Was That a Managed or a Management Service?

Innovative service options are sprouting faster then they can be tracked. It seems that most vendors directly point to management as a key part of any service offering.

Related Analysis from META Group

Management Service Providers: The Evolution Continues Full Story

Most commonly the terms management service providers (MSPs) or managed services are used to describe these new service offerings, but all too often the terms are used incorrectly (and interchangeably). For example, performance monitoring can be contracted for specific elements (e.g., servers, networks or databases), for specific applications (e.g., WebSphere, WebLogic), or as a supplement to a purchased service (e.g., managed VPN, managed firewalls, outsourced ERP application). To better understand the different services, to enable comparison, and to best determine what services a company should engage, it's necessary — but difficult — to label and organize these services.

Knowing the Difference Between 'Management' and 'Managed'
META Group sees a distinctive difference between management services (MSPs) and managed services. The MSP services are purchased directly for management needs, while managed services are purchased as add-on to another mostly commodity service. The differences impact buying decisions, purchase targets, price and expected results.

Managed Services
Managed services are value-added options to what would otherwise primarily be commodity service offering (infrastructure elements, application hosting and so on) The "managed" portion is the operational component, whereas the "service" portion refers to the managed "target" (e.g., managed VPN, managed firewall, managed Web hosting).

The target of the purchase is not usually management per se, but rather some other outsourced service. Management is an add-on, and in many cases is not the core competency of the vendor. Also, these services are often not evaluated on their management capability, but rather the core service. The managed services market is very immature right now, with most services not living up to the promises made. Most vendors substitute people and tools for the required strong management processes. Vendors are beginning to invest in partnerships or acquisitions that will enable them to build stronger services, but this process will take a year or two.

Management Service Providers
MSP services are purchased directly for the management capability (e.g., performance monitoring, help desk). Users evaluate the service explicitly to provide a management process(s) within their organization. The vendor's management processes and management technology are at the heart of an evaluation. Survival of an MSP offering is centered on a vendor's ability to deliver more efficient management faster and cheaper (or better quality — i.e., better service levels) than an IT group could do on its own. The MSP offerings can target management of not only external services (e.g., Web sites) but also internal infrastructure and applications.

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