Even during the COVID-19 pandemic, Managed Services businesses saw less of a negative impact than most other sectors of the tech economy and its value propositions were generally enhanced during the pandemic. As Managed Services have matured in the marketplace, so too have its technologies, practices and its staff. This makes the trends in Managed Services today relatively clear, as what used to be and what is now considered a challenge or an opportunity has drastically altered. With the help of the TSIA’s State of Managed Services 2021 research report, here we detail 9 of them.
1. Value Realization
Managed Services have pivoted from caring about product differentiation to value realization and business outcomes. Customers have an expectation of value for the product or service delivered, and delivering on that expectation leads to increased customer satisfaction and loyalty. Value realization captures the outcomes that are achieved from customers, both quantitive & qualitative, to drive further optimization and customer success.
2. Purchasing Managed XaaS
Purchasing managed XaaS, service-led solutions, as opposed to owning technology assets, is becoming more common. Most companies that either manufacture or supply technology to customers view services as “attach” offers, but the market has made a major shift toward services-led solutions. These are managed XaaS solutions, which have grown in representation from 6% of revenue to over 30% since 2016, while on-site managed services practices have been slowing down. Managed XaaS offers are a major growth driver in Managed Services.
3. Services Versus Product
The revenue ratio between products and services has rapidly turned around in 10 years, and there is now a major shift towards services-led solutions: Managed solutions. Technology has been sold based on features, functions and price for years, but now customers want their suppliers to share the risk of deployment and rollout, demanding more resources.
4. Software Development
More software development methodologies (like Agile, Scrum DevOps, Site Reliability Engineering, DevOps) are being used in services businesses. These also help the supplier to share in the risks of deployment and rollouts.
As the risk of cyberattacks becomes more and more prevalent, MSPs are becoming more important in terms of helping to secure IT infrastructures. With their ability to provide 24/7 monitoring, and to help clients to optimize their security measures and keep up with regulations, Managed Services will be an obvious way for organizations to turn.
It is predicted that by 2024, 30% of business leaders will rely on AI in IT operations (AIOps) platforms for automated insights to drive business-related decisions, as compared to less than 3% in 2021. Developing such advanced delivery capabilities is important to businesses, as a way for them to deepen relationships with customers via vertical expertise and outcome-based solutions.
Customers are increasingly demanding OpEx consumption models, to help them to fulfill the promise of their technologies.
8. Revving Versus Retooling
During the pandemic, organizations were basing their decisions on how the markets they served were doing financially. Consequently there was a shift towards “revving”, where sales and marketing focus on increasing sales while demand spikes, or “retooling”, where internal capabilities are shored up when demand is down.
9. New Roles
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Managed Services General Manager