‘Value’ can be determined by different people as different things, the oxford dictionary defines it as “The worth of something compared to the price paid or asked for it”.

Having worked in and around the IT Managed Service Provider space now for over 15 years I fundamentally believe there is value in working with such organisations, but…. There are 3 core things to consider when attributing value to service provision and getting the worth from the price:

  • Work with them not against them
  • Consider their investment and road map
  • Ask yourself the question on what it is that you do

Ill explore these a bit further:

Work with them not against them

Sounds simple but Service Providers are able to deliver the service they do by commoditising product, layering people and processes around it and selling it to multiple customers. What this introduces is necessary standards, these allow the provider to offer service that benefits from economies of scale that cannot be achieved internally.

This approach is often challenged for its perceived lack of flexibility, inability to bespoke and medium paced innovation. However, in most cases these challenges need to be explored, in my experience most can be overcome with an open conversation on the requirement vs the deliverable, mutual ground is normally met. Caution needs to be exercised when in an RFP process as these conversations can be closed and exploration is very difficult behind a rigorous procurement process, always talk to your potential service provider.

Consider their investment and road map

The true value is a Service Provider is the investment they can make in people and technology that would be prohibitively expensive within most organisations. The technology landscape shifts daily with new trends emerging all the time. A Service Providers survival depends on their ability to recognise and embrace these changes. They also need to be able to offer these technologies back out as a managed product whilst returning a profit. This continuous evolution is necessary and often involves an aggressive acquisition strategy.

Consider this example; currently the demand for Public Cloud services is outstripping the capability to deliver them. This is due to a lack of qualified staff across this technology and has driven the market price for them up. As part of an organisations digital strategy will almost certainly be the adoption of Public Cloud in 1 form or another, but how is this fulfilled; build your own cloud practice, hire contractors or trust in a Service Provider. Almost certainly the Total Cost of Ownership for delivery of such a service is lower when enlisting the services of a service provider. Nearly all that evolving have already invested heavily in developing Public Cloud practices, in some cases this capability has been bought through acquisition, giving a ready made and credible practice.

Ask yourself the question on what it is that you do

The key question when considering service provision is what demarcation are you looking for. By this I mean what tasks are you looking to hand over to the Service Provider and which are you going to retain. This demarcation is generally where the organisation considers its value and where its staff should concentrate their time. The inclusion of a Service Provider to take on the more commodity services will return a significant amount of time back to the core business. For example; the BAU tasks such as OS management and patching, backups, health monitoring and virus definitions are incredibly time consuming. These add no value to the organisation and detract from the real innovation those attributed staff could bring. A Service Provider, using its economies of scale, can take on the commodity tasks below the cost of being able to deliver them internally and return the organisations staff back to higher value activity. In every case the question needs to be asked “What is it that I do?”, the Service Provider can pick up the rest.

But how do you select a Service Provider…?

If I were looking to place my service requirements with a provider I would use a criteria such as:

  • Depth of portfolio and innovation – I would want as many core competencies as possible that were relevant but also a road map that continues to expand
  • A match between the geographies I operated in and the service provider was resident
  • Referenceable in my market
  • Actively endorsed by their customers, best of all from somebody I know and trust
  • The want to be a partner to me, through understanding my business and modelling service that was appropriate
  • Financial stability

My experience tells me that a closed RFP process does not enable this kind of insight, the most successful partnerships I have seen between a provider and customer have been based on open communications and a strong team alignment.

Final thought….. think ‘Partner’ not ‘Vendor’; after all the Service Provider will probably hold your crown jewels and be responsible for your own brand protection, client confidentiality and inevitably, your profitability.

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