Source: Sunday Business Post
As outsourcing and managed services evolve, industry insiders reckon that successful partnerships are based more on strategic relationships than cost savings. Ian Campbell explores a changing landscape.
In 2008, outsourcing and managed services will reach a tipping point and there will be accelerated change and innovation, as more providers step up their activity around new delivery models, according to analyst firm Gartner.
Gartner believes this will occur around infrastructure, application and business process offerings, but there will also be a move towards software-as-a-service - driven by leading vendors such as Microsoft and SAP.
Ireland is a country of small to medium enterprises (SMEs), where a full-blown outsourcing contract - like the HP and Bank of Ireland deal - was always going to be the exception rather than the rule.
The evolution of selective outsourcing could, however, shake up a fast-growing segment, where more and more players have come to market with a managed service proposition.
For the customers - small and medium-sized organisations upwards - more competition and improved delivery will reinforce the growing confidence they have for entrusting the information and communication technology (ICT) parts of their business to a third-party.
The model has evolved around classic functions, such as the service desk, remote monitoring and infrastructure and application management.
These managed services have helped organisations tighten their control on in-house ICT resources, letting them concentrate on their core business, while leveraging best-of-breed technology skills and competencies from outside firms.
If Gartner's prediction holds fast, an ability to differentiate the managed service offering will become crucial for Irish providers. At Ergo, an IT services company that first dipped its toe in managed services a decade ago, the business is based around infrastructure, networks, applications and business process outsource development.
John Purdy, managing director, Ergo, acknowledges there is more competition, but points out that it isn't necessarily good for the customer. “The space has become more crowded with people driving the costs down and the value out of it,” he said.
“The IT industry is its own worst enemy; everything is driven down to a commodity level, which is a dangerous place to be when you are trying to deliver service-centric solutions.”
Keen to distance his company from what he describes as “pure tin providers'‘ - who see managed services as an opportunity without necessarily having the skills to deliver what is required - Purdy was clear on how Ergo differentiates.
“In order to deliver serious managed service and outsourcing benefits, there has to be a different business approach. It's not about providing kit; our people go in and they understand the business needs of the client. Business analysis and scoping is critical.”
An engagement should be a partnership relationship, according to Purdy, established to change behavioural habits and the way processes work.
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