IT companies can also invest in business partners versus technology partners at onsite locations. Enterprises can also put IT partners in check by baking business SLAs into the contract and drafting rewards/penalties by business specific areas. Enterprises should also plan for their SMEs to visit the IT team on a periodic basis thereby bridging the gap between IT and business. Managed Services may include niche areas which do not fit the typical commodity services work , these are onsite intensive and very difficult to source (high hourly rates). Early identification of such areas and de-scoping them is preferred otherwise a new rate card for such areas should be negotiated with the client. This can seriously impact overall program margins. Being fixed price in nature, there could be some operational challenges where optimal staffing may not be happening across towers (i.e. onsite heavy , high number of onsite contractors, less aggressive onsite offshore ratios) at the pretext of improving customer experience. An operational improvement plan should be drawn which clearly addresses

these gaps. IT organizations should also invest in smart tools to measure and monitor real time SLAs and enable collaboration across the support structure (L1, L2, L3)

Posted on behalf of Thomas Mathen

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