| Managed Services is widely acknowledged as the | | | | Augmentation model. |
| best model to adopt for information technology | | | | Once the project went live, there was a period of |
| outsourcing if you have a long term outlook. Widely | | | | 1-3 months for post-production support and from the |
| tipped as the holy grail of information technology | | | | second year onwards, the same vendor was |
| outsourcing, Managed Services model is an attractive | | | | awarded a three year Support and Maintenance, |
| proposition both to vendors as well as the | | | | Managed Services contract for the implemented |
| outsourcing organization. This article describes the | | | | Oracle suite. Responsibilities included Level 1 and Level |
| model in detail including its pros and cons. | | | | 2 support, support for patches, upgrades and |
| Salient Features | | | | implementation of new modules as the contract |
| Salient features or key characteristics of the model | | | | progresses. The vendor proposed a reduced team of |
| are as described below: | | | | 7 personnel that included a Program Manager, 2 |
| - Also known as the Fully Outsourced Model, this is | | | | functional consultants - all three onshore, and 4 |
| where the vendor takes complete, end-to-end | | | | technical consultants including the shared services of |
| responsibility of a set of deliverables in a project. | | | | a DBA offshore. |
| - Vendor also has complete decision making | | | | Pros and Cons of Managed Services |
| responsibilities in providing the agreed set of | | | | Pros |
| deliverables. | | | | - Since delivery and management of stakeholder |
| - Budgets, often calculated on the basis of named | | | | expectations are the responsibility of the vendor, the |
| personnel working on the project, are set for a | | | | client organization can fully focus on their core |
| certain period of time, typically ranging between 6 | | | | strategic initiatives. |
| months to 5 years. | | | | - Vendors can be more independent and can have a |
| - At times budgets are also made for the entire | | | | relatively interference-free management of the |
| piece of work, thereby making it more like a fixed | | | | project. |
| price managed services engagement. In such a | | | | - It will enable vendors to make long term strategic |
| scenario, the vendor has a free hand in deciding how, | | | | investments that should indirectly benefit the client |
| where and with how many personnel the project can | | | | organization. |
| be delivered. There are risks associated with such an | | | | - Vendors can also bring their best practices into the |
| approach as vendors may decide to allocate shared | | | | project, thereby making key process improvements. |
| resources for the project resulting in delivery issues. | | | | - Compared with Staff Augmentation, the SLA driven |
| - This model is often adopted when the work can be | | | | approach can, to a great extent, put to rest clients' |
| clearly scoped out with clearly marked out | | | | worries about management of stakeholder |
| deliverables. | | | | expectations. |
| - For this model to work, the vendor should have an | | | | - SLA driven approach can also result in key process |
| excellent understanding of the client's systems. The | | | | improvements delivering significant, measurable |
| client in turn should be confident enough to hand | | | | benefits to the client organization. |
| over the piece of work to the vendor. | | | | - Knowledge retention becomes more streamlined |
| - The role of the client will be that of a reviewer with | | | | and sustainable. |
| additional responsibility of contracts management and | | | | Cons |
| budget tracking. | | | | - Vendors are sometimes reluctant to assume more |
| - Vendor will be responsible for selection of resources | | | | management responsibilities. |
| as well as take responsibility of managing stakeholder | | | | - Culture mismatch between client and vendor |
| expectations. | | | | organizations can often result in lack of understanding |
| - There will be clearly marked Service Level | | | | among both parties, which in turn can affect |
| Agreements or SLAs for each deliverable and | | | | deliverables. |
| penalties applicable for non-delivery. | | | | - In some situations, vendors wont be in a position to |
| - Delivery of service can be performed onshore at | | | | understand all of the client organization's pain points |
| client location or offshore or a combination of both. | | | | as well as a clear understanding of the scope of the |
| - Managed Services model is often adopted by | | | | project, and ultimately might result in major setbacks. |
| organizations as a continuation of an existing Staff | | | | - In a multi-vendor scenario, where one vendor |
| Augmentation engagement. Adopting a managed | | | | manages Applications and the other manages |
| services model from day one comes with lots of | | | | Infrastructure, blame games are common, with both |
| risks. | | | | parties not willing to assume responsibility for failures. |
| Example | | | | - Process improvements sometimes can result in the |
| This is an example of a client organization moving | | | | reduction of manpower supporting the project, a |
| from a Staff Augmentation based project to a | | | | scenario not favoured by vendors due to an inherent |
| Managed Services based project. A logistics company | | | | loss in billing. |
| implemented Oracle EBS with a total of 9 major | | | | - Re-allocation of the contract, possibly due to |
| modules spanning Financials and Order Management. | | | | performance issues or non-conformance of SLAs, |
| The project was executed onshore with a team of | | | | from an existing managed services vendor to a new |
| 14 people and the company's own Project Manager. | | | | vendor will become a huge challenge for the client, |
| All 14 members were contracted for 6-8 months | | | | given the fact that the existing vendor will be less |
| from an IT Services vendor, and were on a Staff | | | | cooperative. |