With enterprises gravitating towards new technologies for dealing with the myriad transformations that are happening due to SMAC, the providers of managed IT services have to come up with an array of new solutions to take care of the emerging needs of their clients. By Jasmine Desai.
During the last few years, the managed IT services market has undergone a sea-change. The sector is now being driven by the adoption of new technologies and service consumption models. Pressure has mounted on IT departments to align their services more closely with the wider businesses and to demonstrate their contribution to the success of the enterprise, which in turn
has unloaded a host of demands on managed IT service providers. Sanjay Bajaj, Global Head, IT Delivery, BirlaSoft, says, “We need to see the direction in which we are going with Managed Services Business. Most companies are increasingly turning to
their software providers to manage infrastructure, software and numerous business processes.” He adds that in the last decade, the focus of the service providers was on technology capabilities, optimised cost with labor arbitrage. However, this has changed during the last few years.
The emphasis of the services is clearly on agility, service levels and outcome based models. There has been a convergence between cloud and managed services. The first wave of cloud integration was driven by the need of businesses to reduce costs and support the agility of business, but the next wave in cloud computing will lead to seminal transformation in the way enterprises do business. To remain competitive, managed services providers need to offer their clients a greater level of insight.
According to Anand Sukumaran, VP-Managed Services, ITC Infotech, “The managed services market is undergoing a rapid change due to the vast technology changes in the last few years. While it started off with consolidation and virtualization, it is now the cloud services area that is affecting this market the most.
Multiple options for customers
With services now being available as a utility, customers have the option of going for flexible and scalable solutions available
at attractive price points. Customers are actively looking at moving their DC workloads to the cloud and looking at providers to help them with this move. This is also forcing them to re-look at the strategy, workforce mobilisation and overall services in defining the managed services space.
Says Gopalakrishna Bylahalli, VP & CTO, IT Services, Happiest Minds Technologies, “With the advent of SMAC+, the world of Managed IT Services is gaining complexity. The sector has moved to the hybrid technology landscape.” He says that the managed IT service providers will take over existing assets and over a contractual period of 3 to 5 years they will modernise the applications and the infrastructure. This will enable the service provider as well as organisations to monetise their data and
services. This is possible through exposing APIs and/or building platforms, which can be offered as service. Adoption of SaaS will increase and many options for PaaS will emerge. Data as a Service and Analytics as a Service will take its shape as well.
It is quite clear then that with lowtouch, high-value, high-margin solutions in their product portfolios, IT service providers have to look into business transformation. Getting ahead in managed services requires adopting new approaches as they emerge. Managed services has made itself felt in various facets and workings of an enterprise right from ERP, cloud computing, storage to security, analytics and networking.
According to Sunil Jose, Managing Director, Teradata India, “To be able to deliver managed services and provide 24×7 global support, enterprises are now turning towards professional IT players who are running specialised centers staffed with specialists dedicated to the managed services tasks.” To meet organisational requests, there is the growing need for specialists who have the expertise in data management and business intelligence software, as well as a superior knowledge of enterprise datawarehouse management.
Moreover, enterprises are now moving out of the “request report from IT” mode to self-service business intelligence. The
entry cost for analytics is relatively low especially when considering the software solution landscape. Two constants in the
market are represented by the demand to optimise IT costs and innovate the core infrastructure. This gives rise to new and
agile services, that are not only managing the as-is model, but also bring in a risk adverse and cost-effective mechanism to
allow IT to quickly innovate and transform into a business-support function.
Evolution of services
The evolution of services to include service and cloud providers is transforming the managed services landscape. Vendors are looking at all the service providers, regardless of their level and capacity as potential managed service providers. They see the need for more than just service delivery. Services need support and automated support, which makes use of specialised team of experts, is more lucrative and less expensive.
According to Neeraj Jaitley, Vice President, Managed Services, Dell Services, “While the support models continue to be geared towards data centre, enterprise network, end-user, communication and collaboration and security services, managed service models have also refocused to include capabilities that used to be kept in house such as governance, vendor management and
services integration and management.” He adds that directly influenced by an increased demand for IT to be more aligned to business, the managed services and IT outsourcing market has continuously created as-a-service offerings across the entire spectrum of supported capabilities, allowing organisations the flexibility, scalability and ability to anticipate business-level
outcomes from the received services.
Digital business and Internet of everything adoption, combined with an increased pressure to improve, innovate and transform the “ageing” infrastructure core and reduce costs, have also changed the market behaviour, where “run the business” outsourcing models are no longer attractive to the customers. These models are being replaced by the desire to acquire “transformational” managed services surrounded by consistent and proven delivery methodologies and frameworks,
and designed to provide short-, mid- and long-term benefits to the business. According to him, in the future, companies will look to managed services providers to take accountability for business outcomes, not just service levels. The business value of managed services lies in transforming project delivery capabilities; access to expert skills and technology innovation; and flexibility and scalability to take advantage of business opportunities.
From a technology perspective, the continual expansion of cloud into the Software and Platform as a Service arena, together with new and disruptive technologies such as big data and analytics, mobility continues to captivate customer’s attention and, with it, the managed services providers’ focus. Another major shift is the increased interest in reliable security services.
According to Shree Parthasarathy, Senior Director, Enterprise Risk Services, Deloitte in India, “In the light of recent security breaches and challenges, organisations are re-evaluating the information security landscape and, in doing so, they are looking for trusted providers in the market, to partner with and drive a more consistent security management program, without
compromising the usability and costs.”
According to Teradata, the availability of advanced business intelligence skills has become increasingly important for businesses that depend on analytics from the data warehouse, to improve customer acquisition and retention, reduce operational costs and shorten product time-to-market. According to Shree Parthasarathy, Senior Director, Enterprise Risk Services, Deloitte in India, “Global market for managed security services is growing with the proliferation of digital information across devices and technologies. Discovering or recognising an attack is important, but it is even more important to reduce the response time to prevent or limit damage.” He adds that to optimise the response time, security operations (Secops) capability needs to be aligned with business risk appetite.
Mired in challenges
Organisations implementing managed services have reported almost 50-60% increase in the operational efficiency of their outsourced processes. Enterprises have accepted outsourcing services as a means to enable them to reduce their capex and free up internal resources, which in turn leads to business efficiency. According to Gartner blogpost by Douglas Toombs, Research Director, Gartner Inc, “Human expertise will always be a part of the equation in the managed end of the market, but automation when envisioned and implemented properly, can serve as a significant amplifier for an organisation’s existing technical expertise, and deliver better customer outcomes overtime.” Managed IT services are fraught with challenges that organisations must circumvent. Says Bylahalli of Happiest Minds Technologies. “The IT teams in the enterprises are facing the issues of IP protection, data boundaries and government regulations that will make them hesitant to go managed services way.
At the same time, they also face the pressure of reducing total cost of ownership (TCO); they must also deal with the rapidly
changing technology as well as the skill gap. These IT teams are expected to innovate and participate in “Change the Business”
and NOT just look at “Run the business”.
“It is no longer sufficient to provide assurance of “Five 9s”, i.e., systems available 99.999% of the time and keep the “lights on”. Customers are looking at a value add with respect to automation and agility, business value add through outcome based models. These service providers have to be innovative in adopting the SMAC+ technology and evolve outcome based business models,”
he adds.
Having a smorgasbord of choices in the Managed Services market, enterprises tend to get confused in the selection. According to Bajaj of Birlasoft, “Finding the right partners who not only keep the costs low but also align to customer business growth is a common challenge for the customers. Enterprises know their businesses would not be successful without the right resources and support from their partners.” From security perspective, preserving valuable business data is the most common concern with protecting IP and other critical information is the second highest concern. Parthasathy of Deloitte elaborates, “This is no surprise, considering there has never been more data for businesses to maintain a complete and easy-to-access archive, to comply with government mandates, industry regulations and corporate policies.
Customers need to find exactly what they need, whenever they need it. Service Providers face a challenge to evolve on new technologies that help customers overcome their challenges.” According to Jose of Teradata, “The key issue will always be about ‘choice’. For customers especially, it comes down to geography or location. Whether they are looking at on-premises centers, or to put it up in the cloud? What they want to do in terms of the cash flow model? It will all depend on whether service providers will be able to offer complete flexibility to customers.”
Connecting IT with businesses
In the managed services and IT outsourcing arena, one of the major issues is represented by the continual disconnect between IT and businesses. Says Jaitley of Dell Services, “Often IT is seen not as a business enabler, but more like a slow and non-flexible/non-adaptable organisation, which is not supporting the overall business strategy. This has become a challenge during managed services engagements, single or multi-sourcing ones, and if the right governance models are not in place, the initial success of the outsourcing program is quickly overcome by the inherent issues that arise from a continuously increasing gap between business demand and IT supply.”
A major area of concern lies in emerging technologies such as Infrastructure as a Service, Platform as a Service, Software as a Service, which may seem to quickly allow organisations to consume services and drive quick benefits, without the burden of going through a long implementation programs. In this area, integration is definitely a pain point and an issue. The managed service providers have the ability to meet a the emerging demands of business by designing a specific services at the moment of the engagement.
Managed IT service market will continue to face challenges till there is a harmonious synchronisation of technologies and business needs. Also, the service providers must have the ability to satiate these needs in the most costeffective and agile manner. Mention Jaitley from Dell Services, “Ability to receive and consume IT services, tailored on business demands, in flexible, scalable and cost-effective manner has put a lot of pressure on the managed services market and providers, who are now facing the challenge of continuously transforming and innovating their services in a closer alignment with customer business
demands.”
jasmine.desai@expressindia.com
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