Companies typically find the demands of application management overly complex. As a result, more and more companies are turning to outsourcing application management functions. The fundamental value proposition offers service improvement and cost reduction from sharing the outsourcing provider’s technical resources.

1. How to Evaluate a Managed Services Firm By Chuck Vermillion CEO & Founder

2. Managed Service Solutions No “one size fits all” managed services solution will ever be ideal for every business. When evaluating prospective providers, consider important services such as monitoring, reporting, backup, remote management and security. Also consider key provider qualifications including location, third-party certifications, customer references, in-house staffing resources and contract items. After outsourcing, you should see immediate results in cost controls and service delivery. Each organization has different histories, experiences, goals and day-to- day needs. Before signing a long term contract or settling on a management solution that could turn out to be inadequate and overly expensive, you should carefully evaluate your company’s requirements realistically.

3. Managed Service Solutions As outsourcing managed services continues to grow significantly, businesses face a wide range of vendors and options. A 2009 Gartner survey found that 42% of companies with a thousand employees or less had either fully or partially outsourced their data centers, while 28% are planning to do so within the next 12 months. As the trajectory continues upward for outsourcing managed services, selecting the right provider becomes the most critical exercise in any transition. Once you have adequately assessed your organization’s strengths and weaknesses and defined your needs and success metrics, you are ready to begin the process of evaluating and selecting the managed services provider that’s the best fit for your business. To best realize your goals and long term efficiency benefits, your search process should focus on evaluating the following service and provider requirements.

4. Managed Services “Must Haves” Proactive and Constant Monitoring and Management. Your IT partner should predict issues before they arise and affect your business. Basically, you want your provider to quickly address small problems before they become big ones. A reputable managed services provider will not profit from problems, but from eliminating downtime. Availability of proactive 24/7/365 support is crucial for most businesses. Comprehensive Reporting and Communication. Your final choice for a managed services provider should be viewed as a collaborative extension of your IT organization. You need your provider to submit monthly status reports and quarterly business reviews and continually reevaluate your IT network metrics and maintenance data.

5. Managed Services “Must Haves” E Your provider should regularly collect operational data and have a clear, established process in place for converting that information into better IT management decisions. The chain of communication between your team and the MSP team needs to be clear, direct and easy to navigate. Reliable Backup and Restore Procedures. With your provider, determine the timeframe you need for automatic backup and system restore functions. Today’s always-on world requires some of the highest reliabilities the industry has had to deliver. And redundancy is key – of power, network, servers, storage and even entire data centers. A SAS-70 audit ensures that claims of backup are in place and properly managed. In addition, the SAS-70 audit assures any claim of preventative maintenance is backed up with proper documentation and service records. The SAS70 audit will also substantiate any claims regarding change management.

6. Managed Services “Must Haves” Remote Management. In reality, most problems that arise in IT infrastructures can be quickly identified and fixed from a remote location. Does your managed services provider require a steady onsite presence? If so, find out why, and what benefits their presence will provide to your business. Your provider should provide comprehensive remote services management without having to spend time your locations. Full Security Management. Determine whether your services include security management, such as firewall monitoring and patch applications. Do they offer remote data backup storage? Make sure your solution fully addresses your organization’s IT security requirements.

7. Key Provider Qualifications Suitable Location. Compare the location of prospective providers in terms of security (natural disasters, political unrest, etc.) and operational efficiencies to the costs. According to a data center outsourcing survey by Enterprise Systems (esj.com) and SOURCINGmag.com, 80% of the survey respondents outsourced their data centers to service providers located in the United States. Most companies prefer to keep the business domestic, and in many cases, within the same time zone and close to their main business. Third-Party Certifications. If you’re thinking of building your own data center, you must budget for SAS-70 auditing costs. These costs can easily run over $100,000 per year. Or, you can outsource your data center and select a vendor who has already made the SAS-70 investments.

8. Key Provider Qualifications A “SAS-70 audited” data center is a label used by many hosting companies to help show the value of their services. The term “SAS-70″ or Statement on Auditing Standards No. 70, refers to a document that provides auditing standards for performing this specific type of audit on service organizations and is issued by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA). SAS-70 consists of two types: Type I – Evaluates the fairness of a service organization’s description of their internal controls. Typically, Type I auditing begins when a company first starts the SAS-70 process. Type II – Includes the Type I report and evaluates how the controls were operating over a set period of time, usually six months from when the Type I audit was first conducted. It shows the managed services provider claims are accurate.

9. Key Provider Qualifications By reviewing a SAS-70 audit report, you can learn immediately what controls and capabilities are in place and if the data center has been audited by a CPA. You can also confirm the provider’s processes – the riskiest portion of data center operations. A SAS-70 audit will actually test all controls. Excellent Customer References. Check references thoroughly and make sure each provider supplies relevant and recent customer references. Ask references about their experience with escalations. Also, have the provider disclose each partner it works with in delivering your services. Finally, a vendor-agnostic provider should have established relationships with major equipment and software vendors. Make sure your managed services provider represents your best interests and is able to negotiate advantageous pricing and maintenance contract terms on your behalf.

10. Key Provider Qualifications Qualified In-House Staff with Relevant Experience. Ensure the provider you choose has experience working in your industry and with companies your size. Also, ask prospective providers about retention, training and tenure of employees in key positions. One reason many companies turn to managed services is the shortage of technical experts. You don’t want to select a provider who’s having the same staffing issue. Finally, be careful of large, single-vendor solutions that lack the flexibility and customer support necessary to meet your organization’s unique needs. Instead, look for a provider who can become your trusted technology advisor and partner. .

11. Key Provider Qualifications Straight-Forward Contracts and Pricing. Carefully review your provider’s contract terms before signing. Analyze service levels. For example, disaster recovery and business continuity are not interchangeable. So compare the service level required for your business with what the provider contractually guarantees. Take a careful look at how moves, adds and changes are managed in your agreement. Are you going to be invoiced for each one on a per-incident basis? By evaluating contract terms early in the selection process, you can avoid unexpected costs that weaken the advantages you gain by deploying a managed services strategy.

13. About the Author Chuck Vermillion is CEO and founder of OneNeck IT Services, a leading provider of mid-market enterprise hosting and managed services since 1997. For more information about our Managed Services, visit http://www.oneneck.com/Solutions.aspx today.