Navigating Pitfalls in the Transition to IT Managed Services

April, 2024

Transitioning to IT managed services can sometimes be difficult. Many organizations look at the transition as a more traditional time and materials (T&M) model that they use with typical project management.

In the T&M model, the customer agrees to pay the contractor based on the time spent on the project and the cost of materials used. This model is often used when the scope of the project is not well-defined or is subject to change. It provides flexibility for both the customer and the contractor, as the customer can adjust the scope of the project as needed, and the contractor is compensated for any additional time or materials required. However, this model does not always work in a managed services environment.

Some potential drawbacks of the T&M model include:

    • Cost uncertainty: Since the cost is based on the time and materials used, it can be difficult to accurately predict the final cost of the project.
    • Lack of control: The customer may have less control over the project, as the contractor has more flexibility to adjust the scope of work.
    • Scope creep: Without a well-defined scope, the project may expand beyond its original parameters, resulting in increased costs and delays.
    • Less accountability: Since the contractor is paid for their time, there may be less incentive to complete the project quickly and efficiently.

Three-Phase Structure

However, a successful managed services transition follows a three-phase structure: discovery, assessment, and operational integration.

Discovery phase: This phase is primarily getting access to the environment and analyzing the environment. With the knowledge gained from access and discovery, building of an activity matrix can begin. An activity matrix is a chart of tasks performed to manage an environment. The tasks involve everything from system power up/down to upgrades and decommissions. All transition projects will have “gaps” of some kind. The Gap Analysis is the final step in he discovery process. It’s a report that identifies what needs to be learned, documented, and managed in the environment. It’s important that the analysis be thorough so that the account contract team can set expectations of the level of service.

Assessment phase: The assessment phase is where the knowledge and materials obtained through the discovery phase are organized into documentation and processes that will be used by the operations staff. The operational team will need training to perform daily tasks. The team will also need to understand the account’s service level agreements (SLAs) and key performance indicators (KPIs). Protocols, procedures, and communications relating to emergencies and major outages will also need to be covered by the team.

Operational phase: The operational phase is the final transition phase. It is where the account environment is taken over. The individuals present in this phase will make up the production or “steady state” team post go-live. Shadowing is the process of observing the work of an experienced staff member. This task is normally accomplished via a virtual session. An individual will “walk through” the aspects of their job during a one-to-two-hour period. Shadowed tasks can involve managing tickets, providing data restores, or provisioning storage. It is a demonstration of how a job is performed. At some point prior to go-live, the shadowing will be reversed. During reverse shadowing, the steady-state team members perform the processes to demonstrate their ability to take over an assigned job.

Organizations are moving from the T&M model to the IT managed services model for several reasons, including:

    • Cost savings: Managed services can help reduce the costs associated with maintaining an in-house IT team, including salaries, benefits, and training.
    • Improved efficiency: Managed services can help streamline IT operations, freeing up internal resources to focus on core business activities.
    • Access to expertise: Managed services providers have specialized knowledge and expertise in various areas of IT, which can help organizations stay up to date with the latest technologies and best practices.
    • Proactive maintenance: Managed services providers can proactively monitor and maintain IT systems, helping to prevent issues before they arise and minimizing downtime.

Plan Properly for the Transition

To navigate the pitfalls in transitioning to IT managed services, organizations can take the following steps:

Set clear goals and objectives. Define what the organization hopes to achieve by transitioning to IT managed services to ensure that the process remains focused and effective. This involves identifying the specific benefits that the organization hopes to gain, such as cost savings, improved efficiency, access to expertise, and proactive maintenance. By having a clear understanding of the desired outcomes, the organization can better align its efforts and resources to achieve its goals. Regular meetings and transparent communication are vital to maintaining alignment. Define the areas of responsibility for all parties involved in the successful delivery of the service.

Embrace customization and flexibility. Off-the-shelf solutions may not adequately address the unique needs of every business and do not give organisations competitive advantage in their markets or operations. A one-size-fits-all approach can lead to inefficiencies and dissatisfaction. Opt for service providers who will offer customised solutions tailored to specific business requirements. Flexibility and adaptability in service offerings are key to ensuring that organization retains unique capabilities within your business and markets.

Communicate effectively. Establish open and effective communication channels between the organization and the managed service provider (MSP) to avoid misunderstandings and ensure that expectations are aligned. Ensure regular updates and performance reviews to foster an open line of communication. Document agendas for meetings agreed by all parties and communicate clear actions and outcomes.

Avoid over dependency on service providers. Excessive reliance on MSPs, or as in most cases multiple MSPs, can leave a business vulnerable, especially if the partnership ends abruptly, or the MSP encounters operational issues or multiple MSPs have differing engagements and agendas. Maintain a level of in-house responsibility and ownership for the deliverables and ensure documentation and knowledge transfer are part of the service agreement. Include transition-out activities and requirements as part of the initial contract. Each contract should have a documented exit strategy in place to be utilized if required.

Plan properly. Proper planning is crucial when transitioning to IT managed services. Take the time to properly plan for the transition to minimize disruptions to business operations and ensure that the desired outcomes are achieved in a timely manner. Maintain a level of in-house responsibility and ownership for the deliverables and ensure documentation and knowledge transfer are part of the service agreement. Include transition-out activities and requirements as part of the initial contract. Each contract should have a documented exit strategy in place to be utilized if required.

Address security and compliance. Handing over control to a third party can raise security and compliance risks, particularly with data-sensitive operations. Most contracts require the handling of information subject to privacy legislation and considerations regarding the data storage location which can cause breach of security policies. Conduct thorough due diligence on the MSP’s security protocols and compliance standards. Regular audits and compliance checks are essential. Determine the data storage location and process for maintenance of privacy requirements determined by the location of the customer and the MSP.

Have an escalation process. Slow or ineffective resolution of issues and concerns can impede business operations. An undocumented escalation process inhibits the ability to receive the correct level of service and ensure fast attention to issues. Ensure that the MSP has a robust, clearly defined, and documented escalation process including key departments, contacts, roles, and resolution expectations. Response times and resolution pathways should be part of the SLA.

Assess the MSP thoroughly. Thoroughly vet the MSP to ensure that they have the necessary expertise and resources to meet the organization’s needs and provide high-quality service.

The success of the transition engagement depends upon the ability to follow and implement the above prescribed methodology of steps and activities. It is imperative that the implementation of prescribed methodology produces a highly efficient managed services operations team that is ready to take over the customer’s IT operations and eventually increase experience levels and broad alignment with the customer’s business objectives.

By Manish Kapur, Consultant