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Common Pitfalls of Outsourced Services

If you talk to MSPs and their technology partners serving the SMB, it's apparent that many SMBs will likely outsource their IT functions entirely if not partially to third-party service providers.

The ability to put less focus on the nuts and bolts of IT operations can help. As the host of this MSPTV Webcast points out, someone who sells row boats concentrate on row boats and their ability to navigate whitewater currents instead of electrical currents in a server room.

This, after all, is what managed services provides, an assurance of steady IT operations that enable SMBs to focus on their core businesses.

According to outsourcing consultancy Logicalis, there are two common pitfalls of that in-house IT organizations and even tech-savvy SMB owners looking for third-party services fall victim to:

Forgetting priorities: Organizing tech inventory and IT services and allocating them to process owners is key to maximizing a managed services contract. If you're an SMB, you might find a test and development server to host developed applications to be unnecessary. You might quite literally have one or two computers in a bakery or 50 computers in a law firm, and you still wouldn't need a separate server or a physical, off-site data storage for backup and disaster recovery. Finding out what you need and don't need is key. You might have a high-service level on a test/dev server that is unnecessary. Prioritizing your infrastructure needs can prevent this, and can help you purchase the right level of service for each device, and keep you protected. Besides, it can save you money too.

Overpaying for processes and hardware you don't own: Many SMBs are more likely to lease server space or rent PC office equipment and have non-customized software. This is more for medium-sized to enterprise-level businesses, which should always take inventory of workstations and devices on site, some of which are not in use and not locally owned, so therefore you shouldn't pay for it in both cases. The key is to only pay for equipment you operate.

In this vein, MSPs structuring client contracts should act in good faith and take these things into consideration. Very few potential clients like to be up-sold in general, especially if they don't feel the services are tailored to their needs.

"A major pitfall customers fall into when negotiating a managed services contract is not fully understanding the level of effort required to manage their environment and not being able to compare that to the level of effort proposed in a managed services contract," says Mike Alley, practice director, outsourcing solutions, for Logicalis. "So, the number one consideration when entering into a managed services contract is to ensure that the appropriate level of effort for managing your environment and supporting changes is included in the recurring costs of the contract. If not, you will find yourself with unexpected internal or external incremental costs."

Posted by Jabulani Leffall on July 20, 2010