Letting someone else run some or all of what used to be in-house IT services will either deliver cost and productivity benefits or costly and productivity sapping problems.
Making the decision to let aliens in the door to handle some services that were done internally is a choice many business leaders are making. And while the service providers are always happy to talk about new deals, few are willing to talk about why they were fired - or as it goes in polite society, why their contracts were not renewed.
Retaining effective managed services can deliver remarkable benefits, retaining a managed disservice is costly and traumatic for the whole company. Computer Business Review Africa asked Rabin Ram, GM of Xerox Business Services for his views on the state of managed services in South Africa.
Rabin Ram, GM Xerox Business Services
CBR: What is the state of managed services in South Africa?
Rabin Ram: The market has matured to the extent that companies are now much better informed and are able to extract more value from outsourced or managed services. Implied in this is that solution providers are now tailoring optimum solutions that are company requirement- and strategy-dependent.
Experienced outsource solution providers employ solution architects to work with potential customers to design specific solutions that use all the latest available technology and practices to ensure the best possible result. The South African market for managed services continues to grow, especially among large corporations and specifically in the document management space. This is evidenced by the fact that there are increasing requests by companies that vendors submit a managed services option - almost all RFPs/tenders have such requests of late.
Many customers in South Africa have had and continue to have good, positive experiences from outsourcing and managed services arrangements. This serves to stimulate further interest, which is why the market is still in a growth phase.
CBR: What are the benefits of managed services to the South African corporate? Why make the change to the same thing everyone else is doing?
Rabin Ram: There are numerous benefits to be derived. Of a few key reasons, the first is the shedding of a non-core activity that would allow for focus and concentration on one's core business.
Secondly, a managed services partner in the business brings expert knowledge, processes, and methodologies to bear - which would normally not be available in-house.
Thirdly, an experienced vendor can provide ongoing improvements and ensure the availability of leading-edge technologies and methodologies.
Lastly, managed services invariably provide economies of scale by capable vendors, often resulting in cost savings during the agreement term.
That everyone else may be doing the same should be true only in so far as the concept of 'managed services' is concerned and not otherwise.
In the document management environment, no two solutions can possibly be the same as the first and foremost compelling advantage attracting customers would be a strategic and optimum solution specific to their requirements. When a managed services solution is not driven by such imperatives, the benefits mentioned above will not materialise and the project will eventually be considered unsuccessful.
CBR: Is IT not a competitive advantage? Managed services kill any USP or advantage you may have had.
Rabin Ram: A much greater competitive advantage would be having a managed service provider that can add value to one's business. The optimum solution would improve a company's response time, or time to market, improve quality of output, employ technologies that enhance customer communications, such as one-to-one direct marketing, up-selling, and cross-selling. Managed services reduce direct costs, a further competitive advantage. Savings in indirect costs, such as the inevitable reduction in in-house administration, add to this by making available valuable resources for other customer-focused activities.
CBR: What about the dreaded contract?
Rabin Ram: Both parties want to win from the deal which means companies can no longer simply tell IT to do something. Is it worth being tied into a vanilla IT service? When the contract is the result of an optimum solution that provides measurable benefits to an organisation, it could not possibly be viewed as dreaded. It would serve to govern the relationship in an amicable way, and always include an SLA that would provide the benchmarks and baselines to quantitatively measure benefits on an ongoing basis, nudging both parties to continuously improve.
CBR: Security is on everyone's mind. Is a managed service a secure service?
Rabin Ram: In the document management space, the vast majority of financial institutions have seen fit to outsource their requirements successfully for many years now. Likewise, a significant volume of examination script printing is produced on a managed service, outsourced contract, in one instance for seven years without a single breach or compromise to security. The approach in constructing an optimum solution for any organisation would ensure utilisation of technologies, methodologies, experience, and best practice to address security considerations where these are vital.