IBM's research evaluates the business value of managed services, revealing significant benefits like a 224% ROI and reduced IT infrastructure costs by up to 25%. Companies reported increased productivity, with staff efficiency rising by 42% and substantial savings in unplanned downtime. The analysis highlighted the importance of optimized IT processes and strategic investment from managed services.

1. The business value of
managed services
Findings from IDC research sponsored by IBM
SSP03192-USEN-00
© 2013 IBM Corporation

2. The business value of managed services: Findings from IDC research sponsored by IBM
IDC evaluated eight global companies to assess business value
provided by IBM Integrated Managed Infrastructure services
The research base included:
8
existing medium and large IBM clients from 5 countries: Canada, France, India, Italy, UK
6
companies were transitioning to IBM from managing their IT assets in-house
2
companies were transitioning to IBM from local service providers
IDC: A key element in enhancing business productivity
is driving down costs, which can help free up the funds
needed to make strategic investments. Businesses
also need a means to more effectively orchestrate
how IT interacts with business processes and critical
application environments.
The solution lies in using managed services.
2
© 2013 IBM Corporation

3. The business value of managed services: Findings from IDC research sponsored by IBM
All eight are using IBM to manage servers; five are using IBM to
manage server, storage and network infrastructure
Study demographics
Size
Average
Storage environment
Employees
4,888
Storage (terabytes)
Internal IT users
3,181
Annual storage growth
Server environment
Average
Physical servers
managed
Virtual servers
managed
3
150
Network environment
Location/sites
Average
38
30%
Average
85
176
Number of ports
20,000
© 2013 IBM Corporation

4. The business value of managed services: Findings from IDC research sponsored by IBM
Companies studied gained significant, quantifiable benefits from
using managed services
Key findings:
88%
24%
42%
$229,511
224%
5.5 month
reduction in unplanned downtime from server and network failures
reduction in IT infrastructure cost
increase in IT staff productivity
annual business productivity benefit
three-year return on investment
4
pay-back period
© 2013 IBM Corporation

5. The business value of managed services: Findings from IDC research sponsored by IBM
Study participants realized financial benefits in four key areas
Average annual benefit
$376,323 per 100 users / $11,970,834 overall1
User productivity
Business productivity
$203,111 per 100 users /
$6,460,961 overall
$6,256 per 100 users /
$199,003 overall
IT staff productivity
Infrastructure cost reduction
$20,155 per 100 users /
$641,131 overall
$146,801 per 100 users /
$4,669,740 overall
Based on study group average of 3,181 internal IT users
1
5
© 2013 IBM Corporation

6. The business value of managed services: Findings from IDC research sponsored by IBM
While reducing costs is the main driver for managed services,
increasing user productivity was the leading benefit
Business value realized
Optimize the business
processes driven by
affected applications
Reducing the
frequency and
duration of
unplanned
downtime
Free up time so people
can do more
Deliver a stable IT
platform for new
business applications
+
6
Eliminate the annual
cost of lost productivity:
$56,100 per 100 users /
$1.8 million overall
“We have more applications.
Our employees are more
productive because of their
ability to use the systems
more. If I were to estimate,
I’d say 30 percent.”
– Manufacturer
“Around 50 people would
be more productive—I’d say
20–25% more. We’ve also
grown rapidly [35% per
year]…you could say that
this has helped to avoid
additional hiring costs.”
– Bank
© 2013 IBM Corporation

7. The business value of managed services: Findings from IDC research sponsored by IBM
Delivering better, higher quality IT services proves to be the real
benefit as annual downtime is reduced by 16 hours per user
Average user productivity key performance indicators (KPIs)
Before
After
(IBM-managed)
# of annual outages
2.7*
1.1
1.6
Total hours per user
12.4 hours
1.3 hours
11.1 hours
Network downtime
Before
After
(IBM-managed)
# of annual outages
2.3*
1.0
1.3
Total hours per user
6.2 hours
0.9 hours
5.3 hours
Server downtime
7
*Compared to 10–12 incidents per year for an average organization
Savings
Savings
89%
improvement
86%
improvement
© 2013 IBM Corporation

8. The business value of managed services: Findings from IDC research sponsored by IBM
All organizations reduced infrastructure total cost of ownership
(TCO)—a primary objective for managed services
Six organizations moving from in-house to IBM:

25% reduction in IT infrastucture cost including the costs
of both the infrastructure itself and IT support
 PLUS savings from consolidating data center operations:
– Space savings (actual footprint, construction costs and
other annual costs)
– Reduced software license costs by an average $250,000
annually
– Eliminated use of third-party consultants
– Saved on costs and time needed to train in-house staff
Two organizations moving to IBM from local providers:

20% reduction in IT infrastucture cost
“The big benefits
probably come from
having a storage
expert, a network
expert, and a server
expert. If we did that
(in-house), it probably
would be one more
person added, but you
wouldn’t have that
breadth of skill. You’d
have one guy that
knows a little bit of
network, but is he an
expert? Probably not.”
– Transportation company
 PLUS one organization added resiliency and security
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© 2013 IBM Corporation

9. The business value of managed services: Findings from IDC research sponsored by IBM
IBM managed services enabled all organizations to grow their
application environments, re-focus IT staff on critical areas
Business value realized
 Increased IT staff productivity by 42%
 Delivered IT services more quickly
 Increased the agility of their organizations
 Reduced overhead costs
Average IT staff productivity key performance indicators (KPIs)
Before
Savings
Improvement
Time to provision a
virtual server
40 hours
13.67 hours
26.33 hours
66%
Time to launch a
new application
3.75 weeks
2.5 weeks
1.25 weeks
34%
Time to provision
additional storage
9
After
25.25 days
7.25 days
18 days
71%
© 2013 IBM Corporation

10. The business value of managed services: Findings from IDC research sponsored by IBM
Organizations cite additional IBM value in addressing the growing
cost of compliance
“We have more and
more audits. What I
would say is that we
have more audits
because we are making
much more money than
we used to. But thanks
to IBM services, we are
able to respond to the
audits much faster, and
also in a more consistent
fashion, with more
regularity.”
Business value realized
200-500 person-hours per year
savings in the auditing process, due to:
 Improved internal regulations
 Fewer sites to be audited
 Faster response to audit requests
– Manufacturer
10
© 2013 IBM Corporation

11. The business value of managed services: Findings from IDC research sponsored by IBM
Decreasing unplanned downtime and increasing IT productivity
delivers bottom-line business benefits
Stable platform supports a more agile business,
improves responsiveness to market
Average business productivity
Category
Revenue increase from increased
agility
Average
$173,333
Reduction in lost revenue
+ $974,220
Total annual revenue increase
= $1,147,553
Operating margin (assumed)
x 20%
Annual business productivity
benefit
$229,511
11
What is the value of agility?
“The information system is more
stable ... We constantly have new
applications in the business ...
The value for all these changes
depends on the magnitude of the
change and is cumulative. So, if
you look at all the changes we
are implementing on all the
platforms over the next 10 years,
the value of being able to react
more quickly would be worth
millions of euros.”
– European-based company
© 2013 IBM Corporation

12. The business value of managed services: Findings from IDC research sponsored by IBM
IDC’s analysis shows that IBM Managed Infrastructure Services
delivered payback in under six months and ROI of 224%
Three-year ROI analysis per 100 users
Benefits (discounted)
$888,085
Investment (discounted)
$274,326
Net present value (NPV)
$613,759
ROI = NPV / investment
224%
Payback
5.5 months
Discount factor
12%
12
The three-year ROI analysis
illustrated in the table shows that,
on average, the organizations in
this study spent $274,326
(discounted) per 100 users and
received $888,085 per 100 users
in benefits (discounted) for a net
present value of $613,759. The
companies saw payback in 5.5
months and an ROI of 224%.
© 2013 IBM Corporation

13. The business value of managed services: Findings from IDC research sponsored by IBM
Over three years, the companies will see a net benefit of $747,000
per 100 users
Three-Year Cost Benefit Analysis per 100 users
$800,000
$(747,004)
$700,000
Investment
Benefits
$600,000
$500,000
$(433,151)
$(433,434)
Cumulative cash
flow
$400,000
$(262,382)
$300,000
$200,000
$100,000
$$(100,000)
$(7,229)
$(124,911)
$(200,000)
Initial
deployment
13
Year 1
$(124,911)
Year 2
$(124,911)
Year 3
© 2013 IBM Corporation

14. The business value of managed services: Findings from IDC research sponsored by IBM
Selecting a managed services provider: what to look for
Critical requirements identified by managed services buyers
Robust security
capabilities
 Are the basics covered (firewalls, intrusion detection)?
 How will regulatory requirements be addressed locally?
Across multiple geographies?
Effective return on
investment (ROI)
 Can the provider build a business case? Provide actual ROI
assessments?
Quality of service
 How will the provider reduce risks and meet service delivery
targets related to: Availability? Performance? Provisioning?
 Are there contractual SLAs with financial goals?
Control and support
 Is there a formal governance model incorporating program
and project management?
 What management tools and dashboards are provided?
Skills and resources
 Does the service provider have deep skills? Broad skills?
Around-the-clock coverage?
 Is all service labor based? What processes are automated?
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© 2013 IBM Corporation

15. The business value of managed services: Findings from IDC research sponsored by IBM
IBM’s approach is to modularly build a solution tailored exactly to
individual client requirements
Your
customized
solution
Pick the components you want
• Monitoring
• Management
• Reporting
Management
1
Platform
Monitoring
Middleware
Monitoring
Base
Services
Network
Monitoring
Storage
Monitoring
Monitoring
Pick the level of service you need
• Basic
• Advanced
• Base or incremental SLA
Advanced Pack2
Platform
Management
Advanced Pack
Middleware
Management
Groupware
Monitoring
Advanced Pack
Groupware
Management
Database
Monitoring
Advanced Pack
Security
Management
Services
Management
Dashboard
Advanced Pack
Network
Management
Reporting
15
1
Call Center
Services
Advanced Pack
Backup
Management
Advanced Pack
Database
Management
Advanced Pack
Storage
Management
Advanced Pack
Capacity
Reporting &
Management
Management includes monitoring. 2Advanced Pack includes services like Cluster Management, Engineering Services, High Availability, etc.
Base SLA
Incremental
SLA
© 2013 IBM Corporation

16. The business value of managed services: Findings from IDC research sponsored by IBM
IBM Integrated Managed Infrastructure Services has the scale,
scope, tools and expertise to manage client environments
137,091
2,270,000 41,000
Midrange Tivoli
Endpoints
Mainframe MIPS
631
82,089
Intel servers
Middleware instances
4.8M
Batch jobs per week
0.77M
Calls/web chat/
e-mails per month
900
Oracle
Business applications
1,560
63,191
SQL Oracle
Unix servers
SAP instances
8,964
140 Pb
325
2,407
Managed Storage
Siebel instances
811,050
Microsoft Exchange mailboxes
16
Database instances
13,095
Mainframes
53,657
87,657
IBM DB2
Sybase
1,104,340
Lotus Notes mailboxes
© 2013 IBM Corporation

17. Next steps
1. Read the full IDC report
2. Visit ibm.com/services/managed
3. Engage with an IBMer to discuss your needs
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© 2013 IBM Corporation

18. Trademarks and notes
© IBM Corporation 2013
 IBM, the IBM logo, ibm.com, XIV, Global Technology Services, System x, AIX, DB2, Lotus Notes and Tivoli are trademarks of
International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be
trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “
Copyright and trademark information” at www.ibm.com/legal/copytrade.shtml.
 IT Infrastructure Library is a registered trademark of the Central Computer and Telecommunications Agency which is now part of the
Office of Government Commerce.
 ITIL is a registered trademark, and a registered community trademark of The Minister for the Cabinet Office, and is registered in the
U.S. Patent and Trademark Office.
 Linux is a registered trademark of Linus Torvalds in the United States, other countries, or both.
 Microsoft is a trademark of Microsoft Corporation in the United States, other countries, or both.
 UNIX is a registered trademark of The Open Group in the United States and other countries.
 This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in
every country in which IBM operates.
 THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED,
INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY
WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the
agreements under which they are provided.
 The client is responsible for ensuring compliance with laws and regulations applicable to it. IBM does not provide legal advice or
represent or warrant that its services or products will ensure that the client is in compliance with any law or regulation.
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© 2013 IBM Corporation