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Outsourcing Armageddon

by Rob Addy  |  September 9, 2012  |  3 Comments

Traditional managed service provider’s that fail to adapt to the changing marketplace are in danger of becoming an endangered species. Many of them don’t realize this. But that doesn’t make it untrue. Much of the activity that used to be core to outsourcing engagements is now being delivered under the auspices of support contracts. The ISVs and OEMs are expanding the scope of their support services to deliver and demonstrate increased value. Unless the MSPs raise their games (and move further up the service value chain) they will be forced to accept declining revenues as customers begin to understand that they are paying twice for the same (or incredibly similar) things.

Meet the Managed-service-asauraus’s


The world had been good to the MSPs. Profits and growth were good. But they had become complacent. And this complacency could be their undoing. They were bloated from a diet of mega deals and a lack of commercial exercise. Their huge bodies made them slow and forced them to consume a regular diet of new deals to keep the mass viable.

Meet the support monkeys


Support had been treated as a necessary evil. Often seen as “just” a cost center, it had been deliberately kept hungry. This forced it to adapt. In a fight or flight scenario, the support monkeys always ran. They lacked the teeth necessary to do anything else.

You scratch my back, and I’ll eat the fleas off yours…


For decades the symbiotic relationship between the support monkeys and the outsourcing-asaurus’s worked well. Clear lines of service delineation and mutual happiness with their working margins meant that neither party had anything to gain from rocking the boat.

And then the asteroid came…


The economic crisis changed everything. The support annuity came under increased scrutiny and the support value proposition was questioned. Everyone was hurting and everyone was being asked to do more for less. After cutting the fat, providers had to cut into the muscle (and in some cases down to the bone). This weakened them and made them hungry.

Relationships changed…


With food becoming scarcer, the managed-service-asaurus’s started looking for new food sources. The product support related pickings which had once been consider too trivial or insufficiently nutritious to be worth chasing became increasingly attractive. Third party maintenance became in vogue. And the managed-service-asaurus’s turned on their old friends. This shocked the support monkeys (who were also feeling hungry) and caused them to throw their hands in the air.

The monkeys had to think…


But throwing their hands in the air wasn’t going to cut it. So the monkeys started thinking. They hadn’t done too much of that for the preceding couple of decades so it wasn’t easy at first. But they were intelligent and agile and soon got the hang of it. They had to forget that they knew everything there was to be known about support and remember what it is that helped them up the evolutionary food chain out of the primeval swarm in the first place.

They remembered a mystical box…


The “box” was the key. Although at this point the support monkeys weren’t too sure what it was the key to, not indeed were they to sure what a “key” actually was. But they knew that they knew something and they knew that they had to work to get it.

They had to work together to reach it…


Reaching the “box” was difficult. It required hard work. This was not easy as they were under attack from multiple sides and they didn’t have the full happy tummies of the past. But they persevered. They mustered their troop and worked towards the common goal.

What was in the box?


The box contained all manner of prevention-based goodness. The origins of, and road map for, proactive and predictive support services were crammed into the box. These were the tools that would  help the support monkeys save themselves and save the day. It’s not that the monkeys had anything against the managed-service-asaurus’s (even though they were the ones to start the competition) but their need to survive was just as keen.

New tools gave them the advantage…


Being closer to the technology allowed the support monkeys to get to next generation services faster. Being proactive and predictive meant that they were able to carve out an increased slice of the available foodstuff to sustain them. This changed the dynamics of the relationship between the managed-service-asaurus’s  and the support monkeys. No longer did the monkeys have to make do with feeding on the scraps left by their brethren.

The result was inevitable?


Is the end result inevitable? Perhaps. Certainly the relationship between support and the rest of the industry is changing. How it will develop and what the end state will be (if indeed there actually is an end state) is unclear. But one thing’s for sure – The support monkeys are in better shape than they have ever been and the future belongs to the agile mammals not the inertia laden dinosaurs!


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Category: support-strategy  

Tags: outsourcing  support-value-chain  trkfam  value-proposition  where-does-support-fit-in  

Rob Addy
Research Vice President
5 years at Gartner
More years than I care to remember in the IT industry

Welcome to my blog! I post about all things services related from the provider perspective. End-users are welcome to read but please be aware that you may sometimes find its content unsettling. I will endeavour to post frequently (as it's a lot cheaper than a therapist) but please forgive me if other more mundane activities occasionally get in the way...Read my official Gartner bio here

Thoughts on Outsourcing Armageddon

  1. Matt C. says:

    This is quite an impressive presentation. Really entertaining and knowledgeable. True that the industry is still unpredictable. We don’t know what will happen to companies and employees. But yes, for sure, monkeys will always have room for improvement.

  2. Mike says:

    Really Nice one.
    Thanks for sharing this information.Keep Sharing more and more.

  3. Another thought-provoking piece with wonderful cartoons.

    My question is: As pressure on OpEx (and CapEX) increases, as IT is forced to do more with less, and as they develop in-house support expertise—with self-maintainer, automation, and predictive, pro-active, self-diagnosing, self-healing tools—will the support monkeys be mostly be house-bred or are will we still depend on traditional Service Providers and Systems Integrators?

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