What is a Managed Service?
Managed Services, in this context, is when an organization hires an outside firm to handle the daily operations of their specialized applications. Most of the time, this involves an IT director or CIO to look for help outside of their in-house IT. As platforms as a service become more popular (Remedy, Salesforce, Servicenow, etc) - this expands beyond IT - into Sales, Finance, HR to name a few. In the past, this type of service would be out of reach of small companies.
Outside of platforms as a service, companies focus on “integrators” such as Zapier, Microsoft Flow, Workato, etc in order to integrate separate systems together to realize value. This process comes with a whole new set of problems and solutions - but deserved a mention.
So why do companies invest in Managed Services?
- Allows in-house folks to focus on strategic programs
- Frees internal employees to focus on the business core competency
- Enables more capability to your business through the expertise the firm (firm gains industry expertise based on number of clients they service)
- Provides great customer service, normally at a higher level than a small IT shop
- Access to experts in different areas of expertise (HR, IT, Security, GRC, etc)
- Deliverables focused on value added to the organization
- Best in class governance and processes for managing PaaS
What makes a Managed Service firm successful?
There are three main focuses that will make a managed service firm successful.
- Repeatable and re-usable processes across industries and platforms. In order to hit high margins, there should be easily customizable patterns in place that can be utilized for different clients.This means documentation and use cases that are standardized instead of re-inventing the wheel. If you don’t, you end up assigning static resources to clients and unable to realize efficiency gains.
- Improving customer experiences/value through automation. In most cases, clients will come to you with their own processes that someone created behind closed doors. Recreating these processes in PaaS can be painful and manual. Being able to provide baseline processes and automation quickly will show value add and help the organization streamline processes.
- Continuously learning and sharing. The cloud world moves really fast with updates to platforms coming bi-weekly, monthly, quarterly, and bi-yearly. Being able to provide the current value and future value to customers is critical. In order to do so, one needs to stay on top of current customer problems/issues and software updates and standards.
How does Managed Services fit in the organization structure?
I am a huge believer in that people/functional management structures does not have to equal project management structures. In the PMBOK space, I am more of a Balanced Matrix Organization (project + functional/people are equal authority) fan. So let’s build a quick chart of the people side and the project side.
What does a financial model look like for Managed Services?
- The first rule of Managed Services is - don’t sell by hours. Sell by value and subscription. This is the only way you are going to achieve 40%-60% profits for a given client and still be at a competitive price point.
- In most cases, you want to have 40-60% profit margins when running a managed service offering while providing a cost of less than 1-2 full time employees to a given client.
- So let’s say an average employee costs (total) ~ $175,000. That would mean they would need to be on projects/contracts that equal $245,000. If you want teams to be able to work together then you would need to provide a team of (3) $735,000 worth of contracts. If you didn’t have automation, you would need to figure out a way to have the team effectively work on 5 platforms (averaging ~$150,000) full-time, with each project expecting a high level of value being added. The context switching and meetings would be extremely painful to manage.
- There is an assumption here: that the client is a right fit. Don’t go and sell something a client doesn’t need or oversell your ability to solve their needs. Remember: the less you can automate or handle in standardized processes - the more it will eat from your profit margins.
What type of skills or processes would a Managed Services Engineer/Architect use in a given week?
Working in the consulting business can be tough because of the “billable” mindset. The idea that all of your hours should be billed to a client (as long as it is ethical). This can cause a lot of headaches and bad habits.
Some good habits to me would be:
- Dedicated time each week to learn more from youtube videos, community posts, servicenow docs, and nowlearning (outside of what work the client is asking you)
- Dedicated time to building out a robust knowledge articles and playbooks - both specific to the client and for the greater part of the organization (or even writing community posts, podcasts, and blog posts)
- Creating robust update sets / scoped applications that are portable to clients
- Documenting developer best practices for working in client instances
What are activities that make up a managed service?
I really liked the website and content that ScienceSoft produced about managed services (although I can’t vouch for how successful they are or how great of a firm it is)
- Consulting
- Implementation (Configuration focused)
- App Development (Scoped customizations)
- Integrations
- Support and Evolution
The nice part of these 5 areas is they can be their own business. You could have packages for just Consulting or just Implementation (just don’t sell it as a Managed Service - because it isn’t).
What are some managed services packages that one can offer on a PaaS?
Well the priority of the package, on the firm side, should be based on what you can automate, the platform, how well you understand the client’s business, and what the client needs in the first year.
I think it is good to define a core offering (can’t be excluded). If we take ServiceNow as an example this would be:
- ServiceNow Support:
- Authentication (SSO/LDAP/DB Auth), User, Group, Role Support
- Instance Scans
- Health Scans
- Baseline Dashboards
- Item Designer
- Release Management Pipelines
- Bi-annual Upgrades
- Simple Email Notifications
- Table Configuration (Forms, Layout, Fields)
- Customer experience:
- Project Management
- Knowledge/Documentation Management
- Customer Feedback/Survey
- Customer Roadmap
- Platform Roadmap
Then you build out other pieces of platform:
In order to do this, you are going to need to figure out the high value parts exist in the platform and align to customer needs for the first year. Remember that the number of different applications isn’t as important as what value the package brings. You don’t want to sell people on “ITSM” or “CSM”, but instead sell them on the feature or functionality within those product lines to accelerate their business. For example: It may be best to implement Incident Management and Service Catalog, but not Change Management and Problem Management.
Some areas of the platform that stand out to me are (list is not meant to be complete and value should be associated to different parts of this in order to articulate it correctly to the customer):
- CSDM and CMDB (ITOM)
- Manual
- Discovery / Service Mapping
- 3rd party integrations
- Event Management & Operation Intelligence
- Cloud Management
- ITSM
- Incident Management
- Change Management
- Problem Management
- Major Incident Management
- Knowledge Management
- Service Catalog
- Flow Designer
- IntegrationHub Spokes
- CSM
- Case Management
- Escalation Management
- Communities
- Playbooks
- Process Automation
- HR
- HR Services / Catalog
- HR Lifecycle Events
- Service Portal
- UI Builder
- Baseline Portals
- Agent Workspace
- UI Builder
- Playbook Integrations
- Chat & Phone & Walkup
- Virtual Agent Topics
- Live Chat w/ Agent Workspace
- Walkup configuration
- Interaction integration
- Phone integration
- Performance Analytics
- Automated Indicators
- Manual Indicators
- Formula Indicators
- Content Packages
- Workplace Delivery Apps
- Safe Workplace & Vaccine Management