VARBusiness Readers Define--And Redefine--Managed Services

Recently, VARBusiness asked the question: What is a managed service? Solution providers getting into the game have all kinds of definitions for what constitutes a managed service. In fact, some even say myriad definitions are causing confusion in the marketplace, making it difficult to succeed.

To be sure, there are plenty of standard definitions for managed services.

The MSP Alliance endorses the Wikipedia definition: "The practice of transferring day-to-day related management responsibility as a strategic method for improved, effective and efficient operations. The person or organization who owns or has direct oversight of the organization or system being managed is referred to as the offerer, client or customer. The person or organization that accepts and provides the managed service is regarded as the service provider. Typically, the offerer remains accountable for the functionality and performance of managed service and does not relinquish the overall management responsibility of the organization or system."

The Computer Desktop Encyclopedia defines managed services as "an umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be in-house or at the third-party's facilities, but the "managed" implies an on-going effort; for example, making sure the equipment is running at a certain quality level or keeping the software up-to-date." And the Institute for Partner Education and Development (IPED, which is also owned by VARBusiness parent company CMP Technology) defines managed services as "recurring services provided either on-site or remotely on a contractual basis."

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All the definitions have a common thread, but none is precise or granular enough to clearly spell out what constitutes a managed service in the real world. For that, VARBusiness turned to its readers who are actually offering managed services. In their own words, here's how a few define "managed services."

Give these definitions a read. Do you agree or disagree? Send your definition to [email protected].

Taking Care of Customers

There is no big mystery to managed services. It is simply an agreement between the IT house/consultant and the customer to maintain, optimize and forecast usability and suitability of their IT resources and/or other processes and/or resources to a determined level of usability. It's been around for years--it was called taking care of your customers.

We offer service packages to our customers that vary greatly in design, but are still managed services. Some only want us to manage their antivirus and firewalls. Some want the entire IT resource managed. And still others want us to manage their telephone, Internet and facilities. We do this without the $50,000 investment some would have you believe necessary to be a "responsible provider."

There is also an idea that you need to watch customer systems 24/7/365 or you're negligent. Nothing could be further from the truth. No one who I have ever heard of has come to me and said they hacked my funeral home, corner barbershop or the pizza shop because some $8-per-hour tech wasn't watching the DSL warnings at 3:42 a.m. Most customers don't need or could afford anywhere near that type of service. But they do need a managed service to prevent from being hacked or disabled by a virus.

My first responsibility is to my customers by not passing on a huge investment cost that may or may not work as advertised or could be done with OS-supplied tools and a little knowledge. I think that to have a software vendor rebox the term "managed services" and try to make you think they came up with the idea that you can only provide good services with their products is not only false but insulting to anyone who does think of their customers first and their software vendor last.

As for me, I choose to stay above that chaos and continue to provide my customers managed service the good old fashioned way--by asking them what they need and want.

David W Chapman Sr.
Aexeous Technologies
Houston, Texas

Do you agree or disagree? Send your definition to [email protected].Let Customers Decide

What is a managed service? Great question. I have been looking for the answer for the last 12 years.

We are member of VentureTech Network (VTN) and most members are engaged in managed services. I have been asking this "true definition" question of managed service and get almost no answers or perplex expressions. Everyone has their own definition. VTN is a great forum by which we learn a lot to come close to the "true definition" of managed service.

Here is my definition: "Anything you do to maintain and enhance the IT of your client by being the CTO, help desk guy, IT consultant, project manager and all of the above by reducing the cost and risk to the client and still make enough money to stay and grow the business."

We started doing managed services 12 years ago; we used to have "block hours" " a client would buy certain hours per month and we provide the service. If they ran out of hours, we would charge them full price. If they didn't, they'd get upset for lost leftovers. Back then, clients were very careful not to call us in for small issues, which then evolve to be monsters and cost more.

We kept tweaking around and now we think we have comfort level where we call this "managed workplace." We include everything as far as IT is concerned and get involved in a client's company meeting as their chief technology officer.

Our SMB clients feel great as they have multiple people with different skill sets at their disposal for a fixed monthly fee without paying high monthly salary, vacation time, payroll taxes, sick time and, most of all, motivation cost.

We also found that the more disclaimers you add to your contract the further away you are moving from the concept of a managed service. We take full responsibility to our clients' IT. We don't exclude anything. By excluding certain categories, you are creating work for your client or their staff. An example of this is: software support, telephone system and those large on lease digital copiers.

The main challenge we face to sign up the client is to qualify the client to be the "managed service" client. We reject three out of five due to lack of the commitment to their IT infrastructure.

There is no perfect method or process managed service. The definition of managed service has to come from clients.

Arun Patel
Phoenix, Ariz.

Do you agree or disagree? Send your definition to [email protected]. Delivery, Technology And Business Model

A managed service provider is typically constructed of all or most of the following nine characteristics:

1. Delivered remotely. A managed service would typically involve the use of the Internet or a dedicated network connection. A robust connection is almost always needed to deliver any sort of meaningful service value.

2. Leverages technology. By leveraging technology, common IT practices can be automated to a great degree, timeliness improved with dramatically better accuracy rates.

3. Leverages IT personnel. IT personnel in a network operations center can be leveraged in other ways, too. Virtually all travel time is eliminated, so the full effort of their work can be focused on creating value of the client. Since managed services are typically repetitive, significant process and procedure can be developed to streamline delivery of a consistent quality to many clients concurrently. By delivering services in this manner, you can service the client using just the right level of expertise needed to get the job done. In other words, you don't have to over-hire or over-train to have a high-end person doing even basic tasks.

4. Proactive. Good managed services have a strong proactive vs. reactive effect on IT. When talking about "proactive" services, give this word and this promise the respect it deserves. The mantra of the new and inexperienced MSP salesperson is, "We will monitor your network and we will know about your problems before you do," and the implication is that the problem will be fixed before anyone sees the impact. In reality, this is really hard to do.

5. Specify service. A good managed service should not leave the client wondering what exactly is included in a few sentences. If you cannot do this, you have not adequately defined that service. In a short discussion, the benefits should be intuitive and clear, and the deliverables specific. The contractual definitions of these services are often called service-level agreements.

6. Fixed fees. Managed services are always billed for a fixed fee for a specific term. Unused services during a term expire and are not rolled over. When a term ends, all responsibility to deliver services ends at that time.

7. Assumption of risk. In a true managed services model, risk is shifted from the client to the provider. Because you are providing a specific service to your client, any problem they have becomes your burden. In this new IT service model, any mismanagement of the system works to your detriment. In this new model, if a virus attacks your client, it is your liability unless you have a well-crafted agreement, and any agreement crafted in this way will significantly dilute your service's perceived value to the client.

8. Contract term. A managed service agreement should have a specific initial contract term, although it is totally acceptable to have these agreements be evergreen, meaning that they automatically renew. Typically these terms seem to be two to three years.

9. Recurring billing. Managed services are always billed at regular intervals. Managed services are not billed as services are delivered. Billing as services are delivered is called "time and materials." Managed services are usually billed monthly or quarterly and they are typically billed monthly in advance of the service delivery. If you are familiar with the ASP model, you can always just think of managed services as an ASP for network and IT management applications. I also hear many folks referring to this model as software as a service. In essence, the managed service provider buys all the software and the hardware to host the IT management applications. The MSP hires the appropriate personnel to run it all according to well-defined procedures and policies. The MSP computes a monthly pricing model and sells the whole package as a service.

Managed services are not prescheduled or prepaid blocks of time. To do so without some very prescriptive process and deliverables is just a more formal way of managing your calendar and your cash flow.

Oli Thordarson
CEO, Alvaka Networks
Huntington Beach, Calif.
Editor's Note: Thordarson's managed services definitions are from his forthcoming book on managed services.

Do you agree or disagree? Send your definition to [email protected]. Definition: Keep It Simple At New England Data Services, we use the Wikipedia definition of managed services. Why re-create the wheel? We're all too busy for that.

Basic definition: A managed service provider, also called a management service provider, is a company that manages information technology services for other companies via the Internet.

Expanded definition: Common services provided by MSPs include remote network, desktop and security monitoring, patch management and remote data back-up, as well as technical assistance. Most MSPs provide these services on a monthly basis.

Craig Brenner
CEO, New England Data Services
Waltham, Mass.

Do you agree or disagree? Send your definition to [email protected].Could Be Anything

I can't give a single definition of "managed services" because, quite frankly, there isn't a single definition any more than there is a good single definition of "vehicle." The only common denominator of "vehicle" is that it is a device that gets you from one place to another; that could be an SUV, sedan, truck, bicycle or rickshaw.

At the most basic, managed services must be some type of service and must be "managed." This means that it has to be on a regular, ongoing basis and can't just be strictly reactive. By not being strictly reactive, I mean that a problem occurring, the client calling, and you going to fix it isn't "managed services."

That said, simple prepaid, block time that is used on a break-fix basis is certainly not managed services. It's a service, but not managed; it's a billing alternative.

On the other hand, something as simple as scheduled visits at regular intervals where certain prescribed work is being done could be considered a managed service. Let's assume that you're going to a client maybe every other week and, during that time, you're installing patches, checking logs, periodically cleaning systems, removing spyware, etc. It is certainly a service, and you're certainly managing those machines. It might not be the most efficient method of managing those systems nor the quickest nor best way of finding problems before they occur, but it is certainly a form of managed services.

Help-desk services in and of themselves aren't managed services, either. They're a service, but what about it is managed? Someone calls, you answer a question. Maybe you bill them per call, maybe you bill them a flat fee for unlimited use, but that's not the service that is managing anything.

Of course, that doesn't mean that a help-desk service can't be part of a more complete managed services package. Even purely break-fix work is often included as part of a managed services offering.

These days, however, there are a number of people out there who have a somewhat different type of service than what has been done traditionally, and this includes using some type of tool that will monitor devices on client networks and allow for discovering problems and trends before they become major issues. This is generally considered "proactive" services and is certainly a managed service. However, "managed" does not necessarily have to be "proactive."

Of course, managed does not have to mean "complete" either. One company could focus on e-mail, for instance. Let's say that I provide a service for my clients where their e-mail passes through my servers (or those of some company that I hire to do it for me) and get scanned for viruses and other malware and also checked for spam and then filtered. The "clean" messages are then passed on to my client. Certainly, this is not something that is a one-time setup and leave-alone type of service. I have to manage the updates and monitor the service to make sure it is constantly working. This is a form of managed services.

Other companies might focus on managing security. I might use an SNMPtool to monitor my clients' firewalls. I may get alerts of what looks like malicious traffic, investigate and act accordingly. I will likely keep firewall rules up to date and keep any security subscriptions up to date, as well. Certainly, this qualifies as a managed service.

Yet others will manage desktops and/or servers. This might include patch management where systems are kept up to date. It might include alerting, where any changes to what's on a system might cause an alert. It might include making sure specific services are up and running, such as making sure a Web server is up and running and responding or that an Exchange server is running all the proper components.

Simply providing remote backup capabilities is not a managed service. However, if I'm providing remote backup capabilities and monitoring it to make sure that the backups are done on the proper schedule, it can be considered a managed service as well.

In a way, defining managed services is like the famous quote about trying to define obscenity; it is almost impossible to accurately define, but you can recognize it when you see it.

Jeffrey Sherman
Warever Computing
Los Angeles, Calif.

Do you agree or disagree? Send your definition to [email protected].

Management from a Distance I think the buzz around managed services is really talking about "remote" managed services—the ability to deliver, what was once an on-site service, remotely. This creates a new paradigm where a VAR can offer advanced services to more clients with fewer people, hence making more money and margin.

On-site can be profitable, but it doesn't scale and is still highly unpredictable. So instead of an end user needing to contract or employ several people, such as security, Exchange, desktop, database, etc., they can contract with a remote MSP to handle many of these complex support issues from a central location. The remote MSP can employ a staff of experts (because they are spread across many clients), but only needs to charge for what their client really needs.

The key is to find the right tools that not only automate many of the required tasks, but do so with very little labor. That is what differentiates many of the products today. If I only pay $1 for a product, but it requires three full-time experts to keep it working, is that less expensive than paying $100K for a competing product, but only it requires half of a body to deliver the same services?

So any service could be called a managed service (when I go to a car wash, isn't it a managed washing service?), but when they can wash my car anytime I want, from 100 miles away and one-quarter of the cost, it will be a remote managed service.

Jim Hare
Vice President of Business Development
SilverBack Technologies
Editor's Note: SilverBack develops and markets tools that enable solution providers to deliver managed services.

Do you agree or disagree? Send your definition to [email protected].