May 30, 2019

Economic Pillars of Next-Generation Managed Services

The financial and operational complexities associated with digital transformation make leveraging managed services a viable option for service providers.

Digital transformation has two end goals for service providers: better technology and operational efficiency, and more ways to deliver services faster and cheaper. More than half of telco CEOs are looking at digital transformation and CIOs are already spending upwards of 1/5 of their budget on digitalization efforts. If a direct internal investment strategy sounds like the most straightforward way to migrate an organization to next-generation service delivery, then, for many providers, reaching the end goal would actually take more time, cost more and strain existing resources.

Recent surveys have begun to highlight the impact of digital transformation, identifying stress points on both existing operations and technology demands. In the majority of cases, telco CEOs see skill shortages as a threat to their businesses, with many claiming that the majority of their budget is used to maintain existing systems and services, which critically prevents them from implementing digital transformation strategies. With operational restriction creating an expensive barrier to success, businesses need to look for strategic partnerships that can handle new responsibilities and distribute the stress of change.

As economic and cost challenges rear their ugly heads, service providers can shift from a capex investment approach to an opex services-based approach, adopting a managed services strategy via third parties that can offer financial and operational benefits. For many operators, the economic advantages of managed services supersede the longer-term investments of transformations based in house.

Below are four of the key economic pillars that may make managed services a potentially viable choice for service providers that want to transform their businesses but avoid any slowdowns or bottlenecks from existing infrastructure or processes.

1. Efficient Facilitation of Day-to-Day Solution Usage and Operations

Because transformation forces operators to evolve their daily processes, technology shifts create shifts in operations that must align with the new strategies and rollouts. In certain cases, the ability to leverage technology supplier expertise to guarantee a successful transformative outcome can extend to using domain experts that operate and manage the new infrastructure. This helps ensure successful day-to-day operations.

2. Improved End-to-End Management of Upgraded Business Processes and Applications

Complementing the new day-to-day operations, managed services can bring a new layer of expertise that will ensure all new technology value is maximized, new business processes are more efficient and new applications are used to their highest effectiveness.

3. Better Allocation of Resources to Keep Digital Platforms Optimized

For many operators, system upgrades and patches are often seen as potential risks to technology or business continuity, which means operators must allocate resources to ensure faultless operations. But this action may take resources away from other areas, reducing their effectiveness. By shifting all responsibilities to a managed services provider, operators can get a service-level guarantee that ensures operations remain optimal, updates and patches are implemented smoothly and critical resources can continue to focus on their existing business functions.

4. Holistic Focus on the Complete Scope of Applications and IT Activities

With technology expertise comes the ability to optimize the technology stack better. Embedded and partner-based applications become part of the operational structure and their value is maximized. As service providers increase their focus on new business verticals while also staying hypercompetitive in their traditional markets, managed services allow a holistic focus on developing the business and letting the IT technology partners focus on the technology.

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