Managed services across IT architecture of enterprises have traversed a lengthy way from the early days of FM and AMC. It means more opportunities for system integrators and solution providers to ride this wave. But it’s not as easy as it sounds. Solution providers have to invest resources in terms of skilled manpower, training sessions and essential ‘Go to Market’ tools to emerge successful. “Managed Services is no longer a technology-driven model. If a solution / service provider can convert a technology infrastructure at the customer’s end into a utility or a service, he becomes a managed service provider,” says Avinash Pitale, Executive Director, Omnitech InfoSolutions, defining managed services in simple terms. Importantly, it has to be a ‘pay-per-use’ model, he adds.

Ajay Sawant, MD, Orient Technologies says, “In managed services, the scope of work is pre-defined within specific parameters between solution provider and customer.” “The managed service model familiar to us is the 100 percent outsourcing of an entire array of IT services of an organization under one /multiple contracts.” Says B. Shankar, Director, Ashtech Infotech. He adds that it is an SLA driven model wherein customers do not have the hassle of managing IT applications on their own. Pitale concurs saying, “Customer are very concerned with optimized and efficient IT infrastructure than the type of services. The focus has moved from technology to optimization.”  According to Biren Selarka, CEO, Acma Computers, “Managed services revolve around three factors – availability, accountability and ‘pay per use’. The litmus test of a service provider surfaces if he is able to manage promised services at all times and is accountable for issues related to it”.

“An organization will prefer one source contact for printing needs than individual suppliers for printers, cartridge supply, paper supply,” cites Pitale.

“A solution provider or system integrator who can club and provide all these threads becomes a managed service provider assuring printing availability to customer. It is not only about high availability,” points out Deepak Jadhav, Director, Enhanced Software Solutions.  An enterprise is not only concerned about uptime of application, hardware infrastructure, patch up gradation but also compliance and regulatory norms. “Today, a managed service provider is also expected to manage the compliance issues. Hence a managed service provider is someone who can provide services across all aspects,” says Jadhav.

Managed Services’ Scope

“Very few players can offer the entire breadth of managed services. Solution providers like us can operate in a few verticals and key technologies. Services like RMS are a subset of a large gamut of managed servcies,” says Jadhav at ESS. According to Ketan Barai, MD, Kaybee Infotech, “Today partners offer scanning services at enterprise places with their devices and scan documents at a fixed price. He becomes a scanning service specialist and then can then link end to end managed services”. Jadhav argues, “Managed services are a much larger picture. When a solution provider says they offer managed services, the customer is confused as he expects everything under one roof. If one engages in printing servcies, he is a managed service provider for printing.” Selarka agrees that the holistic IT management of enterprises needs as a service is a managed service per se.

Sawant of Orient Technologies says, “Creating a niche within a particular technology within managed services is preferable. You cannot be jack-of-all-trades and master of none. While doing ‘bits and pieces’, you must convey your capability to offer scalability to your customer.”

Shankar at Ashtech points out, “Large MSPs have migrated to a large level. It is not the question of our capability to reach there, but also customer perception about us pitted against a large MSP.” Jadhav shares the market reality: “The customer does not want to deal with multiple service providers and prefers a single point-of-contact for all its managed services needs.” Ketan Barai differs saying, “It is difficult for customer to get all servcies through one system integrator .Thus he will select a specific part of the services portfolio offered by a skilled solution provider.”

“Companies like IBM, EDS, Infosys looked at optimization as business process and consulting business for customers which was big ticket value,” says Pitale. According to him, “Most solution providers are still at component level concentrating into support management, desktop management wherein they should look at business process management.”

“Managed services are a huge domain wherein LAN/WAN/desktop/storage and other technologies can be delivered,” says Ketan Barai, MD, KayBee Infotech. “Vertical niche and specialization is a part of managed services for most system integrators. Define your niche irrespective of customer size,” he adds.

“To be successful, one has to identify the level which a solution provider wants to play,” says Selarka at Acma Computers.

Overcoming Roadblocks

Ketan Barai is skeptical about ROI in managed services arena. He says, “It is a competitive field with substantial investment in training, certification and retaining of manpower.” Sawant at Orient Technologies says, “We have to emerge out of the trader or SI mentality of single digit margins. To get double digits margins in managed servcies, we need to invest in resources. As you take risk, you get rewards.” “Most system integrators are not used to a gestation period of 12 to 18 months in managed services which compels us to create a niche in a particular segment/technology,” says Vartak.  Pitale says, “In services like RMS, the investment is less as you have to convince your customers to move support from onsite to remote. Likewise, you can keep on adding customers on RMS.”

Shankar suggests, “For companies like us, we have been targeting SMEs and trying to gain ownership of infrastructure and applications. With a limited pool of certified people, it makes sense to undertake contracts which are doable.” Vartak opines that ‘Show the savings’ must be the pitch to convince your customers.

Deepak at ESS says, “It is a risk and reward model where you invest, take risk and show savings to customers.”

“Collaboration between system integrators to address a specific customer need of managed services can be a good strategy,” says Pitale. Deepak at ESS however feels, that it is more of a transaction or opportunity business and cannot be seen as clear strategy.

Pitale says, “Collaboration between two partners across different locations is possible, wherein one is senior and other is junior. Hence, the junior partner cannot replace a senior at the customer end.” Barai feels that two partners can definitely compliment each other with their individual technical expertise.

The Road Ahead

Closer To Customer

For 18 months, Omnitech followed a top to bottom approach wherein their C-level executives with a clear cut agenda meet CIO/CTO of end customer.

Your loyal customers especially the top management must be aware at all times that you have expanded your portfolio, he reasons. Sawant however feels, “It is difficult to schedule so many meetings due to limited bandwidth and a number of senior executives in a typical solution provider set up”. “In the IT industry, legacy vendors are changed on the basis of scalability rather than pure technology or price point,” says Pitale.

Sawant says, “A solution provider must demand justified premium while offering managed services to get more bottom lines and hence reinvest in resources for this business arm.”

“We show brand value to the customer, so he feels proud to do business with us. Engagement management is what we miss,” says Pitale. Vartak of Kalyx Infotech agrees, “We should focus on engagement management with the customer rather than just transaction management. One needs to de commoditize the revenues of customer business, value add for their services need and add more referral customers.”

“A more horizontal approach across technology gives more stickiness with customer,” says Pitale. He says that since technology moves fast, specializing in few technologies can be risky at times even in managed servcies.

Cloud Is A Reality

Cloud is the highest level of managed services, feels Pitale at Omnitech. Vendors like Microsoft and others are investing a lot in this technology which means it is a fundamental roadmap. The high level of scalability according to customer needs is the elasticity provided by Cloud backed by the value proposition of the ‘pay-per-use’ model for enterprises. Vasant Vartak at Kalyx Infotech cites a recent project. “One of our customers has hosted an entire mail exchange of 20,000 plus e-mail accounts across the globe on a public cloud. It has helped reduce the time to access mails from 4 days to 4 hours.” Cloud will get more popular and telecommunication density will accelerate this trend, he says.

However Ajay Sawant of Orient Technologies is highly concerned about security issues forcing organizations to re-examine cloud technology. Security remains a major issue on the cloud, he states. Pitale agrees to an extent as he says, applications like mail will move to the cloud faster while core applications involving financial information will take more time. “Cloud is awaiting standardization like ISO which will give much needed confidence to the end user.”

Jadhav at ESS agrees, “Cloud is a reality. Organizations are moving their internal Lotus to Google mail. Other than workflow, most business applications will move to cloud.” The emergence of Capex to Opex model is a market reality today, propelled by last year’s recession and Cloud is at the forefront, says Selarka at Acma Computers.

Whether taking the vertical or specialized approach, system integrators want to play in the managed services field, in a big or small way as it offers large market opportunity, good profits margins and better bottom lines. Are solution providers competent enough to elevate their ‘managed services’ model to the next level?.