Statistics show that demand for managed services is growing, as is the number of providers. Profondia has found that, of more than 13,000 Swiss companies with 30+ employees and 10+ IT staff, 9 in 10 companies use a cloud solution. The survey also shows that the number of companies that use a managed service for certain IT areas rose to 84 percent in 2018. All of these trends continue to grow.
And costs are not even the deciding factor for using managed services. Of 349 IT decision-makers surveyed by IDG with support from Trivadis in the DACH region, costs were only cited as the fifth most important reason. The faster implementation of projects, quicker provision of new features, increased flexibility when needed and more IT-based innovations ranked higher for the IT decision-makers.
Trivadis Co-CEO Gerry Klump speaks about how this trend came to be, the benefits of managed services and what sets Trivadis apart from other managed services providers.
Why is Trivadis currently putting such an emphasis on managed services?
Gerald Klump: Services have always been part of the Trivadis portfolio. A lot has changed in the IT market, though, since we were founded 25 years ago. And that’s not all – services are currently changing the way we live and work. To name just a few examples: Linear television is on a downward slope. No one, certainly not the younger generations, like to be told when to watch something. If you’re in the mood for a specific film, you pull it up as a service – that’s TV-as-a-Service.
Or Mobility-as-a-Service: There are apps that integrate all mobility options. You tell the app where you want to go and it suggests the best combination of transport options. Ideally, that platform also lets you book your rideshare, buy a bus ticket and so on. And a smart side effect of that: No more costs of keeping and maintaining your own car, which is in the garage at work or at home 80 percent of the time anyway. So instead of getting my car serviced – having the tyres or the oil changed, the windscreen fluid filled up and getting it washed, I can focus on my core business: my hobbies. The things I really want to be doing. That also often involves services. For music there’s Spotify, Amazon Music, Google Music or iTunes; for food there are delivery services.
Things are similar these days for IT in companies: more and more companies are aware that services help them focus on their core business.
Where is this tendency to turn to services coming from?
Gerald Klump: The developments in technology play a key role here; it’s largely a result of digitalization. If we’re using TV-as-a-Service as our example: bandwidths have to be high enough for Netflix, Amazon and the rest to be able to stream their services to customers. And those services will only be used if the right apps are available so that customers can use them easily on their smartphone or tablet. This service would not be possible without fast internet connections or smartphones.
At the same time, our expectations are also changing. We now expect many things to be available seamlessly, without delays, from anywhere as a service. A luxury that only major corporations and the very rich could afford in the past is now available to all. As a result, for example, employees in specialist departments expect to be able to implement their ideas quickly without having to wait for the IT department; the ”Everything Customer,” as Gartner calls them, who is used to getting everything as a service, is also entering the B2B realm.
Without internet, without cloud services, without interfaces, without smartphones or tablets, a key piece of the puzzle for successful services would be missing. At the end of the day, it’s about being able to consume services quickly and without complications, which is why it is also known as IT consumption or service consumption.
How can companies benefit from services that are not Netflix or that do not offer an app?
Gerald Klump: To start, it is important for companies to learn to think in services and to recognize the benefits for them. In larger corporations, the IT department is often set up as a profit centre that sells services to the business units at internal cost rates. And yet a major problem remains: investing in one’s own infrastructure. This becomes fixed capital that doesn’t directly benefit the core business. Never mind the fact that the infrastructure needs to be upgraded every three years on average so that it will continue to be supported by the manufacturer. And that in turn requires internal purchasing plans, which binds resources.
So why not just use IaaS and get the infrastructure or expanded service option as a service? Companies are able to use the infrastructure they require as needed – it is provided by the service provider, along with maintenance, updates, new investments, etc. The question is whether it is even necessary to have one’s own infrastructure, i.e. dedicated storage space and one’s own computing power, or whether it can be covered by a platform such as Database-as-a-Service. In that case, the service provider not only provides the infrastructure for the database, they also handle operations of the database including updates and backups – one thing less to worry about. And of course, applications can also be used as services with Software-as-a-Service.
The benefits really do sound convincing. So why wouldn’t all companies want to switch to services?
Gerald Klump: It might be easiest to explain it with an example from daily life: No one wants to give up having their own car. When you consider everything besides the cost of fuel, it costs about 300 to 400 euros a month to have a car, depending on the make and model. A rental car, on the other hand, only creates costs during the time it is rented or for the number of kilometres it is driven. And yet people like to have their car waiting for them in the garage, even though mobility as a service would be an option for many who have easy access to public transportation.
So what I’m trying to say is: People have to change their way of thinking in order to have their software or data stored with a provider rather than in their own server rooms or computing centres on company grounds. The provider handles everything else, from availability, data protection and data security, the latest versions of the software, etc. That might also be a reason: because no one in the company can be made directly accountable anymore. The fear of getting locked in with a vendor, of being dependent on a service provider who manages access to the physical storage of the data and software, might also play a role.
But it certainly is not the case that companies have not yet heard of the benefits of managed services. Trivadis has been operating databases and applications in companies of varying sizes for many years as our specific expertise for this is more in-depth than one generally finds in companies.
A look at the statistics clearly shows that companies are increasingly accepting managed services.
What are the specific benefits of managed services for companies?
Gerald Klump: IT Consumption, so only paying for the IT services that are actually used, offers a number of positive effects on multiple levels: it creates a balance between costs, efficiency and productivity; at the same time, administrative tasks, collaboration and analyses are taken into consideration and business processes and goals are improved. The traditional IT model is increasingly becoming a risky and cost-intense approach as the technology and user requirements are changing faster and faster.
Service Consumption can ease the burden on budgets and increase investment opportunities by offering the flexibility and efficiency that companies need to grow and be competitive, but only if it is used correctly and monitored regularly.
Which companies do managed services suit?
Gerald Klump: In the past, it was primarily larger corporations that opted to use managed services, but this will change in future. The benefits have increasingly also been recognized by small and medium-sized enterprises. Above all, the ability to focus on the core business and minimize risks are seen as improvements. A good example for this is a logistics company that tasked us with operations and support of their business-critical infrastructure on numerous continents. “As an SME, we would not have been able to afford to maintain that kind of structure,” the customer says. Trivadis ensures that the corporate group’s business-critical core applications work without issue and, if a problem does crop up, that these are available again as quickly as possible. Replicating independent databases in locations with unreliable internet services was only one of the major technical challenges with this. There was also the matter of continually improving applications that had been developed in the company as well as standardizing these across countries.
On top of that, there were the scheduled costs, the high level of service availability and the minimization of complexity within the IT organization. In many cases, smaller companies are scared off from managed services by what initially seem like high costs. It is important to consider, however, that the monthly costs can be calculated and that the cost risk in the event of a complete failure or an IT security incident is also minimized or even eliminated. The ability to continually develop the infrastructure must also be taken into account as it is considered the key to success in future. Small companies in particular also have the option thanks to managed services to use resources that were only accessible to larger companies in the past such as AI applications, deep learning or data analytics.
There are many managed services providers. Why should companies choose Trivadis?
Gerald Klump: Not all services are equal. The IDG study shows that trust and a focus on the customer are most important to IT Managers and departments of managed services customers. Trivadis has unparalleled expertise in the operations of databases and applications from thousands of projects and more than 300 active service level agreements. With 15 locations in Central Europe, we are always close to the customer and know which service needs to be available to them. A high level of standardization and automation allows companies of all sizes to create their own individualized service portfolio. In addition, customers have access to the full breadth of 25 years of expertise with Trivadis throughout the entire life cycle of the infrastructure and applications. We act as consults for our customers in this regard, independent of a specific manufacturer. This combination of service plus proximity to the customer plus expertise is only available with Trivadis.