Managed Services Means Never Having To Say You're Sorry

By Chris Josephes
October 12, 2009

It hasn't been a good week for managed service providers. Everyone knows about the T-Mobile Sidekick fiasco, and a few astute readers are aware of the problems encountered by Air New Zealand.

In both these cases, Air New Zealand and T-Mobile relied on outside vendors that provided infrastructure and IT services to handle their business operations. Those vendors (IBM and Microsoft, respectively) had failures that cost their customers millions of dollars in revenue and damaged reputations.

But Microsoft probably doesn't see their failure in terms of lost photos and contact information, while IBM doesn't see their failure in terms of traveler inconvenience. They only see hardware failures and corrupted data. They failed, and now two companies that relied on them are having to field phone calls and emails from a lot of angry people. T-Mobile could potentially lose thousands of customers; whereas Microsoft could potentially lose just one.

To be fair, everybody outsources something if you look hard enough. If you can't afford to do it yourself, it's easy to be swayed by a company that will claim they can offer a lower price by doing it in bulk. And when it comes to customer service, they'll probably say something clever like, "The buck stops here!" in an effort to win your trust.

Air New Zealand CEO Rob Fyfe was not happy with IBM, and who could blame him. He expected a quick response and an apology from IBM, yet he received neither. And that's the core of the problem with managed service providers.

A managed service provider will never know your customer base like you do. If you're smart, you probably spent countless hours on research knowing how many texts the average user sends out, or what foods they like on a long flight. You anticipate what their responses will be if they're inconvenienced by down cell towers or if their flight is delayed. You worked hard to win customer loyalty and trust by building a superior product. Now imagine losing all of that because you made a bad choice on a managed service provider. And from the customer's perspective, the third party vendor didn't fail... you failed.

If your only option is to rely on an outside service provider, understand the consequences of what a failure could mean. Never become complacent, even if the vendor has worked for years without failure. Finally, consider a plan to eventually bring the service in house when the cost becomes acceptable and when you want to expand your business.

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