Managed services are increasing in popularity, as more companies outsource their computer network management.
“A properly structured managed services program can provide the benefits of reducing your IT costs and reducing your risks of hardware failure while standardizing IT management through streamlined efficiency, often all at lower costs than the company could manage by doing it in-house,” says Eric Folkman, manager of the Managed Services Division at Blue Technologies.
This has been especially advantageous for companies that either don’t have in-house IT talent or the capacity to manage their networks. Even with the improving economy, Folkman says many small and mid-sized businesses have not replaced the IT staff they once had on the payroll, so managed service providers (MSP) can fill that gap easily and cost effectively.
Smart Business spoke with Folkman about how a company can effectively use a MSP to cut IT costs and improve service.
What are managed service providers and how has cloud storage impacted this field?
In most cases, MSPs are value-added providers that remotely monitor and manage computer networks, which include servers, workstations, Internet usage, anti-virus, data backup and other infrastructure components. The remote access can also incorporate help desk functions as well. By providing expert assistance, MSPs deliver a significant amount of IT functionality at a lower cost.
Cloud computing already has had a dramatic impact on IT and is starting to have some impact on MSPs. Depending on what the business is looking for, MSPs can offer cloud storage or facilitate storage with a cloud service provider like Amazon or Google. Cloud storage also can be an important tool for disaster recovery. It’s a good place to store your backup files so at least you have data off-site.
How can business owners decide which service(s) to outsource?
Some companies instinctively know what services they need to keep, but many don’t; they may have a hunch that they could be doing something better but they don’t know anything beyond that.
The MSP will ask pointed, direct questions designed to ascertain what services are of value. Expert MSPs take the core services and modularize them to put them into different packages and separate tiers, as an effort to match the bulk of a client’s needs. Then it can be customized further to get the perfect fit, as necessary.
Some companies just want monitoring, with the MSP calling or texting if there’s a problem. However, most employers who are going down this path will say, ‘It would be nice to know if there’s a problem but we don’t have the skills to deal with it.’ Therefore, the MSP should not only identify the problem but also fix it, even though that company may have the capacity to do so. A business might continue to handle, on its own, an existing backup mechanism.
If a firm is not an IT firm but has to do IT functions, does it really make sense to devote employees to these tasks? If it’s a non-core competency, you should seriously look at outsourcing these non-core competencies as a way to reduce costs and let the experts handle things.
How should companies deal with pushback from their internal IT staff?
An IT person’s first thought might be, ‘Hey that’s my job, and if someone comes in to help me I’m not doing my job right.’ There is a degree of that, but managed service providers are not out to get anyone fired. They come to help and are hopefully viewed as a friend and resource to count on.
From an IT perspective, networking computer management is not that exciting. It’s one of those necessary evils, and very frequently the smaller, internal team doesn’t have the capacity to deal with computer management — doing the patching, the anti-virus and updates. In fact, for a lot of smaller companies, there may not be a dedicated IT resource at all. Sometimes the president, CFO or the controller manage all the technology in addition to his or her full-time job.
What are some best practices when moving into managed services?
Talk to whoever is providing IT support for your company and ask very direct questions related to the costs to maintain the workstations, software revisions, server status or network status, etc. Generally, a business owner will know if there are frequent outages or problems with the network or viruses, but the owner really needs to get answers from the IT people and get it with proof. For example, a report that shows the system is fully patched or one that shows the anti-virus is up to date.
Secondly, determine the cost of maintaining your equipment. Rough estimates are generally good enough, but factor in labor costs, including salary and benefits, technology costs, contract costs, etc. Then, compare these costs against what an MSP will charge you. Look at your written proof to see if you’re in good shape or if you need a more cost-effective expert.
Finally, execute a document with your MSP called a service level agreement. This agreement spells out, in full detail, exactly how things are going to go. It’s the responsibility of both parties to negotiate and fully understand the terms before they get started. Then you know the full extent of the services and how they will be delivered, because the last thing you want is a surprise when you need somebody.
Eric Folkman is manager of the Managed Services Division at Blue Technologies. Reach him at (216) 271-4800, ext. 2249, or efolkman@BTOhio.com.
Insights Technology is brought to you by Blue Technologies
The ability to attract, hire and retain talent remains a top concern for chief executive officers worldwide. While we experienced significant layoffs and cutbacks during the recession, talent and skill shortages are still very apparent. Companies need to be creative and expeditious in their search for talent. This has increased the prevalence of flexible labor and contingent workers.
Contingent labor is a growing expense on global operating statements. The ability to expertly manage, control and extract maximum value from this expense can be critical to a company’s competitive positioning. Vendor management technology continues to be an effective way to better manage contingent labor. VMS, paired with an outsourcing partner or managed service provider (MSP), enables companies to obtain visibility into this complex spend category, creating a framework to more easily develop, implement and manage a competitive sourcing program. This puts the current supply chain under scrutiny and expands the supply chain to attract and retain best in class suppliers.
“Many companies simply use the same suppliers without ever looking at whether they could do better,” says Laurie Bradley, president of ASG Renaissance. “VMS allows you better data visibility and a standardized service platform to enable controls, checks and balances. Once the data is aggregated and easily accessible customized reports can be generated to better manage budgets and project expenditures through growth periods.”
Smart Business spoke with Bradley about how VMS can help standardize your contingent hiring and potentially lower your costs.
What companies are ideal candidates for VMS?
VMS is software as a service and does not require a huge capital outlay, so it is affordable to even smaller users of contingent labor. It requires time and training to install and deploy, so companies with expenditures in excess of $15 million should consider it. It is ideal for those with multiple locations and can be effective across multiple currencies. It aggregates all spend points and enables users to examine usage, cost, performance and labor trends.
Most companies that undertake this process are surprised at how much they are spending on contingent labor because there is typically not one line item identifying contingency spending. Generally, every office and plant is doing things differently. In times of recession and rapid growth, contingent users can become very creative in how they get the talent they need in spite of a hiring freeze.
How can a company get started on the process?
First, do your homework. Consider skill classifications and the types of contingent expenditures to include. This may cover temporary workers, contract workers, independent contractors and outsourced services. Due diligence should include discussions with human resources, facility managers and executives.
Once you understand what you’re spending, you’ll likely see there are pockets everywhere. Then the question becomes, how efficient is the current state? Are you getting the best value for dollars spent and can you quantify your return on investment to include the quality of your current service providers? Is there consistency and fairness in the pricing model?
Identify your suppliers. Are there benefits to leveraging business with a smaller supply chain? If you have 100 suppliers and can reduce to 50, giving each the opportunity for more business, could you negotiate better pricing? Until you know what you’re spending, it’s hard to have those conversations.
How do you begin to get your arms around it?
Start with line items where it’s clear there are contingent dollars in temporary help. You might have 300 engineers at six facilities, and you’re paying some $36 an hour and others $48 because the company has never put a full service request out for competitive bids. When you put it together, all of those little pockets add up to very significant spending.
Where do you start to standardize spending?
Many times, an MSP is selected by the company to operate and manage the VMS application on behalf of the company. The MSP institutes rate cards for job classifications and selects a supply base. Sometimes agencies that have supplied a company for years don’t make that cut. Most MSPs encourage the customer to onboard all suppliers. Then you can systematically see where you can save money.
It can be a challenge when you start rationalizing the supply base. When tenured suppliers for price or quality reasons no longer fit the contingency staffing model, they may be eliminated. This requires a well-planned communication strategy so hiring managers understand the benefits of the new process. In addition to a learning curve on technology, they now have to deal with changes in their supplier pool.
How can companies present VMS to current suppliers?
Two biggest benefits to the supply chain: access to more orders and faster payment terms. Suppliers compete on a level playing field with access to more orders, and standardized quality and performance metrics help drive out nonperforming participants.
Who should be involved in the process?
It typically starts at the purchasing level with involvement from human resources. IT also plays a critical role as system integration is a key component of success.
How can VMS benefit businesses?
The technology of VMS, with a vendor-neutral MSP, helps companies better manage contingency labor expenditures on a standardized platform. It helps suppliers gain greater access to client requirements and provides an easy way to transmit, record and manage the lifecycle of talent. Vendor neutrality reassures suppliers they are not in competition with the MSP for staffing, breeding trust and fostering a collaborative work environment. This ensures talent requests are broadcast across a diverse supply base and ensures suppliers meet client-specific quality, performance and price guidelines.
Laurie Bradley is president of ASG Renaissance. Reach her at (248) 477-5321 or firstname.lastname@example.org.
Insights Staffing is brought to you by ASG Renaissance