It’s Not Easy Starting a Managed Service Offering

The Gartner article “Key Considerations When Thinking About Insourcing or Changing IT Service Providers” was an interesting read because my organization has been trying to start a new line of business in managed services. The idea is to have three different service offerings for a managed service: Bronze, Silver, Gold. The bronze service offering allows the client to have a finite number of hours per week to leverage a pool of resources for defects and enhancements. The silver service offering assigns a ServiceNow subject matter expert to the client and can be utilized for development, design, and road mapping of their platform. The gold service offering is a complete outsource of their ServiceNow help desk team. All defects and enhancements would be routed to a dedicated team in my organization.

The initiative has started a little over a year ago with a RFP with a luxury bag manufacturer. The client worked with us for many years and has a sound understanding of our services and quality of our deliverables. We were very confident that we were going to win the contract however this was not the case. They saw too much risk with being the first client for our managed service offering. From an evaluation standpoint, this makes sense especially after reading the Gartner article previously mentioned.

The article mentions the common factors that drive the decision: Cost, Control, Change, Contract, Alignment, and Frustration with service quality or vendor relationship. The common factors that was driving the need to outsource the services was the following:

Change: The client was pursuing various acquisitions and did not want to invest more money into the IT department.

Cost: Outsourcing the help desk will be much cheaper than keeping employees on staff.

Alignment: There were too many vendors and contractors work on the ServiceNow platform. Their goal was to work with one vendor for not only outsourcing the help desk department but also for project work, defect remediation, and development of enhancements.

After being notified that we lost the RFP, we reached out to our contact within the organization and asked for feedback. Much to our surprise, the quality that we were known for was not a metric in the decision process. The client was looking for a cheap alternative, that has a reliable and proven process, and is flexible to make adjustments when needed. Unfortunately, our proposal was different from this. The owner of my organization stressed that they would be the first client so we would align with them from a cost perspective in order for us to get the process correct. Our costs were much higher because our organization is entirely U.S. based. Our competitors outsource their developers to India which makes them much cheaper from a vendor perspective.

One year later, we’re still are trying to perfect the delivery of our proposal. I plan on sharing what I learned from this Gartner article so that our service delivery manager can prepare a proposal that addresses the common factors in deciding to outsource and to answer some of the questions when determining outsourcing is a viable option.

Huntly, Helen. (2013, June 25). Key Considerations When Thinking About Insourcing or Changing IT Service Providers. (ID: G00249310). Retrieved from Gartner database.

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