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98 Percent of Managed Services Is Chaotic: Page 2 of 4

Part of the problem is many solution providers have adopted the term "managed services," but are only delivering time-based monitoring and response solutions. The difference is often night and day in terms of initial investment, services delivered and revenue. Managed services are akin to hardware and software as a service--the service provider delivers management of IT infrastructure based on predefined service-level agreements. Time-based reactive models enable service providers to respond with quick fixes to IT problems--a misconfigured firewall, a server running near capacity or a printer out of toner.

"This whole managed services phenomenon has been hyped into a frenzy," says Dan Wensley, vice president of partner development at Level Platforms, which also provides managed services tools to solution providers. "We had more services when we had less functionality because there wasn't so much confusion."

The realization of the different levels of managed services is partly based on the required investment of getting into the business. Full managed services requires a significant investment in IT infrastructure and staffing. To provide 24/7 monitoring and management, a MSP needs an operations center that carries unused capacity for peak traffic, as well as a staff of experts who can analyze and respond to nearly any situation in moments. The initial capital and human expenses often run $1 million or more--far more than many small VARs can afford.

Wensley has taken the extraordinary step of banning the term "managed services" on his team. Rather, Level Platforms is pushing the subsets of managed services--monitoring, response, break/fix, off-site management--until confusion over the definitions and capabilities of service providers is clarified.

"All of this will evolve in five years, not in the next 12 to 24 months," Wensley says.