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The Matthew White column

What is the difference between outsourcing and managed services?

IT outsourcing vs Managed Services… what’s the difference? I saw this question from a person thinking of changing their IT Support. Here’s my quick answer after having worked 26 years in IT, both with small companies and multi-nationals or governments.

Outsourcing is “Your mess, for less”.

Managed Services however fits somewhere on the scale of Advised, Coached, or Done-for-you.

More than a decade ago, I was hired into Infosys – an $8 billion/year outsourcer. My boss (who grew up in Pune, India) told me after about a year, that I and my cohort were part of a drive to move into the UK and they decided a strategy of needing to “put a white face on their Indian operations”. Interesting… Not only that, I was told that the way to quote customers was put us UK born people on the job and make sure to add at least 4 outsourced/off-site people back in India, because that was where the real profit of the job came from. Those people had daily charge out rates that were half our UK ones, but the day rate salary cost of those employees was 1/8th for us UK ones. This meant we could do exactly what the customer was doing, but cheaper. There were many experiences like this I had at the big outsourcers that made me want to set up Flywheel differently.

Managed Services on the other hand, is more often a fluid service that is more than just support. That’s the reason most SMB companies and nearly all schools don’t off-shore to an outsourcer. With managed services, you provide a service, not a computer. So for instance, instead of just buying a switch, then hiring an outsourcer to handle tickets when it breaks, a Managed Service provider will make sure that you have a network service that keeps working. They will do pro-active tasks and sometimes even upgrade your hardware as part of your service contract, to make sure that your network always works.

That’s why I describe a scale of managed service. The levels start at Advised for level 1, then Coached for level 2, then Done for You at level 3.

The scale of Managed Services

The first level of IT Managed Service is “Advised”.

This is where you are responsible for your network. You design, select and procure the equipment. Then you design and set up a support team by hiring a person on site. Along the way, someone buying the “Advised” level of IT Managed Service will ask for advice on what to buy, how to design it, maybe even get help who to hire. This type of service is good for people who are technical with lots of time to research, or for people who are truly cash strapped. The sort of person who does their own IT is the sort of person who does their own legal work. Unless they are a trained IT person or a trained lawyer, they are a danger to their company. Asking for advice is good, and our consultants are always happy to teach someone willing to learn, but if the person is doing DIY because they are penny wise and pound foolish, that’s not a good use of anyone’s time.

The second level of IT Managed Service is “Coached”.

This is where we start with a customer on their journey. We will listen to what they want to achieve with their business, then help them select the equipment and the service they need. If they buy the right equipment, then they should have the least problems running it. This customer knows the value of their equipment being down for an hour is far more than any savings between the best equipment vs the cheapest. An IT Managed Services provider on the coached level will have regular business meetings – yes business meetings, not IT reviews – done at least quarterly, to discuss the business and how it is working. By knowing the plans, stresses, opportunities and major activities, the IT provider can recommend how to overcome obstacles that they see coming up (eg if you opening a new office, your IT provider will remind you to plan your broadband installation 9 months early because it takes that long to install in some areas). This is good for most businesses that have simple IT needs. It’s also perfect for most primary and SEN schools. If anything difficult or complex comes up, the IT provider will be able to provide overflow as well as expert additional services – both of which don’t make sense for the business or school to be paying for all year.

The highest level is “Done for you”.

This is where your IT Managed Services company is part of your business. A full Done for You service can look like an outsource, but it’s more than that. Most of our secondary schools and many companies that buy a Done for You service from us have us handle all of their IT needs – everything from design, procurement, installation, support, capacity management, service improvement and lifecycle. But what takes that beyond mere outsourcing and lifts it to a Done for You IT Managed Service is to what level the IT provider speaks in your school or company… For these customers, we provide either an IT Director service, or a strategic review and audit service. This is where it is like hiring your own IT Director who sites at SLT level, who discusses IT with you at the level of business objectives or pedagogical outcomes. The team will ensure you have a fully costed roadmap of IT improvements to achieve those outcomes and objectives. Then they will go and make those projects happen, and be accountable for the results. In other words, the IT is just done for you, so you don’t need to worry about it.

The best part

The best part of a good managed service, is that you can have high quality IT support for less than hiring your own team, simply because you are sharing that service with other customers. This service is for people with budget constraints (like state funded schools) or companies that don’t yet have the volume of IT work that needs a full time permanently on staff.

From this description, you will start to have an idea of what level of IT managed service you need. You will always have some form of outsource – most people these days don’t need a telephony PBX on site and find it better to outsource that part, but have their IT managed service provider look after it for you.

Changing IT provider is a big step. Make sure to learn more from the articles and videos on this site to help you work out the questions you need to ask yourself and your prospective IT providers. If you have more questions than we have already answered, have a no obligation call with one of our support team to find out more.