Despite all the attention the managed services model gets these days, it has a long way to go to deliver on its promise of profoundly transforming the IT channel.
Aside from the inherent difficulties the average VAR faces in making the transition from the traditional product-centric way of doing business, a great many customers still are not ready to embrace managed services.
The reasons are numerous.
Misperceptions abound. Among them is the occasional report of a price war between platform vendors and service providers. This one baffles me. And that’s because managed services do not easily lend themselves to price wars.
All of the managed services vendors’ platforms have enough differences between them, and their pricing schemes differ sufficiently, to make it difficult to imagine how a price war might actually play out in this segment. Furthermore, any warring that takes place between managed services providers simply amounts to bidding for a customer.
Another misperception has to do with what “managed services” actually means. In some cases vendors are attaching the term to service and support packages that differ from the traditional definition of “service and support” only in name. This practice is especially irritating and succeeds only in creating confusion.
Also muddying the waters is the tendency by some to approach managed services as if it were product. This is understandable, considering that VARs’ businesses traditionally have revolved around the sale of products.
But it is an area that requires clarification, and it must be done in a hurry because users appear to be confused. In a recent study commissioned by IT trade association CompTIA, users ranked managed services No. 13 on their list of technology spending priorities for 2007. The list also included things like network security and voice over IP.
While 81 percent of VARs polled said they expect to see growth in managed services, only 11 percent of customers participating in the survey said they plan to spend more on managed services in 2007.
These numbers do not bode well for the immediate future of the model. It would appear that fewer customers are ready to embrace the model than what solution providers believe.
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Among SMBs (small and midsize businesses), where managed services can effectively replace or supplement budget-tight IT departments, trust remains an issue. According to Gartner research, many SMBs are nowhere near ready to trust their data with third-party entities.
SMBs also have serious doubts about whether the model works well and whether it delivers enough cost benefits.
These are serious hurdles, and considering how long we have been discussing the merits of managed services, these obstacles are alarming. They indicate an urgent need for the managed services industry to assert itself and work diligently to dispel all the misconceptions.
Vendors and their partners—the service providers—must make a concerted effort to emphasize the value of managed services to the users. That value translates to improved productivity, IT reliability and, ultimately, higher business profits.
Customers should not be looking at the adoption of managed services as another technology acquisition, but rather as a new approach to how they tap IT services. The focus must be on how this approach helps them achieve their business goals.
Until the industry learns to hone this message, managed services will continue to fall short of fully delivering.
Pedro Pereira is editor of eWEEK Strategic Partner, contributing editor to The Channel Insider and a veteran channel reporter. He can be reached at ppereira@ziffdavis.com.
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