In the early era of IT services, businesses (IT services customers) were reaching out to providers only to get something new developed or built for the name of a new IT service for their business. The new IT service used to be a new application or IT infrastructure to host the new or existing applications. Once the IT services providers complete the new service development, businesses (IT services customers) get the ongoing support and maintenance service of the newly developed application or the newly built IT infrastructure from the same IT services company that developed or built it. But they used to get support and maintenance service for a short period and after a couple of months, they used to get the support and maintenance work transitioned to their internal IT team. 

If they did not have the right skills in their existing IT team to take care of the support and maintenance work of the newly built IT service then they used to hire the required personnel with the right skills. But they used to love to keep control of their IT applications and infrastructure operations under their own internal IT team. They wanted their IT applications and infrastructure to be managed by people whom they could see, meet, manage, and govern directly. This approach was working well and both the IT services providers and businesses ( IT services customers) were happy with this approach.

Then came the medieval era of IT services. In the medieval era of IT services, many new technologies started coming into the IT market and they started enticing businesses ( IT services customers) for quicker adoption. Businesses were also in a race to be early adopter just to show themselves as technologically advanced as their competitors. The entry of new technologies into the marketplace and the race of their early adoption by businesses caused significant growth and complexity in the services portfolios of businesses’ IT organizations. Many new and complex technologies became part of businesses’ IT organizations and businesses’ IT organizations started feeling the need for extra manpower having specialties to manage those newly adopted complex IT technical components. There were 2 options in front of businesses; either to increase the headcount of their internal IT organization to take care of the newly adopted complex technology or to involve a third-party service provider to take care of the same. 

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The first option was causing the size of the internal IT organization to be much bigger and the same was also causing the overall IT operations cost to go very high. In the medieval era of IT services, the IT function was considered as a cost to the company and not a revenue-generating asset or an asset to cause revenue generation that’s why businesses were reluctant to go ahead with the first option of IT services support and maintenance. This made the business’s IT organization’s decision makers start looking for third-party IT services providers to look after some of the key IT services of their organizations assuming they will be offering such services at a lower cost compared to their internal IT organization. In the beginning, businesses reached out to their existing IT services providers with whom they had long backdated relationships and expressed their needs and those service providers started offering them IT operations support and maintenance services just to keep their existing relationship intact because, till that time, there was no formal model for the IT services providers to offer this kind of  IT services. This laid the foundation of IT managed services business as part of the service offerings of IT services providers.

Over some time IT services providers defined a formal model to sell, engage, and deliver IT operations support and maintenance services to their existing and prospective customers. Their model used many techniques like remote support, offshore resources utilization, use of a shared team across a pool of customers, etc. to make their service offerings very cost-effective for their customers. Due to a surge in customer demand, the IT-managed services business grew remarkably and became one of the key pillars in the service portfolios of IT services providing companies. During this growth era of IT managed services, many IT products companies built many tools and applications to better run the managed services business. All these developments were making businesses more comfortable and confident in letting their IT operations be managed by third-party service providers. IT services providers were also making the best use of this market situation and making lots of revenue out of this mode of IT services business.

During this period, IT services providers were positioning groups of personnel having relevant specialized skill sets to manage customer-specific IT services and considering themselves to be accountable only for the well-being of the IT services that they manage. That means the system administration group was considering themselves accountable for the well-being of the systems they were supposed to manage, database administrators for databases, network administrators for networking devices, and so on. There were processes to bind them together but they were mainly at the time of incident resolution or change execution. All these groups did not have a shared vision for the customer business IT organization. Each group was doing their best to keep their managed assets highly available, high performing, and secure and they were using their group-specific metrics to justify their value additions to the customer IT organization. This was the pre-visualization era in which IT services like servers, databases, networking components, applications, etc. were running directly on boxes and wires.

In the name of managed services, service providers were doing lots of preventive and on-demand maintenance work on the hardware, operating system, middleware, and applications. Besides break fixes, all such maintenance activities were taking most of the time of the managed services personnel. But Lack of shared vision for customer IT organizations was making them work in silos and causing frequent interruptions in customer IT services due to communication gaps and poor intra-team coordination. 

Moreover, customers were also visualizing the availability, performance, and security of individual IT components rather than visualizing the performance of the end workload availability, performance, and security that means viewing everything in terms of the availability, performance, and security of the business applications. If business applications are fine then everything is fine and if individual technical components are working fine in their concerned places but business applications are not fine, this was not the norm of IT operations those days. That’s why managed services providers were doing tons of work for their customers and making tons of money out of them but their customer’s business applications were facing frequent disruptions due to different reasons. Sometimes due to system issues, sometimes due to database issues, and sometimes due to network or security issues.

Then the world made its entry into the modern era of information technology. This era brought technologies like virtualization, cloud, mobility, artificial intelligence, and analytics.

Cloud made IT services available like a service and killed the concept of upfront payment and ownership of the IT technology stack before using the same. It also made its users free from many administrative and maintenance work by owning the availability, performance, and security of hardware and operating systems. Sooner platform as a Service (PaaS) came into the technology marketplace and made IT services more service-oriented. In PaaS, Cloud service providers started owning the availability, performance, and security of middleware, databases, networking services, etc. Cloud services providers not only promise a certain degree of availability, performance, and security of their PaaS services but also guarantee credit back policy in case of non-compliance with their service level commitments. This increased the adoption level of PaaS services in the IT buyers and users. So in today’s time, businesses prefer to host their services on PaaS and they see the success of entire IT operations through only one lens and that is the availability, performance, and security of the business applications. This was opposed to the notion of the previous era where success factors were not only the success of business applications but also the success of individual IT components.

Due to the high adoption of PaaS and change in IT operations success factor perception, managed services providers are facing challenges like less preventive maintenance work to be done and the need for laser-like focus on business applications performance on top of underlying IT components performance. Many managed services providers are finding managed service a very difficult business to carry on as they are unable to justify their heavy service charges in terms of their deliverables against the new expectations of their customers. But the fact is managed service is still a very promising business and many service providers are making huge profit out of it. However, one cannot survive and thrive in this game using the old techniques and tools.

Today, managed services customers expect high availability, performance, and security of their business applications under any situation so managed services providers need to realign their focus from IT infrastructure to end business applications. In other words, they need to be application-centric rather than box and wire-centric. As far as justification of managed services service fee in terms of deliverables is concerned that can be done for the applications and PaaS services in the name of proactive monitoring, observability, preventive maintenance, and technology life cycle management. 

PaaS services also need maintenance like timely application of certain updates, upgrades, refreshments, etc. In the modern era of IT, customers are not happy with knowing a fault just before few minutes before the fault starts time but they expect the fault to be predicted a few days or at least a few hours in advance so that they can do the needful in time and prevent impact on their IT services. 

To fulfill such expectations, managed services providers will have to use some market-standard observability tools on top of their proactive monitoring ones to predict outages quite early. Customers are also expecting their managed services providers to keep their technology stack up to date along with the changes in the technology marketplace. They are not ready to work with the managed services providers who just maintain their IT technology stack status quo. Customers have this need because today applications have very complex integrations with other technology stacks and even with the technology stacks from other service providers that are running in an altogether different location and IT environments so the change or upgrade in one side component must be accompanied with the change or upgrade in another side component to avoid any service interruption. All service providers notify their customers quite in advance in case of any such changes or upgrades in their environment so the managed services providers need to keep an eye on such events happening in their technology ecosystem and plan changes or upgrade their part of the technology stack to ensure the expected level of performance out of their customer applications.

Doing all such work manually will be very difficult for the managed services providers so they can implement AI Ops (Artificial intelligence for IT operations ) in their managed services ecosystem to cater to the high expectations of their customers.

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In the modern era of information technology managed services providers will have to adopt observability and AI Ops as part of their way of working to survive and thrive in their business because even now managed services are a very lucrative business if done differently to meet the new expectations of the customers. That new expectation is the success of the business applications as a single fact to justify the success of IT operations.