This is a free presentation outlining my observations and experiences with IT Outsourcing (Managed IT). The presentation covers: - Common Vendor delivery and pricing models - Considerations when selecting an IT Outsourcing Vendor - Benefits and risks of IT Outsourcing - Common customer mistakes -Setting SLAs appropriate to your business www.consultingcloud.com.au

1. Managed IT Services
Sharing my knowledge and experiences
Tom Smyth – Chairman and Managing Director
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2. Agenda
1 Common Managed IT Vendor Business Models
2 Considerations when selecting a Managed IT Vendor
3 Benefits and risks to your organisation
4 Common mistakes organisations make
5 Setting SLAs appropriate to your business.
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3. Common Managed IT Vendor Business Models
Very broadly speaking, there are 2 basic profiles of Managed IT Vendors.
To a certain extent this defines the ethos and culture of the Vendor organisation
Profile 1
• Those that use a “Vendor orientated” contract where the Services are strictly
governed by the Contract
 Everything needs to be clearly understood and documented
 Usually high cost
 Sometimes transformation is mandatory
 Little flexibility. Change is typically difficult and costly
 Certainty of costs, usually high penalties for vendor non-performance
 Typically large multi national vendors
 Ideally suited to “total outsourcing” – customer just wants to get rid of
problem
 Not usually open to transitioning Customer resources to Vendor
 Performance improvement is usually slow and painful
 Vendor mindset “You will do it our way”
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4. Common Managed IT Vendor Business Models
Profile 2
• Those Vendors that are reasonably flexible and see the contract as a
partnership between the 2 organisations
 Contract is usually never referenced after the deal is done
 Vendor prepared to take more risk
 Also prepared to take on “as is” environment
 Typically lower costs
 Variations are usually simpler and less costly
 Vendor might rely on additional billable project activity to maintain
profitability
 Typically smaller outsourcing vendors
 Stronger customer intimacy
 Customer has an influence to improve Vendor Performance
 Usually more willing to transition customer resources to Vendor
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5. Common Managed IT Vendor Business Models
Operating models
Service Desk and 2nd level Leveraged (local/interstate/international)
support
Dedicated teams
On site presence
Customer able to meet vendor delivery staff
Pricing Pre-packaged services (one size fits all)
Resource based pricing
Little granularity in price charged
Open book
Vendor prices in perceived risk
Transformation Customer must transform technology into Vendor’s
standard operating environment
Vendor will manage current operating environment
until Customer requires transformation
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6. Considerations when selecting a Managed IT
Vendor
• Be clear on what you want and do your homework
• Determine whether your organisation is ready to outsource
 Changing your business model
 New roles and responsibilities
 Perceived reduction in control
 Internal communications and morale
 Organisation maturity to follow new processes
 Additional rigour – cost containment (approvals, lead times,
expectation setting)
• Selecting the right Managed IT Vendor can be challenging, but you need
to be confident they are the right fit for your business
• “Try before you buy” if you can (give the potential Vendor a small project)
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7. Considerations when selecting a Managed IT
Vendor
• Try to use a small panel of key people from across your business to assist
with the selection of your Managed IT Partner
Top 6 considerations when selecting a Managed IT Partner
(in order of importance)
1. Cultural fit
2. Vendor skill set and maturity (technology and processes)
3. Perceived Vendor flexibility
4. Are you in Vendor’s “sweet spot”
5. Price and pricing methodology for variations and projects
6. Perceived ability to improve bad performance
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8. Benefits and risks to your organisation
Benefits
• Usually better visibility/control of ICT costs
• Consistency with Service Delivery (SLAs)
• Removal of single points of dependency
• Scalable to meet growing business demands
• Reduced number of business distractions with ICT, able to concentrate on
core business
• Improved processes and discipline means reduced business risk
Risks
• Exposure to unexpected cost increases (if homework not done)
• Vendor does not perform to expectations, resulting in lost credibility for
Management and IT
• Local Vendor resources are not empowered to orchestrate change
• Your organisation struggles to adapt to new processes and disciplines
• Ineffective Vendor Customer Engagement Resources
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9. Common mistakes organisations make
• Homework not done
• Concentrate too much on legals and not enough on Service Delivery and
culture
• Customer structure not modified to adapt to new processes and
disciplines required
• Customers fail to realise extent of change required to work with an
outsourcing Partner
• Customer fails to invest in building strong relationship with Vendor
• Too much emphasis on price and not quality
• Decision on Managed IT Partner made in isolation of rest of business
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10. Setting SLAs appropriate to your business
• Work out what you want
• Need to translate vendor infrastructure Service Level Agreements (SLAs)
into business terms
• Pay attention to the “little things”. For instance if the number of
abandoned Service Desk calls exceeds the SLAs, the business perception
might be that the whole of the Managed IT Program is not working
• Consider bringing in an outside Consultant to assist if you don’t feel
comfortable
• Ensure that the SLAs are contracted, and the Vendor has the resources
and tools to report on them
• Ensure there is a clear and documented understanding of roles and
responsibilities for critical processes such as Incident, Change and
Problem Management
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