Leading analyst firm Ovum has found that managed services contracts are changing and that the traditional model based on a level of technology performance and/or a reduction in the total cost of ownership (TCO) is being challenged.
The change is being brought about by organisations wanting more flexibility to respond to changes in market conditions, technology, the cost of technology and their own strategies. As a consequence there are new principles that will shape the managed services market over the next three years.
- As technology costs fall, a greater proportion of contract spend will be allocated to service.
- Clients however will seek to recover this service premium if the service falls short of defined parameters.
- The number of inflexible TCO deals will fall.
- Providers will be more proactive about how the client can benefit further from service or technology.
- Providers will need to be more transparent about costs, value and how they execute their services.
- The provider’s role with third-parties will change as services are increasingly provided out of the cloud.
- Providers will need to have a greater focus on industry verticals and measure performance within the context of the client’s business.
The findings were based on Ovum’s analysis of the eight year managed services relationship between Unilever and BT. You can read the full White Paper here.