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Managed services is the practice of outsourcing the responsibility for maintaining, and anticipating need for, a range of processes and functions, ostensibly for the purpose of improved operations and reduced budgetary expenditures through the reduction of directly-employed staff. It is an alternative to the break/fix or on-demand outsourcing model where the service provider performs on-demand services and bills the customer only for the work done. The external organization is referred to as a managed service(s) provider (MSP).

Definitions

A managed IT services provider is a third-party service provider that proactively monitors & manages a customer's server/network/system infrastructure, cybersecurity and end-user systems against a clearly defined Service Level Agreement (SLA). Small and medium-sized businesses (SMBs), nonprofits and government agencies hire MSPs to perform a defined set of day-to-day management services so they can focus on improving their services without worrying about extended system downtimes or service interruptions. These services may include network and infrastructure management, security and monitoring. Most MSPs bill an upfront setup or transition fee and an ongoing flat or near-fixed monthly fee, which benefits clients by providing them with predictable IT support costs. Sometimes, MSPs act as facilitators who manage and procure staffing services on behalf of the client. In such context, they use an online application called vendor management system (VMS) for transparency and efficiency. A managed service provider is also useful in creating disaster recovery plans, similar to a corporation's.

The managed services model has been useful in the private sector, notably among Fortune 500 companies, with potential future applications in government.

History and evolution

The evolution of MSP started in the 1990s with the emergence of application service providers (ASPs) who helped pave the way for remote support for IT infrastructure. From the initial focus of remote monitoring and management of servers and networks, the scope of an MSP's services expanded to include mobile device management, managed security, remote firewall administration and security-as-a-service, and managed print services. Around 2005, Karl W. Palachuk, Amy Luby, Founder of Managed Service Provider Services Network acquired by High Street Technology Ventures, and Erick Simpson, founder of Managed Services Provider University, were the first advocates and the pioneers of the managed services business model.

The first books on the topic of managed services: Service Agreements for SMB Consultants: A Quick-Start Guide to Managed Services and The Guide to a Successful Managed Services Practice were published in 2006 by Palachuk and Simpson, respectively. Since then, the managed services business model has gained ground among enterprise-level companies. As the value-added reseller (VAR) community evolved to a higher level of services, it adapted the managed service model and tailored it to SMB companies.

In the new economy, IT manufacturers are currently moving away from a "box-shifting" resale to a more customized, managed service offering. In this transition, the billing and sales processes of intangible managed services, appear as the main challenges for traditional resellers.

The global managed services market is expected to grow from an estimated $342.9 Billion in 2020 to $410.2 Billion by 2027, representing a CAGR of 2.6%.

Advantages and challenges

Adopting managed services is intended to be an efficient way to stay up-to-date on technology, have access to skills and address issues related to cost, quality of service and risk. As the IT infrastructure components of many SMB and large corporations are migrating to the cloud, with MSPs (managed services providers) increasingly facing the challenge of cloud computing, a number of MSPs are providing in-house cloud services or acting as brokers with cloud services providers. A recent survey claims that a lack of knowledge and expertise in cloud computing rather than offerors' reluctance, appears to be the main obstacle to this transition. For example, in transportation, many companies face a significant increase of fuel and carrier costs, driver shortages, customer service requests and global supply chain complexities. Managing day-to-day transportation processes and reducing related costs come as significant burdens that require the expertise of Transportation Managed Services (or managed transportation services) providers.

Types

General services

IT services

In the IT industry, the most common managed services revolve around connectivity and bandwidth, network monitoring, security, virtualization, and disaster recovery. Beyond traditional application and infrastructure management, managed services may also include storage, desktop and communications, mobility, help desk, cloud solutions and technical support.

Main providers

Main managed service providers originate from the United States (IBM, Accenture, Cognizant), Europe (Atos, Capgemini) and India (TCS, Infosys, Wipro).

Company	Country	2017 revenue
IBM	United States	$79bn
Accenture	United States	$35bn
Cognizant	United States	$18bn
Tata Consultancy Services	India	$18bn
Atos	Europe	$16bn
Capgemini	France	$15bn
Infosys	India	$10bn
Wipro	India	$8.5bn
HCL Technologies	India	$7bn
ATEA	Europe	$4.7bn
Computacenter	United Kingdom	£4.4bn
Datapipe	United States	$2.4bn
ALTEN	France	$2.4bn

See also

• Application service provider – Business providing software via the web
• Customer service – Provision of service to customers
• Enterprise architecture – Business function methodology
• Information technology outsourcing – Contracting formerly internal tasks to an external organizationPages displaying short descriptions of redirect targets
• Managed service company – Company structure in the United Kingdom
• Managed private cloud – Aspect of cloud computing
• Remote monitoring and management
• Service (economics) – Activity for which payment is due
• Service provider – Organization that provides services to other organizations
• Service science, management and engineering – Term introduced by IBM
• Service level agreement – Official commitment between a service provider and a customer
• Technical support – Maintenance service of electronic consumers
• Web service – Service offered between electronic devices via the internet

References

1. "Inside Outsourcing: More Bad News from Business Regulation?". The Brookings Institution. November 1996. Archived from the original on 31 January 2022.
2. "Introduction to Managed Services" (PDF). CA Technologies. September 2012.
3. Palachuk, Karl (January 2013). Managed Services in a Month. Great Little Book Publishing Co., Inc. p. 208. ISBN 978-0981997858.
4. OryxAlign. "An Insight Into IT Service Delivery: Traditional Break-Fix vs A Managed Service" (PDF). Archived from the original (PDF) on 2017-02-02. Retrieved 2016-03-28.
5. Nimsoft Guest (5 March 2010). "How Break/Fix Can Break Your Managed Services Business". MSPMentor. Archived from the original on 7 July 2017. Retrieved 28 March 2016.
6. ^ Alexander S. Gillis; John Moore. "managed service provider (MSP)". TechTarget. Retrieved 15 July 2024.
7. "What is a Managed Service Provider (MSP)?". SearchITChannel. Retrieved 2022-03-10.
8. "Top ten criteria for selecting a managed services provider" (PDF). IBM Global Technology Services. 2015.
9. "Cloud Data Backup & IT Disaster Recovery Solutions". Retrieved 2023-06-23.
10. Joe Panettieri (23 April 2012). "60% of Fortune 500 Companies Running ManageEngine". MSPMentor. Archived from the original on 2 February 2017. Retrieved 28 March 2016.
11. Casey Morgan (4 June 2015). "IT Managed Services in the Public Sector". storagecraft. Archived from the original on 2 February 2017. Retrieved 28 March 2016.
12. "MSPmentor 250 List 2014: Honorees N to P". MSPMentor. 2015. Archived from the original on 2017-06-27. Retrieved 2016-03-28.
13. "MSP Partners Recognizes Outstanding Contributions in Managed Services". BusinessWire. 7 August 2008.
14. Palachuk, Karl (July 2011). Service Agreements for SMB Consultants. Great Little Book Publishing Co., Inc. ISBN 978-0976376026.
15. Simpson, Erick (15 August 2006). The Guide to a Successful Managed Services Practice. Intelligent Enterprise. p. 320. ISBN 978-0978894306.
16. "IT Outsourcing - Global Market Trajectory & Analytics". www.researchandmarkets.com. Global Industry Analysts, Inc. April 2021. Retrieved 2021-09-21. Amid the COVID-19 crisis, the global market for IT Outsourcing estimated at US$342.9 Billion in the year 2020, is projected to reach a revised size of US$410.2 Billion by 2027, growing at a CAGR of 2.6% over the analysis period 2020-2027.
17. Randy Perry (June 2013). "Business Value of Managed Services" (PDF). IDC.
18. ^ Sarah Kuranda (4 June 2014). "Top Five Functions Outsourced To Managed Services". CRN Magazine. Archived from the original on 16 July 2018. Retrieved 28 March 2016.
19. Robert Peretson (2011). "Managed Services:The Win-Win Model for Your IT Support Success" (PDF). MSP Business Management.
20. Wood, J.B.; Lah, Thomas. "The Case for Managed Services: A Stepping Stone to the Cloud". Technology-as-a-Service Playbook. Technology Services Industry Association.
21. Spencer Smith (February 2016). "Managed services companies rethink their portfolios". TechTarget.
22. David Linthicum (19 May 2015). "The case for managed service providers in your cloud strategy". InfoWorld.
23. "Making the Transition from VAR to MSP" (PDF). CA Technologies. October 2014.
24. John Moore (May 2015). "Cloud-based service revenue lags among MSPs". TechTarget.
25. Steve Banker (11 February 2014). "A Holistic Approach to Transportation Managed Services". Forbes.
26. Adam Robinson (2 September 2014). "What are Managed Transportation Services? The Old Model vs. The New Model". CERASIS. Archived from the original on 22 March 2016. Retrieved 28 March 2016.
27. "Supply Chain Managed Services". Deloitte. 2015.
28. Adam Robinson (22 September 2014). "What are Managed Transportation Services? The Old Model vs. The New Model". CERASIS. Archived from the original on 22 March 2016. Retrieved 28 March 2016.
29. "Managed services". Water Centric. 2015.
30. Dan Pegan (16 July 2014). "The Growing Trend of Managed Services for Advanced Metering". Electric Light and Power.
31. Chloe Green (7 March 2016). "How to use managed services to overcome the top 6 app security hurdles". Information Age.

Further reading

• Palachuk, Karl (16 September 2014). The Managed Services Operations Manual: Standard Operating Procedures for Computer Consultants and Managed Service Providers – a Four-Volume Set. Great Little Book Publishing Co., Inc. ISBN 978-0990592310.
• Managed Services in a Month, 2nd edition. Great Little Book Publishing Co., Inc. 2013.
• The Guide to a Successful Managed Services Practice, January 2013. Intelligent Enterprise.
• Palachuk, Karl (1 July 2006). Service Agreements for SMB Consultants. Great Little Book Publishing Co. ISBN 978-0976376026.

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