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Managed services a perfect fit for mid-market businesses


Johannesburg, 28 Mar 2008

Technology research organisation Gartner has predicted that in the future, companies will not have IT departments as we know them today, but instead will outsource their day-to-day ICT requirements to managed services providers.

This does not mean that ICT management will disappear; merely that it will become focused on business rather than technology.

This model has already left its mark on large enterprises, but its potential for mid-sized companies is only starting to be realised.

Sandy Purbrick, general manager of Business Connexion Johannesburg's industrial and commercial cluster, defines the mid-market not only in terms of organisational size but also technological maturity.

"Enterprises are typically characterised by sophisticated ICT leadership, well-defined ICT processes and policies, extensive governance and large budgets. Mid-market companies have similar IT requirements, but without the budgets to match," he says.

For mid-market companies to effectively achieve value from their technology investments, they need to manage them in the way that large enterprises do - using well-defined ICT process, procedures and policies. Instead of focusing their spend on technology, they need to invest in managing the technology.

When mid-market businesses contract with a managed services provider they are able to access the same level of management sophistication as large enterprises, with built-in governance and best practices. Furthermore, the presence of a contract and service level agreement gives the business more control as it can demand outcomes and measure performance.

The market is now finding that managed services are as suitable for mid-size businesses as they are for large enterprises, especially as the managed services model is scalable to the requirements of the company.

Purbrick says that another compelling reason for the mid-market's adoption of managed services is the skills shortage in the ICT sector, which affects companies of all sizes. "Managed services providers are able to achieve economies of scale by sharing skills across clients," he says.

The most advanced skills are often not affordable to mid-sized businesses. In addition, smaller ICT departments struggle to attract and retain skills as they cannot offer the career paths that the service providers can.

Certain misperceptions of the managed services model remain, however. One is that the business will lose control. The opposite, however, is true. Managed services gives the business more control as the contract can be measured in business terms, can scale according to requirements and carries less risk in terms of skills, flexibility and best practice.

A second misconception is that it downgrades IT management's status. Again it should have the opposite effect. Internal IT management can become more focused on creating business value from technology and less on managing day-to-day operational technical issues. This is where the business will see more value from IT management.

Purbrick says the benefits of managed services to businesses of all sizes are now too compelling for senior business and IT management to ignore.

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Editorial contacts

Lillian Mpofu
Business Connexion
(011) 266 5329
lillian.mpofu@bcx.co.za