The market for Managed Service Providers (MSP) grew by $87bn to $193bn between 2014-19, with an annual growth rate of around 12.5%. Given its rapid growth and rising popularity among firms, how do organisations get the best of out an MSP relationship?
The reasoning behind many organisations move to an MSP model are numerous. MSPs are specialist IT companies who manage a firm’s technology services for them, freeing up the business to fully focus on their main objectives. In addition, MSPs are able to leverage economies of scale in the procurement of IT and in doing so are more cost efficient, delivering financial efficiencies for firms who enter into a partnership. MSPs are specialists in their field and as such it is their responsibility to keep abreast of the latest technological developments and ensure regulatory compliance. Partnering with an MSP can mean businesses can concentrate on their own areas of expertise and still be comfortable that their technology is being managed by industry experts.
However, the use of MSPs can come with challenges which can be damaging if not managed correctly. Challenges will arise if organisations fail to adequately conduct their tendering process. These can include breaches of Service Level Agreements (SLAs) or potential failures of service or outages which can cause harmful effects to a company’s reputation. When evaluating suppliers, firms must ensure that they are strategically aligned and have clear agreement on their expected service levels. Only through clear and concise communication can the partnership remain resolute and prosperous.
Once services have been defined and the framework for measurement agreed, an adequate oversight model must be defined for such a partnership. This framework ensures processes run smoothly and delivers a platform to plan for future implementations of exciting new innovations in technology such as AI, Quantum Computing and the Metaverse. An effective oversight framework should consist of both a Relationship Governance and a Service Management model. The Service Management team are tasked with ensuring the efficient operation of the day to day services, certifying compliance with the agreed structure and SLA’s. Furthermore, the Service Management team has the responsibility to drive and implement any changes with the vendor should any failures arise.
The Relationship Governance structure should ensure a longer-term focus, managing the strategic relationship direction, verifying short term achievements whilst also focusing on driving the strategic goals of the service in the long term. This could be through the expansion of the service the MSP provides, or the integration of new technology into pre-existing services to increase efficiency. Furthermore, the Relationship Governance team has the responsibility of ensuring the technology strategy of the MSP remains in line with the strategic objectives of their organisation.
Underpinning both the Relationship Governance and Service Management Framework must be an organisational design which defines clear roles and responsibilities for people involved within both structures. Effective Service Management and Relationship Governance is key to the optimising the partnership, ensuring both long- and short-term success.
By Hari Reilly-Singh