What's behind move toward managed services

Network World - When the going gets tough, the tough get ... managed? Apparently so.

One of the major trends I've seen in recent months is the move towards managed services. More than 65% of the companies I work with say they have deployed managed services -- more than double the 27% that were doing so in 2006. The most common types of managed services? Managed router services (deployed by 49%), followed by managed VoIP (22%).

A couple of factors are driving the trend. First is that carriers and other service providers have been aggressively pricing managed services -- to the point where some of my clients were able to obtain fully managed services (along with brand-new routers) for less than they expected to pay for unmanaged services. (Yet another reason for doing a full-scale RFP -- these kinds of bargains typically kick in towards the end of a negotiating process.)

Another huge reason is lack of staffing. As IT departments are asked to slash budgets by as much as 40%, the staffers that get the ax are often those who manage and maintain, rather than architect, innovate or deploy. This means that outsourcing management is the only logical move.

There's also the skill-set challenge. Particularly for emerging or complex technologies such as VoIP or security, organizations can't easily find (or justify spending money on) subject-matter experts.

Finally, there's the desire to keep costs stable and predictable. In this unpredictable economic environment, the more costs you can contain and control, the better--and managed services offer the promise of consistent services for a flat monthly fee.

But do they deliver? Folks who've been in IT a while like to talk about the outsourcing pendulum -- during recessionary times, when IT is viewed primarily as a cost center, companies turn towards outsourcing (for many of the reasons noted above). But they inevitably turn back, and the dissatisfaction rate with outsourcing deals runs as high as 75%.

So it's reasonable to ask whether the move towards managed services is such a great idea. On the whole, I think it is, particularly for services such as managed-router, -firewall and -VoIP offerings.

But even a good idea can go too far. I've seen companies that want to outsource their entire infrastructure departments. That sounds good on paper, but what happens the next time a new application is rolled out -- one requiring not just an increase in bandwidth, but effective optimization and prioritization? Many times the service providers either can't handle the load, or charge an arm and a leg to make changes.

And that's the primary reason the outsourcing pendulum always swings back: managed services can be great ways to wring costs out of a steady-state environment, but when the economy improves and IT begins to innovate, outsourcing often ends up increasing an organization's costs, or limiting agility.

The upshot? Consider managed services -- but keep your contracts short-term (two to three years). When the economy opens up, you'll want the freedom to reconsider your options.