According to research conducted by TSIA, managed services is one of the top three growth engines in the technology industry. However, the industry is currently facing an identity crisis.

As companies undergo digital transformation, they are confronted with the challenge of transitioning to the cloud while still maintaining their necessary legacy services. This hybrid environment poses unique obstacles for managed services organizations, including how to help customers navigate new capabilities and increase adoption. At TSIA's 2023 World Interact conference, several speakers shared how their companies are proactively addressing these challenges. If you missed the conference or are in need of a recap, this blog will explore the key findings and insights presented.

Maintaining a Hybrid Environment

"Moving to the cloud is no longer a choice," Brian Adler, Senior Director of Cloud Market Strategy at Flexera, stated in his presentation, "Unintended Consequences of Transitioning to the Cloud." Adler also highlighted the increasing number of cloud-based workloads while acknowledging the importance of maintaining legacy infrastructure.

Managed services organizations are now tasked with balancing adopting modern applications and preserving on-premise servers and other hardware.

However, the cost of maintaining both environments can accumulate significantly. Flexera's State of the Cloud survey revealed that companies estimate their wasted cloud spend to be at an all-time low of 28%, although this rate is still higher than desired. Adler warned that without a comprehensive approach to managing hybrid estates, organizations will struggle to control their cloud costs effectively.

Furthermore, as the number of cloud services continues to grow, so does the number of silos. Adler advocated for a transition from data-driven models to business intelligence (BI) models, urging companies to leverage their resource, consumption, and entitlement data across the hybrid technology estate to optimize cost and risk. In his session, Adler outlined the strategy behind this recommendation and provided several key focus areas for companies to start acting upon to facilitate this shift.

Flexera has experienced significant benefits from this focus shift within its customer base. They have observed a 60% reduction in production costs of technology research and an impressive 4 to 5 times return on investment for the average enterprise customer. Adler emphasized that the time to start managing cloud expenditures is now, as organizations can then proceed to optimize their spending more effectively.

Shifting Priorities

Toby Alcock, Chief Technology Officer at Logicalis, stressed that merely ensuring the availability and performance of infrastructure is no longer sufficient for customers. In his presentation titled "The Value of a Managed XaaS in a Hybrid Cloud World," Alcock highlighted the increasing complexity faced by managed services providers, including a greater number of tools, limited human resources, and constrained budgets. He emphasized that a shift in prioritization towards business outcomes is imperative.

Logicalis’ recent survey of over 1,000 chief information officers (CIOs) reveals an increased focus on innovation and enhancing both customer and employee experiences. There’s no question that the industry is ready for this shift; the next step is to determine how and where to concentrate efforts effectively.

With this in mind, Logicalis established a hierarchy of outcomes to guide organizations as they develop their managed services in the cloud. Logicalis' Managed Digital Fabric platform outlines five pillars of outcomes:

• Availability
• Security compliance
• Economics
• User experience
• Sustainability

Around two years into their own digital transformation, Alcock reported that Logicalis has witnessed significant improvements in customer and employee satisfaction by shifting focus to these outcomes.

Increasing Digital Engagement and Adoption

Customer success often hinges on product adoption, an often overlooked aspect. In an "Ask the Expert" session, Jeremy Blanton, Vice President of Managed Services Research at TSIA, highlighted that customer success has historically been responsible for encouraging retention and renewals, which are outcomes of expansion. To increase expansion, companies must ensure that customers are maximizing the value of their services.

Dawn Gartin, Dynamic Engagement Manager at Workday, shared her insights in a talk titled "Results Trifecta: Customer Success, Services & Digital Engagement." She outlined Workday's journey to optimize its customer success organization. Through a survey, they discovered that customer success managers (CSMs) spent over 40% of their time on internal activities. To address this, the Dynamic Engagement Team was created to help CSMs strategically prioritize their focus on specific customer segments.

One area of focus for the team was on features that were "purchased, not deployed" (PND). They launched a campaign aimed at identifying underused SKUs and assisting customers in realizing their value with the goal of educating and exciting them to deploy these features.

Targeted messaging and demos ensured that the right customers received the right information at the right time, leading to increased customer satisfaction and saving CSMs from redundant, high-touch interactions. As a result, Workday experienced reduced costs, quicker customer engagement, and increased recurring revenue.

Gartin acknowledged that implementing this approach poses challenges, requiring extensive cross-collaboration, a mindset open to learning from failures, and a willingness to embrace chaos. Her talk addressed the hurdles that Workday encountered while building the new team and how they overcame these challenges. She emphasized that change is to be expected along the way, but the results will be worth it.

Navigating the Identity Crisis: Strategies for Success in Digital Managed Services

Digital transformation presents new challenges for the technology industry, including managed services organizations. Successfully transitioning to the cloud while maintaining legacy services requires innovative strategies to minimize costs, prioritize a broader set of business outcomes, and strategically delegate ownership of processes that influence customer experience.

The insights from TSIA's 2023 World Interact Conference shed light on how companies are addressing the identity crisis in digital managed services. By adopting a holistic approach to managing hybrid environments, focusing on business outcomes, and promoting customer engagement and adoption, organizations can navigate the evolving landscape of managed services and thrive in the digital era.

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