Johannesburg, 25 Jul 2007
There is a growing demand for managed services in South Africa, but this is sometimes tempered by concerns over complex contracts and the perceived dilution of technological advantage.
This is the view of Johan van Huyssteen, general manager of outsourcing at Business Connexion, who says that while managed services may not be a competitive advantage in itself, outsourcing allows businesses to focus more on their core competencies and to enhance performance in these areas.
According to Van Huyssteen, the true benefits of managed services are not technical, but business related. "Managed services providers are in a position to offer an end-to-end service that is aligned with business requirements. This puts businesses in control of their costs and allows for greater flexibility," he says.
Furthermore, managed service providers can offer a dedicated and specialised set of skills that in-house IT departments are unable to match. This means that not only do businesses have access to a deeper pool of resources, but also that their ICT concerns are treated with a service ethic.
"Internal ICT departments tend to be focused on technical service levels and will typically measure how well various components of the ICT infrastructure are performing. Managed service providers sell services and so operate within a service culture. This makes for an improved end-user experience," Van Huyssteen says.
Van Huyssteen emphasises the importance of combining a well-defined sourcing strategy with a single service integrator to manage service providers. "Companies should retain what is core to their businesses and look to 'smart-source' non-differentiating elements," he says.
Smart-sourcing, which refers to the practice of trusting aspects of ICT service to different service providers according to their specialties, is best able to create competitive advantage when overseen by a single service integrator - an interface that simplifies the task of managing multiple suppliers.
Managed services come with a host of other benefits, all of which translate into competitive advantage when one considers the time and resources saved in other areas of business. Notably, managed services providers are able to absorb much of the cost and hassle of aligning with best practice standards and corporate governance requirements, which is often a considerably draining experience for small and medium-sized companies.
This being said, Van Huyssteen warns against the 'foot in the door' approach of some service providers. "Many service providers are coming in at as low a cost as possible, but offering a limited scope of services, forcing clients to pay for extras. This puts a serious strain on the relationship between service provider and client. It is preferable to sign a contract that may be a little more expensive but includes all eventualities," he says.
Contracts and service level agreements (SLAs) are perhaps the most important considerations in an outsourcing deal. According to Gartner, between 2% and 5% of the total value of the deal should go into contract and service management, which, Van Huyssteen says, justifies employing full-time service management staff. He adds that contract and SLA deliverables should be defined in terms of quality as well as quantity, and all assumptions, inclusions and exclusions should be clearly understood.
"Sometimes a contract might state, for example, that it is up to the client to provide all infrastructural hardware - so it is important to understand exactly what services will be provided and at what cost," he says.
As for security, it is clear that a high availability, Tier IV data centre is less exposed to disaster than many in-house facilities. Other security concerns can be dealt with by a policy that is defined by the client or an independent consultant.
"Security policies must conform to governance and best practice requirements, such as Sarbanes Oxley and ITIL, and once defined by the client must be executed by the service provider. It is also essential that policies are regularly reviewed and audited, and that evidence of compliance is available to be viewed by the client on a day-to-day basis," he concludes.
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