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When to Make the Move to Managed Services

How do you determine when its time to use managed services?

At some level, every business is utilizing outsourced platforms. But where infrastructure as a service is concerned, what are some key indicators that managed services is the next logical step?

Most companies are comfortable with outsourcing some portion  of their infrastructure and applications (think about the degree you use AWS, or Salesforce.com). But outsourcing isn’t simply an option for super large businesses who want to consolidate costs or increase agility. For businesses that are looking to grow, at whatever scale, managed services presents a path that can enable greater market impact, performance, and cost benefits than the simple promise of underlying cloud infrastructure.

Managed Services

How do you determine when its time to use managed services?

Market requirements
Depending on the kind of customer your business is targeting, managed services will be more or less beneficial to your go to market strategy. Say you’ve designed your software in a vacuum, through focus groups, and alpha/beta tests. Now its ready to go, who are you going to sell it to?

You could choose to sell to individual people, but unless you a huge marketing budget, you generally will sell it to institutions who will have many potential users. In determining your ideal market, you can better anticipate the degree of scale you will need to achieve to support the kind of clients you could win.

If you’re looking to scale, part of the appeal of your product will be its ability to meet demand securely. Saying you have a server in your closet or that you’re using AWS isn’t going to be as compelling a sell given the importance of the important data clients will need your infrastructure to house. Prospects will want to know where the data is hosted, how its protected, what your compliance procedures look like, and much more.

You may have designed amazing features, but if using your product proposes adding risk, it will be passed over. Going to a managed service provider in this scenario becomes a smart move – especially in your ability to articulate scale, security, and compliance value around your product. Beyond this, gaining a team to provision new infrastructure architectures for your clients within your environment enables you to advertise a faster time-to-market.

Performance
It's very easy to get a service where you can spin up servers and VMs at will. But once you get to the point of having 50 of them its no longer so simple. You need help with how to network them together, switching fabric, DR etc. Similarly, its very easy at the PaaS level with like Heroku and Pagoda Box to provision resources where you can utilize Ruby on Rails and PHP to develop an app. But to scale that to meet a bigger need is definitely tricky.

At that point, you either get the capital to hire staff and acquire large amounts of tech or choose to outsource to get to the level of performance that will serve the customer base you have but are also looking to support.

Cost
It's hard to discuss moving to an outsourced model without having cost play into the determination. While cheaper in some cases, depending on the degree of service you are expecting, price can be variable.

However, there are other things to consider. There’s the whole Capex v Opex conversation, and perhaps more germane to how most companies actually plan, there is the full time equivalent (FTE) perspective.

On the latter point, expertise is important and quite often one of the hardest parts of any project to put together. Not only is there the costs associated with salary, benefits, and searching for the right people, but there is also the associated cost in time of how long it takes to locate, integrate, train, and get a return from any HR investment.

It’s a lot about the scale you’re at. If youre starting out and need 20 or 30 servers, then you probably cant afford to hire the best team. If you’re very successful company, and you need a couple hundred servers, it becomes very difficult to find the people. With an MSP you could get the same solution delivered to you in 3 weeks . You only have 1 chance to get your product to market right. If you’re looking for full time staff, you need to account for making sense of the team, them utilizing new tools and platforms, balancing egos, work styles, and more to get out the best possible result.

You might get some great people together, but you can’t take that to the bank until its happened. Certainly its not the same as signing a contract and 3 weeks later having a system delivered to you along with access to network, database, and systems administrators that all have worked together for 5 years and have a wealth of experience dealing with a broader range of environments and a broader range of business models.

So how do you know when its time to move to managed services? Let us know on Twitter @CloudGathering.

By Jake Gardner

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