Removing the barriers to success

All business relationships have some risk attached. Simon Quicke looks at the risks from managed services and how you can...

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All business relationships have some risk attached. Simon Quicke looks at the risks from managed services and how you can overcome them




Every managed services contract you embark on should be underpinned by a clear vision of the positive results that you want to achieve. You should realise that as with any type of business arrangement you will have to speculate to some degree to accumulate.

Those opting for managed services are embarking on an IT transformation process, and this process is a journey on which the company providing you with your services will be doing the driving. The key fact is that although somebody else has their hand on the steering wheel, you should have core objectives that govern where exactly you want the driver to get to.

Although the objective of bringing in managed services suppliers is usually two-fold, with the ultimate aim of running IT systems better at reduced cost, it is vital that you feel comfortable with your choice of partner. If an enterprise is planning to outsource the management of part or all of its IT infrastructure to a third party, it is essential that underlying any contract is a trust between the customer and the service provider. For many firms, transferring the responsibility of maintaining a segment of an IT infrastructure out of house can be the cause of consternation.

Given that this is the basis of managed services, it is tempting to think that successful managed services are the result of skilled risk management. This is simplistic. The key is the ability to plan for a variety of scenarios that, whilst testing, are overcome, and do not prevent you from realising your key objectives.

Don’t take the view that managed services are fraught with difficulties and potential problems. It is true that the service providers’ staff will inevitably change and resources may not be available at the same level all of the time, for example. But these types of things happen, and would likely happen if you kept your resources in-house. Risks preventing the delivery of the core objectives should be planned for and likely scenarios constructed.

This is where you need to work closely with your managed services supplier. Defining objectives and identifying potential issues right from the start is critical to a successful partnership. You should work together to identify potential hazards and work out “what-if” scenarios. You should not be afraid to be as open and honest as possible about your objectives because a managed service must address your business needs. The key issues are mutual flexibility and trust, not technology.

Trust is crucial. The benefits of outsourcing can include cost cutting, but often the main benefit is allowing your enterprise to concentrate on its core business, leaving someone else to worry about the technology. But some things are hard to quantify: for example, it is not always easy to measure return on investment (ROI) on a managed services contract. The relationship between you and your provider has to be strong: objectives change over time, and regardless of how exhaustive a contract can be at the start, there will be issues that arise over the term of the deal that may threaten to destabilise the relationship. If things go wrong there can be severe fallout, with the worse case scenario being a complete failure of the project’s objectives.

Typical flash points are the start and the end of a contract. The transition from in-house to external services partner can be painful if not properly planned; for example, if your contract ends and you’ve not prepared for having to take back responsibility for your IT systems.

Again, a culture of trust with your supplier can prevent these things. Bill Archer, EMEA president of AT&T, is clear about the questions that you should be asking in order to minimise the risk.

“You have to be sure you are choosing a provider that has experience doing what you want done with the necessary resources, experience and depth,” he says. “There is a need for an ongoing governance process. In relationships where the full potential is not reached it is often because there isn’t regular stewardship about how the partner is performing,” he adds.

When risks are militated against and objectives met within a mutually respectful culture, a relationship can last for a decade, as opposed to the average length of a contract, which is about five years.

When Clarks recently renewed its managed services, says retails services manager at the footwear giant Alistair Smith, there were rewards for both customer and partner. “The depth of understanding we have of each other’s business has already produced the benefits of a true partnership approach and we look forward to this continuing,” he says.

The objectives of your managed services contract – higher revenues and returns with more effective operations – can only be achieved by finding a partner who you can trust to align its service with your business. You need to acknowledge that there will always be risks in such relationships, but by flexible, agreed arrangements these can be planned for and the benefits delivered.

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