Increasingly Diverse Customer Demands Expected to Shape the Face of Managed Services in 2013

The managed services business model evolved tremendously in 2012. Not only have managed service providers (MSPs) expanded their service portfolios through innovative technologies and strategic partnerships with other providers; they have fine-tuned their pricing and deployment models to meet the increasingly demanding needs of their customers.

Customers largely drive the managed services model, and cost pressures and regulatory requirements are a huge challenge for the internal IT departments of organizations in a variety of industries. According to Kalpesh Master, managing partner for managed services in MSP SunGard's global services business, companies are increasingly hoping to grow revenue and are turning to MSPs to provide niche managed services that boost their core business initiatives.

SunGard has identified 10 trends in the managed services and outsourcing space for 2013, with a focus on back-office functions in addition to areas that were previously considered too risky to outsource. These may include tax processing, actuarial modeling and retirement plan recordkeeping. The shift in views toward these managed services will "help firms recognize cost savings from service providers' economies of scale, domain expertise and quality integrity, while helping firms focus resources on core business areas that directly contribute to revenue generation," said SunGard.

The first trend is one that has played a dominant role over the past year. As the nature of outsourcing matures, companies are increasingly viewing their MSPs as complete solution partners, including professional services, custom application development and thought leadership in addition to traditional managed services. Along with this, the business process-as-a-service (BPaaS) model is expected to gain momentum next year, as providers leverage a utility-based model to serve multiple companies, offer economies of scale and support efficient business processes.

In 2013, organizations are expected to continue seeking Software-as-a-Service (SaaS (News - Alert)) solutions so they may hand pick components within the cloud to create a customized solution. Business process outsourcing (BPO) customers will also be searching beyond traditional application hosting and staff augmentation to add domain-specific business services as well as thought leadership.

IT executives are expected to look at the big picture in the New Year, outsourcing more of their infrastructure and application management services in an effort to reduce total cost of ownership and free up in-house resources. Organizations will also be seeking outsourcing providers that offer cloud computing in an effort to quickly prototype and develop a variety of applications.

Regulatory and operational risk requirements and compliance will also be a major driver, leading companies to demand strong SLAs from their MSPs. Service contracts based on a variable cost model are also expected to become more prevalent, enabling the transfer of risk to the service provider to help organizations save money as well as manage fluctuating demand. Best practices and global certifications and standards will also help set the pace for more efficient service delivery and higher quality services. And new and complex initiatives like smart grids and managing big data are expected to create demand for more complex managed services.

"The financial services industry is expected to increase its spending on outsourcing of services and technology at a rate more than two times that of traditional onsite IT spending through 2015," said Rodney Nelsestuen, CEB TowerGroup senior research director. "Drivers of this growth include the need to update technology despite tight budgets and deferred investments, vendor innovations in both pricing and the delivery of more bundled IT and service options, and increases in the business value that vendors offer through expanded domain expertise. Technology and operations will become more integrated, and software will be embedded with infrastructure, bundled with managed services, and provided through both on-demand cloud services and more offerings of platform-based business process outsourcing."

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.