CIOs are at a crossroads today with businesses expecting them to accomplish a multitude of tasks ranging from making the right technology investments, delivering business value to building a future-ready IT landscape. This is in an environment where technological heterogeneities and complexities are increasing by the day. CIOs would gladly assume this strategic role, but the fact that they are saddled with mundane IT tasks prevents them from shouldering greater responsibilities. Another challenge they face is the increasing pressure to cut down costs with 70 percent of IT costs being channeled only towards running the business.
What should the CIO do in such a situation? The answer is -Opt for managed IT services. A good ITO solution can bring about a near 100 percent success rate in IT operations. Also, it can reduce in-house IT costs by 30 to 40 percent, and enhance operational efficiency by 50 to 60 percent.1 It also renders flexibility to take on business changes or a disruptive competitor - surely a dream come true for every CIO.
All said and done, managed IT is not a new concept. What is new is the business value that next-generation managed IT solutions offer, a clear shift from the earlier focus on technological value. The ideal offering would be the one that improves operational resilience and provides better service; shifts from Service Level Agreements (SLAs) to a Business Level Agreement (BLA)-based framework; and works towards reducing customer cost from the IT operations standpoint.
While many companies are willing to hop on to the managed IT bandwagon, they are also getting smarter and more demanding, and have three key asks for their prospective service providers:
“How can you help us improve our service levels?”
“How will you convince our internal customers of the business value?”
“How will engaging your services help reduce our costs on an ongoing basis?”
By outsourcing IT, businesses can get back to doing what they do best – focusing on their core competencies – leaving the job of managing IT to skilled specialists. With ITO solutions, they can immediate slash costs by eliminating redundancies, cut capital expenditure on IT infrastructure and free up internal resources. Automation of IT processes is another advantage. Since managed IT costs are predictable, businesses can budget better as well.ITO also facilitates implementation of lean standard operating procedures and continuous analysis and optimization. Moreover, by driving alignment of IT with business, managed IT solutions can trigger positive business outcomes. No wonder that more and more companies are embracing the new managed IT services model.
According to a study, the third quarter of 2013 was the best ever third quarter in terms of ITO global annual contract value (ACV) – $4.4billion, a sequential rise of 100 percent. Also, 247 contracts were awarded in this period, the highest in any quarter ever.2 The entire managed IT services market is
expected to swell to $256.05 billion in 2018; currently the market size is $142.7 billion.3
Thanks to next-gen solutions, organizations can extract business value from their managed IT services. Meanwhile, CIOs can do what they should have been doing in the first place –focus on strategy.