How can Managed Services help your business?

Though Managed Services have been around for years, the impact of the coronavirus pandemic and a rapidly changing telecoms landscape is generating renewed interest in this key IT strategy. What makes Managed Services such an attractive proposition for CSPs now?

Managed Services is big business. In fact, the global IT Managed Services market is forecast to exceed $300bn by 2025, with industry heavyweights such as IBM seeing enough opportunity for it to be worth spinning off an independent Managed Services business.

In the telecoms sector, Managed Services are set to be worth an estimated $26.2 billion by 2025, but our analysis of vendor contracts shows that only around 10% of announced BSS/OSS deals currently include a Managed Service element, so there is still plenty of headroom for further growth.

Running a CSP business requires a wide range of BSS and OSS applications to manage the key business processes and the associated data. Newer entrants to the market in the last few years may have the luxury of only having a few dozen applications to maintain, whereas incumbent telcos that have been operating for decades have generally acquired a huge technical debt over the years, often running into the hundreds of systems.

Faced with this legacy and complexity of maintaining such a wide range of different platforms, operating systems, databases and integrations, CSPs have been under pressure to reduce their spiralling operational costs for many years now.

One option is to outsource the operation and maintenance of this whole set of applications and infrastructure to a specialist third party that will be responsible for all systems, no matter who the original providers were, and all for a fixed and predictable cost. Over the years we’ve seen a few of these mega deals, such as the ones IBM first signed in India with Bharti Airtel in 2004 and then with Idea Cellular in 2007, reportedly worth $750m and $800m respectively over 10 years.

Another option is for bitesize deals with solution providers who offer specialist Managed Services around their own systems. The big selling point for these often being the “single throat to choke” – the software solution provider is also running the service, so there is no question of who is responsible when problems are faced.

Whichever approach is chosen, what is critical is that the Managed Services contract has a clearly defined service level agreement (SLA) which specifies the responsibilities and the response times for all types of service actions, and these should be tied to business outcomes, not technical ones – e.g. “Bills have been delivered to customers”, not “Billing has run”. Compared with an internal IT team responsible for operations and maintenance, a Managed Services provider can be more readily held to account with financial penalties (or credits) if SLAs are breached.

But Managed Services are not just about controlling costs, another key driver is the greater agility they can provide. By working with experienced system experts, the time to implement new features and processes, or to launch new products and services, can be reduced dramatically. So Managed Services can drive new revenue opportunities as well as cost optimisation and operational excellence. Having experts from the solution provider embedded into, and understanding, your business can also bring benefits in terms of breadth of utilisation of the solution to maximise your return on investment. A good Managed Services provider will be suggesting ways to make your business run more smoothly, not just doing what they’re instructed to do.

Over the last five years the “mega deals” appear to have been scaled back, as markets have matured and CSPs look towards consolidation and efficiency rather than using Managed Services to support rapid growth. Take the case in India where Bharti Airtel grew from 4 million to 200 million subscribers in the 10 years of the initial IBM deal. That trajectory cannot continue, and consequently the demands on the Managed Services provider change.

Furthermore, software architecture and deployment have changed considerably over this time, placing new and different demands on Managed Services. We now have open, standards-based software, CI/CD and containerisation, combined with cloud and increasingly multi-cloud deployment. In fact, this shift to cloud architectures is driving further changes and opportunity for Managed Services too.

Where in the past there was a common mentality amongst CSPs wanting to “own” the infrastructure and software applications that were essential to their businesses, the rise of cloud computing means that CSPs are now increasingly choosing private cloud infrastructure and Software-as-a-Service for their mission critical BSS/OSS applications. Being able to wrap all this up in a Managed Services contract can be a huge advantage for CSPs, and a big differentiator for solution providers who can offer a full range of options.

From a BSS/OSS perspective, Managed Services can deliver value at multiple levels, including:

• Business change – implementing new configuration, features, processes, reporting and analytics
• Application operations – running and monitoring business processes and system functions, testing and deploying new software releases
• IT/platform operations – database administration, operating system, security, capacity management, performance tuning, backups and business continuity

What level of Managed Services you decide to use, will come down to your business strategy and the skills and resources available. Some CSPs prefer to use Managed Services to augment their in-house capabilities in specialist areas, whereas others see the benefits of a more holistic approach. Managed Services can be used as a solution to a temporary problem, a common one being a Build-Operate-Transfer model to help for a period after a transformation while your staff get up to speed with the new system, or a long-term strategy, but they should not be considered a one-way street either – contracts must have the flexibility to scale up or scale down according to need.

From improving operational efficiency to increasing market agility, Managed Services can ultimately be a key differentiator for CSPs, freeing up in-house resources to focus on improving the customer experience and growing revenue.

Cerillion Managed Service provides a full range of options and a dedicated team of experts to maximise your billing ROI and improve your time to market. Find out more here, or read how customers including Scarlet and Sure are leveraging the Cerillion Managed Service.