To Manage or not

Everyone has become more competitive and every potential client you ever dreamed you’d land, has at least ten other companies a phone call away if you don’t give them what they want. Forget the global financial crisis for a moment, the economic and political turmoil that Pakistan is going through, is creating big rifts between the vendor and the client. But there is some light at the end of a really treacherous tunnel – managed services.

An increasing number of companies are finding it more challenging to find shoulder space to stand for too long if they don’t have liquidity. Whether you should go for the one-time development sale and hope that the maintenance contract comes in later on, or do the gratis deployment grunt work and push for the regular monthly payable, is an interesting crossroads that many service providers are faced with. As vendors, fewer companies want to run after the one-time fee, if they can get a client actually hooked to their services for the long haul. And to achieve this, vendors are perfectly willing to do the initial work at virtually no cost, just so they can make money where there IS money – the support.

It’s the difference between Microsoft and Oracle, licensed and open source – invite them into the club and then attack, or get them addicted and then send the lamb to the slaughter.

The New World Business Order
The way companies operate their businesses has changed – drastically. No longer do they want to buy products and operate them on their own – they don’t want the additional baggage that might come along with a solution. Instead, they would rather just outsource the service completely and have someone else manage it. This gives way to a trend that is slowly picking up around even the emerging markets: managed services. What is more, a bunch of fresh grads who believe in the power of collaboration will be as big a thorn in your big company’s potential overall revenue, as will be the rest of the vultures who are out to prey on your customer base.

As the CIO or executive responsible for technology-driven decisions in your organizations, you must make an assessment as to what processes your organization can let go of. The questions you should be asking yourself, should help you build a business case justifying whether or not to opt for managed services.

Managing your cloud or IT infrastructure is usually a support function that is outsourced to a third party company. But beyond this, perhaps other support services can also be given out. With the increased access to infrastructure, there has been a rapid rise in the number of companies who are able to position themselves to offer managed services. Whether it is the management of your network or the regular maintenance of your communications networks, a company that has the experience and requisite competency to help you take a load off your feet, might actually be able to gain a great deal of traction. For the time being, the realm of managed services seems to be limited to high contact points for customers. Contact centers or tech support help lines, for example, are being pitched as a managed service.

Large Organizations Push Outward
While the converged internet space makes it easy and appealing for young companies to set up their own collaborative ventures, the number of larger organizations are also adding to the competition itself.

Once they learn the ropes and get the experience of working with their own ‘manageable services’,  they are able to offer the portfolio to the rest of the market. These larger organizations, take Wateen or Mobilink as examples, are able to turn themselves into one-stop-shops, whereby not only can they manage another company’s services as a third party vendor themselves, but they can also pull in a wider range of clients their way.

International banks such as Barclays or HSBC also have their services outsourced to local companies where the bulk of the technology buying is done through the vendor, thereby eliminating the need for even having an in-house IT department. Cisco Systems Pakistan, who was the vendor of choice for Barclays, negotiated the bank’s IT set up based on a standard blueprint that was provided by the headoffice. Many organizations who want to enter new markets, engage in similar relationships with their vendor.

Managing Relationships with the Vendor
Managed Services is based on two essential premises: IT requirements and trust. Like any relationship, people and organizations must be comfortable working with one another. If you are a Small and Medium-sized company, you should opt to work with someone you have a track record with either as a reference or in your own personal capacity. Ensure that you have the terms of reference written down so that there is little possibility for deviation from the responsibilities.

A clear channel of communication between the client and the vendor is critical in making the relationship work long term. And on behalf of every vendor, something that really makes the relationship fluid is clear and precise payment terms.