Managed services take complexity off customers’ shoulders while guaranteeing “that it simply works.”

Adding a management layer to basic services helps grow beyond best-effort, unmanaged services and enables tapping into servicing business-critical applications. “Managed services” refers to managing customers’ technology environments on an ongoing basis through standardized offerings designed to deliver on standard or agreed-upon target SLAs. Managed services are typically offered to cover business-critical services – functions that are at the heart of a business. Examples of those critical services range from a key-card computer at a hotel that hands out room keys for guests arriving on weekends (exactly when traditional call centers cannot deliver expert support), to SAP modules that control the supply chain of just-in-time manufacturing facilities, all the way to managing the data center of the stock exchange or flight-control systems. Although the latter have no option to fail, even the smaller or seemingly insignificant services must not be interrupted when considered from the viewpoint of the respective businesses.

Managed services also entail the ability to manage the customer solution “end to end” by offering active-monitoring features to the provided solution and proactively reporting faults and incidents, while ensuring that restoration happens within the committed SLAs.

Managed services also entail the ability to manage the customer solution “end to end” by offering active-monitoring features to the provided solution and proactively reporting faults and incidents, while ensuring that restoration happens within the committed SLAs.

Managed services represent an attractive growth opportunity for telecom operators

Operators, in emerging and mature markets alike, will continue to face challenging times, as unmanaged connectivity prices have been declining and can be expected to further erode in the future, driven by a range of dynamics.

• Capacity is still abundant and continues to grow faster than demand.
• Incremental cost for the utilization of that bandwidth is minimal compared to incremental revenue, and incremental operating costs are often negligible.
• Technological advances reduce the cost of upgrading capacity on existing assets for all network asset classes: copper, HFC, fiber and over-the-air technologies.

The transformation of once-praised connectivity services into undifferentiated commodities makes the case for managed services more compelling for telecom operators. Businesses increasingly depend on constant uptime of services such as connectivity (voice and data), security, managed equipment, cloud, and software applications, as all are major lifelines. This is the core reason that, if sold properly, businesses are willing to pay substantial premiums for services that come with performance guarantees.

Although readiness to pay may be there, we have seen many operators lack sales abilities (as well as delivery abilities, which we explore in the next section) when attempting to embark on the journey into selling managed services. This is mostly due to three deficiencies:

1. A lack of product availability to the sales teams of truly managed services
2. A lack of process maturity during the sales phase to properly detect and describe a client problem in which technical complexity is of significant concern, with monetary impact on the client.
3. A lack of structured pre-sales engineering and support, coupled with a one-man-show understanding of account managers.

It seems that although demand is growing and customers are willing to pay premium prices, operators are still set up to sell commodity connectivity and leave managing complexity to their customers – or chance.

Managed services take complexity off customers’ shoulders while guaranteeing “that it simply works.”

Adding a management layer to basic services helps grow beyond best-effort, unmanaged services and enables tapping into servicing business-critical applications. “Managed services” refers to managing customers’ technology environments on an ongoing basis through standardized offerings designed to deliver on standard or agreed-upon target SLAs. Managed services are typically offered to cover business-critical services – functions that are at the heart of a business. Examples of those critical services range from a key-card computer at a hotel that hands out room keys for guests arriving on weekends (exactly when traditional call centers cannot deliver expert support), to SAP modules that control the supply chain of just-in-time manufacturing facilities, all the way to managing the data center of the stock exchange or flight-control systems. Although the latter have no option to fail, even the smaller or seemingly insignificant services must not be interrupted when considered from the viewpoint of the respective businesses.

Managed services also entail the ability to manage the customer solution “end to end” by offering active-monitoring features to the provided solution and proactively reporting faults and incidents, while ensuring that restoration happens within the committed SLAs.

To succeed, operators need to articulate the ambition level and playing field.

Ambition: What is your ambition regarding managed services?

• 1. What are the strategic guidelines?
• 2. What do you want to achieve?

Playing field: What type of player do you want to become in the next five years?

• 1. In which geography do you want to play?
• 2. Which business model is your core?

Execution: How do you want your enterprise business to achieve growth?

• 1. What needs to be done to achieve the ambition?
• 2. How have others done it?

The managed services transformation lays the basis for competing in the cloud & ICT space

Moving into a managed services environment should be regarded as a natural progression adding professionalism to telecoms operations. Avoiding this evolution, operators will be unable to reap the benefits of technology disruptions that are already on their way: software defined networks and network function virtualization promise both cost benefits and operational convenience to customers.

Take the growth of WAN optimization services as an example, where virtualized components both in the core and on the client premise, both provisioned and managed remotely and leveraging the smart mix of best effort connectivity with security adding protocols and capacity. These are growing at the expense of traditional MPLS products.

Or take the integration of cloud services with network services as another example: without offering an integrated SLA spanning both service classes, operators cannot compete with over-the-top suppliers. It is all about leveraging the assets in the context of customer demand. Insights into multiple assignments enable us to assemble a list of key requirements to become a managed services provider.

Integrating managed services into an operators’ DNA requires building up internal capabilities and an extensive internal transformation – a challenge most operators fear due to legacy, size and processes.

However, the successful ones have succeeded have:

1. Opened their own technical environments up for customers to run their applications on
2. Proactively and operationally managed third parties’ solution contributions
3. Been transparent on any incidents impacting the production platform, regardless of whether an incident has had client impact
4. Allowed client administrators to be in direct contact with their own technical staff
5. Had transparency regarding their own access networks, the client on-site gear and The end-to-end network configuration

As with any transformation, full organizational buy-in to the promise of managed services is required to give this much-needed transformation the momentum and energy it needs to succeed in a world where telecom operators are searching for new areas for revenue that go beyond rudimentary connectivity solutions. The good news is that adding this level of professionalism will also reveal numerous cost savings opportunities and remove internal inefficiencies in production.