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Managed services are the practice of outsourcing day-to-day management responsibilities and functions as a strategic method for improving operations and cutting expenses. This can include outsourcing HR-activities, production support and lifecycle build/maintenance activities. The person or organization that owns or has direct oversight of the organization or system being managed is referred to as the offeror, client, or customer. The person or organization that accepts and provides the managed service is regarded as the service provider or MSP.
Typically, the offeror remains accountable for the functionality and performance of the managed service and does not relinquish the overall management control and responsibility of the organization or system.
Common managed services
Common managed services include but are not limited to:
- Information Services
- Business-to-Business Integration
- Communication Services
- Internet (provided by an Internet service provider)
- Email (provided by an Email service provider)
- Telephone (typically provided by a telephone company)
- TelePresence (provided by a TelePresence Managed Service Provider)
- Videoconferencing (provided by a Video Conference Managed Service Provider or by a Video Managed Service Provider)
- Voice over Internet Protocol (Provided by a VoIP service provider)
- Supply Chain Management Services
Managed services provider
A managed services provider (MSP) is most often an information technology (IT) services provider that manages and assumes responsibility for providing a defined set of services to its clients either proactively or as the MSP (not the client) determines that services are needed. Most MSPs bill an upfront setup or transition fee and an ongoing flat or near-fixed monthly fee, which benefits clients by providing them with predictable IT support costs.
As organizations face significant challenges in scaling and managing their global Information Technology infrastructure while effectively reducing costs, it becomes much more cost effective to gain access to best in class tool sets, hardware, software and even niche technology experts by only paying for what they use by using managed service providers. Many studies have shown a reduction in IT hardware and software expenses using MSPs.
Sometimes, MSPs are contracted to manage multiple staffing vendors and to measure their effectiveness in filling positions according to a customer's standards and requirements. In effect, the MSP serves as a "neutral" party that offers the customer a complete workforce solution while ensuring efficient operation and leveraging multiple staffing companies to obtain competitive rates. In this situation, MSPs typically use a Vendor Management System (VMS) as a software tool to provide transparency and efficiency — along with detailed metrics to the user — related to every aspect of the contingent and contract workforce. The model has proven its usefulness in the private sector, notably among Fortune 500 companies, and is poised to become more common in the government arena. A wonderful example of MSPs usefulness and benefits of managing a company's data (big data) was highlighted in the CEO of IBM's speech October 2, 2013.
MSPs often use specialized software, in order to control and deploy managed services to their customers known as Remote Monitoring and Management (RMM) software.
The business model behind managed services has been commonplace among enterprise level companies. The model has also been adapted to fit small to medium-sized companies by the value-added reseller (VAR) community as they evolved to provide more consistent budgeting and higher levels of service to small businesses and mid-size enterprises.
In Information Technology and Telecommunications
IT manufacturers are currently moving away from a "box-shifting" resale (whereby partners simply sell off-the-shelf- solutions) to a more customized, managed service offering. Key challenges for traditional resellers adopting an MSP offering are the billing process and sales process itself, since the sale is more service-based and therefore less tangible.
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