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Beware of Customized Managed Network Services (MNS)

By Andrew Lerner | June 23, 2016 | 0 Comments

NetworkingJust PublishedGuest Blog

This is a guest blog from Ted Corbett, who covers Managed Network Services (MNS) and recently published research on the topic.

Many enterprise look to MNS in order to address challenges such as skills gaps, understaffing, desire for turnkey solutions and improving availability etc.  In conversations with Gartner clients, we often hear the following from clients (on the front-end):  “the good news is that the MNS provider offered customized services with tight SLAs with valuable SLCs. Thus, we’ll achieve high performance with predictable costs. We’re thrilled because this agreement will allow us to shift our focus to our businesses core value.” Translation:  You’re special and we get you.

However, the outcomes of these “customized” MNS deals don’t quite pan out so rosy.  In short, enterprises pay the MNS provider more, but receive lower service delivery.  To understand why all you have to do is look at this from the MNS providers’ perspective. In order to make reasonable margins, the MNS providers strive for three key principles in their offerings.

  1. Standardization of Offers – establish the foundation for scale
  2. Repeatability of Processes – doesn’t work unless your offers are standardized.
  3. Automation – can’t happen without offer standardization and repeatable processes.

This is, in-essence, the opposite of customized.  Thus, adherence to core operating strategies just collided with making a “customized” deal. As a result, customized MNS “solutions” usually:

  • cost more (in order to create the special offer) because MNS platform customization is needed
  • require more manual processes to be involved.

These manual processes often remain a permanent one-off (“why automate unique processes that don’t scale to other customers”) which leads to increased manual errors. Often degrading service levels. No SLC amount will make up for service degradation resulting from this approach. Clients often report this to us, in essence as a realization: “the MNS provider was treating us flexibly and adjusted their offer to align with our needs, but then their performance was a pain to deal with, they had said yes, but never should have!”. Translation:  You’re too special. So what should you do? Simply put, we recommend remaining inside the MNS provider’s Goldilocks zone, which is depicted in green.

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We cover this in more detail in this published research: How to Control IT Spending and Improve Vendor Management When Sourcing MNS, http://www.gartner.com/document/3314517

Summary: When specifying price and performance, managed network services contracts are often opaque, leading to budget overruns and client dissatisfaction. I&O leaders should employ three best practices to optimize costs and service experience when negotiating with MNS providers.

 

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