What should managed services providers do differently in a cloud-first world?

Managed Network Services - on a lighter note, this is the business of outsourcing your problems so you don't have to deal with them. Managed service providers perform break-fix and/or on-demand services, and bill the customer for the time spent or activity performed. This often applies to predictable application or infrastructure environments and the user interface for such services is a self-service portal or a help-desk helpline.

One of the important elements in managed services is predictability - in terms of desired services and existence of standard operating procedures. This assumption influences almost every single parameter in which a managed service provider operates - how managed service contracts are signed, operational efficiency, customer engagement and providing solutions. However, the rapid emergence of cloud has upset the predictability once enjoyed by managed service providers and help desks. This is in sync with the rise in consumerization of IT and users (employees of the customer's organization) with more decision making power in terms of the devices they use, how  and where they use them, and the context in which they use them.

When cloud operates in the back-end with a mobile in the front-end as opposed to a more traditional server in the back-end and a client in the front-end; all of a sudden we can see that we are playing a new game altogether. Managed services providers need to rise to the occasion and invest in new areas and re-imagine how they will solve some of these emerging problems and tackle new opportunities.

Create business value through sales of managed service contracts

Managed IT services is an industry where customers can do comparison shopping from one vendor to another, with the notion of gaining predictability. New-age managed service providers need to challenge this notion in an evolving IT landscape. They should position themselves to solve the customer's problems with a holistic view of cloud and mobile. In a cloud world, customers pay for what they use and how they use it. However, managed service providers conventionally focus on the total contract value which is not in sync with the new paradigm of cloud spending; they should adopt a variable contract value. This means there are frequent considerations, checkpoints and revisions to evaluate the business value a provider brings to their customer. Additional business value can be brought in when the service provider can enhance the operating model rather than the infrastructure model. The comparison shopping mentality of customers can be fought when providers can position themselves as a trusted advisor to the line of business (LOB) budget sponsor rather than doing an arm's length traction with the IT budget sponsor. This is the only way to get closer to providing higher business value rather than being perceived as a vendor who maintains servers or data center. Let’s explore ways to accomplish this.

Establish trusted advisory by combining consulting services with sales engineering

Combining consulting services with managed service contracts will allow for a consistent relationship with the customer. This consulting service is not necessarily to win more deals, but to enhance the value provided by existing managed service contracts. This is key to establishing a trusted advisor relationship. It is important to take constant initiatives to explore the challenges faced by the customer outside of the managed services contract or scope. The relationship established with intent to genuinely solve customer issues will uncover opportunities to churn higher business value for the customer, and in turn, improve the operational efficiency of a provider. Identifying technical roadblocks within a customer's LOB application or IT is also possible with such relationships. These roadblocks can be solved by bringing in the professional services team and performing sales engineering for the customer, thereby substantially elevating the position of a managed service provider. This deep knowledge and relationships established are intangible and invaluable, making it harder for another provider to replace you. Read more about being a trusted advisor here .

Drive operational efficiency with predictive analytics

Most service providers maintain systems that keep track of issues reported or services provided. This means there is historical data on the nature of operations. Plugging the servers, machines or data already available in logs into Big Data systems will unlock insights and add intelligence to the existing data. Such investments will bring in competitive advantage in terms of operational efficiency.  In addition, your conversations with the customers will be better because you'd know things that even your customer doesn't know about their application, infrastructure or user behavior. This is something we can learn from the online advertising industry or e-commerce companies in terms of the application of Big Data for better user tracking and tagging, providing more relevant advertisements or products. Application of Big Data in managed services can go as far as predicting what server/application in which data center is likely to fail and which users could be impacted, enabling predictive actions to resolve/prevent a system from going down. The possibilities of such applications are infinite and we're only limited by our imagination. This makes me wonder if Einstein was referring to analytics when he said "Logic will get you from A to B. Imagination will take you everywhere."