IT services have traditionally followed the “managed” operating model in which the provider acts as an “extension of your IT team”. This approach supposes that trusted outside experts will manage all IT (or a defined portion) so that companies can focus on their core business
The key word being “trusted”. Indeed, companies typically will enter into a managed services agreement after testing the waters and establishing a trusting relationship with the provider. Budgetary constraints, a need for clarity, concrete deliverables and a desire for more flexibility have given rise to a different model: On-Demand services. Here we will provide a brief outline of each model, help you decide which model is best for you and advise you on what to keep in mind when signing an IT services contract.
What are Managed Services?
A managed services agreement consists of a client outsourcing, on a continuous basis, certain services to a service provider on a fixed-cost subscription model. In an IT managed services agreement, the MSP (managed services provider) actively manages certain parts or all of the company’s technology stack.
IT managed services provide an opportunity for large corporations with a complex IT stack to continually outsource many functions such as database management, application development and their ERP lifecycle management. In exchange, the MSP provides a turnkey solution, access to its expertise and takes total ownership of the task/project.
You can learn more about Vortex IT Systems Managed services here
What are On-Demand Services?
As the name implies, On-Demand services fulfill a specific purpose or task explicitly defined by both parties. In such an agreement, the number of resources assigned to the task is fixed. On-demand contracts allow clients to scale up or down depending on their need with the fee being based on usage.
Whereas a managed services contract provides access to a (theoretically) unlimited amount of resources and scope of expertise, an on-demand agreement will deliver a set amount of resources specific to the request.
On-Demand services are responsive rather than proactive. They provide a more incisive and focused intervention rather than a long-term partnership.
A Strategic Partnership
IT service providers strive to provide value. But how do we define this value? It’s important to go beyond cost savings and technology know-how & identify a partner that can deliver strategic business outcomes & help propel your business, regardless of the type of model you choose. It should be a relationship based on common goals, trust and communication.
Vortex IT Systemshas worked tirelessly to develop IT services based on these values and offer unparalleled service based on the following 5 core elements: A personalized approach, resource continuity, value, insights & transparency
|SERVICE TYPE||MANAGED SERVICES||ON DEMAND|
|Fees||Fixed||Based on Usage (Scalable)|
|Resources||Dedicated||Limited, based on Needs|
|Contract||1-3 years, closed||1-3 years, opened|
|Onboarding||3-6 months||less than 1 month|
A Personalized approach
Vortex IT Systems prides itself on It’s high level of expertise and its personalized approach to client service. This “best of both worlds” approach has enabled us to provide technology expertise with the attention and care every single client deserves. This approach extends beyond strategic advice and project performance to also cover communication and availability. We believe in going the extra mile regardless of the chosen model. Not only is this the hallmark of client service but it’s also good business. It is a way to grow the client relationship.
In all service industries the toughest challenge is establishing a trusting relationship. Technology aside, the importance of the people can not be understated.
Turnover is a real issue across industries but even more in IT where the bedrock of success relies on historical knowledge of technology implementation.
To that effect, Vortex IT Systems has focused on developing internal HR practices to improve and encourage employee retention. We strive to limit the number of resource changes on our IT services mandate because we understand the importance of continuity & relationships.
We often hear from Incoming clients about the lack of proactivity from their managed service providers. In such a competitive landscape, clients rightfully expect more than what they have signed on paper. We understand this and see it as an opportunity to stand out. Clients are looking for new ideas, insights and strategic thinking from their MSPs. Successful IT consulting firms will strive to provide this value irrespective of the contract type.
As an example, a customer was running Oracle on VMware, we informed them of the potential licensing risks involved and both parties agreed to do an assessment. We uncovered non-compliance issues representing over $40M in potential fees which we helped bring down to zero by accompanying the customer within the following year. The mandate was not related to licensing.
Reporting has become a pain point for many companies working with IT consultants. We have identified this as another opportunity area critical to the success of service contracts.
Analytics without insights will not get you very far. Vortex IT is committed to providing valuable insights and recommendations to help you act on our findings and results.
Too often reports are ignored. We don’t want reporting to be ignored, on the contrary, it is critical to uncovering insights and new strategies. It is high time to go beyond automated CSV exports and spreadsheets.
From daily billing reports to coaching and training your internal teams, our philosophy focuses on transparency and sharing of information. We don’t believe in holding our cards to our chest or shrouding our billing reports in mystery. Transparency in the long term will help build trust and clarity.
So you’ve decided to sign an IT services contract. You are excited at the notion of leveraging outside talent to optimize your IT processes and environment. Before signing, make sure to address the following 4 key points to avoid common pitfalls.
- Identify exactly what you expect the MSP to do. If it is a managed services agreement, be as detailed as possible: Is the technology already installed? Are you expecting your provider to QA the installation? Don’t leave anything up to chance. Be as clear and detailed as possible as to what the contract covers. Defining baselines and sharing expectations will go a long way to ensure a successful working relationship.
- Once both parties know exactly what the service provider is responsible for, you need to define success together. Is it in the volume of tasks performed? Is it in the insights and learnings? Both? You should enter negotiations with an MSP having already defined this. Define reporting: the number of meetings, the type and frequency of reporting and communication (feedback loops etc..). Set expectations as to the value you expect from your service provider. Since managed services are in essence continuous and proactive make sure both parties know what is required of them.
- IT managed services – What’s Included: make sure your MSP provides Asset Management, Ticketing systems, Call Centers, 24-7 support, etc…
- On-Demand IT services: How fast will the response time to a query be? Is there emergency support? Is the support around the clock? etc…
- Exit Strategy
- Unfortunately Many MSP and On-Demand IT service providers will try to lock clients into a contract for multiple reasons. You must protect yourself with an exit clause in the contract that will give you the freedom to exit a contract without incurring costly and unreasonable early contract termination fees. You should be able to test out the relationship before committing long term. It’s a definite red flag if an IT MSP doesn’t give you that option.
- Resource Competence
- Ask to see resumes of the people you will work with. Especially in an On-Demand scenario, since you are limited in the number of resources per request, you should be entitled to know who you will be working with and reassured that they are indeed qualified for the work.
On-Demand and Managed IT services are proven means of outsourcing some or all of your IT tasks. Whichever model or service type you chose, we believe the information shared in this article will help you make an informed decision. Vortex IT Systems offers both Managed and On-Demand IT services. While our Managed Services approach is traditional, Vortex On-Demand offers a hybrid approach to On-Demand services and provides the best of both worlds. We welcome the opportunity to help you propel your IT solutions that run your business.