What are Managed Services?

Managed services are recurring IT services whose type, scope and quality are clearly defined by a service provider in advance with its customer. They differ from classic IT services in several respects.

Managed services are recurring services that an IT service provider provides for its customers. The type, scope and quality of these services are clearly defined in advance between the managed service provider (MSP) and its client. To this end, they agree on a so-called Service Level Agreement (SLA), in which, for example, the availability of IT systems or the response time in the event of faults is specified.

Managed services are usually billed on a monthly basis. If the service provider does not comply with the SLA in all respects, the customer can usually demand a partial refund of the fee. Under certain circumstances, the MSP may even face a contractual penalty.

Remote monitoring

The starting point for managed services was remote monitoring of IT infrastructures, also known as remote monitoring & management (RMM). IT consultant Karl Palachuk first described the service model in 2006 in his book “Service Agreements for SMB Consultants: A Quick-Start Guide to Managed Services” and thus coined the term. Initially, it was primarily corporations that purchased IT services as managed services, but subsequently SMB customers also became interested in them.

Today, managed services are part of the range of services offered by many system houses, alongside traditional services such as consulting, implementation and maintenance. In the meantime, the offers no longer refer only to the monitoring of server and network infrastructures, but extend to almost all sub-areas of IT such as applications, backup, endpoint security, firewall, mobile device management, printing, UCC or workplace.

Industrialization

Managed Services differ from traditional services in several respects. First, they are not one-off services, but recurring services that are provided continuously over a certain period of time. In addition, the service provider usually operates remotely with the help of remote tools. Its technicians only travel to the customer’s site in exceptional cases.

In addition, managed services are generally based on multitenant technologies. This means that the provider can support several customers via one platform and perform standard activities such as applying patches or installing updates with a single action on numerous customer systems at the same time. In conjunction with the automation of processes, the service business is industrialized in this way, whereas conventional IT services are more like manual operations.

Last but not least, the concept of managed services is designed to be preventive rather than reactive. In the classic service model, the system house only comes into play in the customer’s normal operations when an incident occurs, and then takes on the role of problem solver. In contrast, an MSP has de facto operational responsibility for the customer systems entrusted to it. It is therefore in his interest to ensure that they run as smoothly as possible. If he defuses potential incidents before they escalate, he saves time and effort.

Complexity drives demand

One driver of demand for managed services is the increasing complexity of IT. The large number of different end devices that employees now use to access the corporate network from almost anywhere, the use of the public cloud leading to hybrid structures, and the increasing threat of cyber attacks are just three factors facing a shortage of well-trained specialists. In the absence of know-how and resources, IT departments are inclined to transfer part of their operational responsibility – for segments of the infrastructure or for security systems, for example – to an MSP.

At the same time, there are technology trends that favor the spread of managed services. One of these is the increasing use of the public cloud. Most IT administrators, especially in the midmarket, have little or no familiarity with the provisioning and management tools of hyperscalers. This opens up the opportunity for service providers to offer their customers the operation of workloads on AWS, Microsoft Azure or another platform as a managed service.

It is not uncommon for managed services to be based on public cloud services. Because of their multi-tenancy and scalability, cloud infrastructures are particularly conducive to the service model. However, it also works without cloud. Some MSPs operate dedicated infrastructures on which they provide services for their clients. Others monitor customer systems via RMM consoles installed on their premises.

No outsourcing

Incidentally, managed services also differ from traditional outsourcing. The latter involves the comprehensive outsourcing of IT tasks, often involving the transfer of personnel, sometimes entire IT departments, to a service provider. Managed services, on the other hand, relate only to subareas of IT that are precisely defined in advance. The IT staff remain with the customer. They are merely relieved of some of their duties so that they can devote themselves to other activities.