« Open Source Based WAN Equipment | Main | Innovation and Legislation »

Do Managed Services Make Sense?

Twenty years ago, the essentially the only "services" that were offered by the telcos were transport services. At least in the US, the ability of the telcos to offer services beyond basic transport were severely limited in the immediate post-divestiture era.

However, over the course of the past twenty years, at least two major shifts have occurred. The service providers are now allowed to offer enhanced "managed services," and the extent to which these services offer reasonable value to customers has increased exponentially.

However, by most metrics, these enhanced services have failed to be adopted to any significant extent.

So the question is "why"? Is it a case of companies not trusting the service providers - maybe with good reason? Is there too much BYOB (Be Your Own Bell) attitude in the user community? Is the pricing wrong? Are the service providers ineffective at selling these services?

What is the key missing ingredient in having these services take off?


There are multiple reasons that higher level business services haven't taken off. From my perspective, these range from limited feature sets, concerns about data ownership, concerns about the outsourced business durability with the potential for data loss all the way up to regulatory issues including the rigorous demands of HIPAA and Sorbanes.



Are people really digging their heels in to stay away from Managed Services ? I wouldn't entirely agree. I know of enterprises who are on the extreme outsourcing end - having outsourced 95% of their IT infra management. So I asked their CTO how many IT staffs they had, and they laughed and said, 3 or 4. Where cost-saving becomes visible and apparent, MS will gather momentum as it rolls.

The "missing ingredient" that Steven is looking for is a true customer service orientation. Unfortunately, the attitude of the telco's (as exhibited by their billing, customer service, order processing, and troubleshooting/repair practices) is one of a monopoly public utility. When push comes to shove customer service will take a back seat to the needs of the bureaucracy. As such, I will rely on them (with fingers crossed and appropriate contingencies in place) to provide bandwidth and dial-tone. Beyond that, managed services require a business partner that has the desire and ability to listen to their customer's needs and respond appropriately. The telcos claim to be that partner, but ultimately have disappointed those that believed those claims. Why haven't I adopted managed services? I have more confidence in my own organization's desire and ability to support our business needs than I do in the telcos.

I think its key to understand the decision making process of going 'managed' or 'un- managed'. If the service is a commodity then it makes sense to offer it out (I won't use the word outsource as it can stir up other connotations that may not apply here )but where a service requires a heavy value offering, providors do a poor job of getting it done. I think the post by Michael Cardali points to a great example. Telcos in general aren't excelling at customer support and aren't quick to step up. Thus it does pose the question how can they deliver a value model when they propose to do it with people that aren't as committed to your business as someone who works for you ?.

I agree there is a certain amount of xenophobia displayed by end users when the issue of 'managed service' occurs. But this seems to be justified anytime there is a loss of service and the vendor is slow to react because he is still within his SLA parameters. BTW has anyone ever been in a SLA negotiation with a vendor ? its not pretty, and you can't help but feel and you can't help but feel that its an excercise in how they can commit to doing the bare minimum.

In my experience with frame-relay vs site-site IPSec VPN, customer service has depended on the technology.

In our dwindling frame world, even with online trouble tickets, with or without automation, nobody reads the critical information we post to the ticket log, and the ticket drags on and on. I can't count on both hands and feet the number of times we've converted customers from frame to VPN overnight BEFORE the frame line even gets fixed.

For some reason, Internet connections seem to get the attention that customers deserve. Obviously, T3 and above are going to get micro-attention, as well they should. But we've found that across the board, from DSL to T3, Internet connections are much more stable and catered to efficiently. For mission-critical applications, this is paramount.

The bottom line, though, is people. Without the right people, customer service is hit and miss. I don't know if that necessarily translates to a "you get what you pay for" scenario, but I'm sure it comes eerily close.

Our philosophy is really the more you can control, the better, because you can troubleshoot problems much more effectively and efficiently. That eminates from the lack of trust for vendors to manage what we already know, as well as the fact that certain vendors have failed in that capacity. As a result, our actual time to repair is much lower, and mission-critical applications don't have to suffer needlessly because the telco thinks our CPE is the problem.

I have found that all the Telco's I have worked with over the past 10 years have one thing in common: They do not live up to their promises once the contract is signed.

My current company had managed services when I arrived, but were not happy with the way things were being managed. Some examples are:
-outages that lasted a week.
-delays fixing issues due to incorrect circuit/router id's (which the vendor owned & installed)
-no consistency with the HW/SW standards.
-lack of escalation and notification procedures.

Other than the above, outsourcing of the WAN is a great idea. All sarcasm aside, there are areas where outsourcing makes sense, but the WAN is not one of them in my opinion.

Managed service is expensive. We run managed service on an international MPLS network and it reduces the provisioning efforts for international sites. It also provides 24/7 monitoring for problems.

We do not use managed service on a U.S. domestic frame relay network of 70 sites. The benefits do not justify the costs.

Managed service does not mean that you can ignore the network and leave it to the carrier. Capacity planning still belongs to the customer even though the carrier does provide utilization reports.

Even with managed service the customer has to follow-up on problems and in some cases initiate escalation. The process is not automatic.

Managed service should be an economic decision, not a technical decision. It is a good choice for some companies and some networks and a poor choice for others.


It’s interesting that the question challenges the growth of managed services through telcos, specifically, and not managed services, generally. I’m assuming that’s an acknowledgment that managed services are being adopted, indeed, but that the early dominance by telcos has been lost to alternate managed service providers—the integrators and independent MSPs.

I think your readers have provided much of the explanation for that shift in market share—it’s about doing as good a job as a company's in-house staff and providing great service. I will offer another reason to consider…telcos focus only on the network, but the real enterprise challenge is the performance of applications that run on the network, not simply the network itself. Some MSPs are willing to look beyond the network CPE to the other remote site needs (firewalls, content filters, remote servers, smart UPS’s, and other business-specific devices such as smart refrigerators, POS systems, printers, and more). Complete remote site monitoring (not just network monitoring) has value; and if you can deliver it with excellence, folks are more than willing to adopt a service approach. MSPs are also more agile and offer services for new technologies (VPN, Wi-Fi, security) and alternate equipment companies (Juniper, 3Com) much more readily than the behemoth telcos.

An interesting development by telcos to overcome these obstacles is to partner with (and in some cases, acquire) the MSP—for example, MCI’s acquisition of NetSec and Totality, AT&T’s partnership with Vanguard Managed Solutions. Even the large integrators have taken that approach, in some cases (IBM’s partnership with Nuvo is a good example).


With the migration to IP telephony, wireless mobility, converged networks, and business process integrations, there is an obvious opportunity to "virtualize" business communications. Not only will this enable centralization of technology support, but will permit such support to be distributed or shared between providers and enterprise resources.

Service providers do not necessarily have to offer and support only the application technologies they develop, but can offer customers a variety of similar but not necessarily identical software capabilities that an enterprise applications choose from. If such applications are"open" and interoperable, rather than proprietary "suites," enterprise customers can mix and match at the individual user/subscriber level.

I think you are starting to see such interoperability between IP networking, unified communications, and business process applications starting to be developed for enterprise CPE. (Today's alliance announcement by Microsoft and Nortel.) The next obvious step is that such capability can be selectively provided through a variety of service arrangements. The choice of service provider will then depend on who provides what application, directly or indirectly.

Transport service alone is no longer an interesting proposition; the software applications are. And they have to be device and network independent to satisfy the dynamic needs of different end users within an enterprise organization.

Post a comment