Managed Service Provider - IDC Info Snapshot
An info snapshot of how Managed Service Providers could deliver business outcomes to customers and help them accelerate their business and technological transformation. Lae alla documentInfo Snapshot, sponsored by SAP | January 2025
Continue reading >
Transaction-Centric:
One-To-One Relationship
Partnership Model: An Ecosystem
Structure Focused on Outcomes
Business
application
vendor
MSP focus:
• Ownership of vendor management
• Negotiations
• Tracking risks and SLAs
• Defining business and IT outcomes
Customer focus:
• Ownership of
vendor
management
• Negotiations
• Business and
IT outcomes
• Tracking risks
and SLAs
Infrastructure partner
Business process sevices/
Transformation partner
Business application vendor
Technology platform partner
Application support partner
MSP partnerCustomer
Customer focus is on innovation and business
growth rather than managing the intricacis of IT
and business services
Infrastructure
partner
Application
support vendor
Technology
perform partner
Business process services/
Transformation partner
The Essential Role of Managed Service Providers in Delivering
Outcomes From Your IT Investments
Accelerate the Journey to Modern IT —
Embracing a New Way to Manage and
Consume Technology Investments
Rijo George Thomas
Senior Research Manager,
IT Services Research IDC Asia/Pacific
Source: Managed Hybrid Cloud Services Buyer Needs and Requirements (IDC #US50639224, May 2024)
Continue reading >
Transaction-Centric:
One-To-One Relationship
Partnership Model: An Ecosystem
Structure Focused on Outcomes
Business
application
vendor
MSP focus:
• Ownership of vendor management
• Negotiations
• Tracking risks and SLAs
• Defining business and IT outcomes
Customer focus:
• Ownership of
vendor
management
• Negotiations
• Business and
IT outcomes
• Tracking risks
and SLAs
Infrastructure partner
Business process sevices/
Transformation partner
Business application vendor
Technology platform partner
Application support partner
MSP partnerCustomer
Customer focus is on innovation and business
growth rather than managing the intricacis of IT
and business services
Infrastructure
partner
Application
support vendor
Technology
perform partner
Business process services/
Transformation partner
The Essential Role of Managed Service Providers in Delivering
Outcomes From Your IT Investments
Accelerate the Journey to Modern IT —
Embracing a New Way to Manage and
Consume Technology Investments
Rijo George Thomas
Senior Research Manager,
IT Services Research IDC Asia/Pacific
Source: Managed Hybrid Cloud Services Buyer Needs and Requirements (IDC #US50639224, May 2024)
Accelerate the Journey to Modern IT — Embracing a New Way to Manage and Consume Technology InvestmentsEvolution of Managed Services in a
Technology-Driven Landscape
As enterprises transition from the era of digital
transformation to the era of digital businesses,
technology is the critical enabler that drives success.
According to IDC’s 2024 Worldwide CEO Survey,
February 2024, digital products and services are
expected to make up about half of an organization’s
revenues in the next five years. This seismic shift
indicates that Digital First is not merely about
deploying the latest technological solutions or
transformation in silos, but also about running a
scalable business model rooted in technology.
To stay competitive, organizations will continue
to build business models rooted in technology,
consequently driving waves of investment into digital
infrastructure and intelligent applications,
among others.
Taking an Outcome-Based Approach
Will Make Technology Landscapes More
Complex and Increase Cost Pressures
IDC research shows that enterprises anticipate
significant growth in their current application
landscapes and the usage of the cloud as an
operating model to drive further innovation.
According to the IDC Application Services Survey,
3Q23, organizations estimate that nearly 43% of their
application portfolios are hosted on the cloud today;
and in five years, they expect that more than 51%
of their application portfolios will be hosted on the
cloud. These transitions in the digital landscape will
have a profound impact on the enterprise’s ability to
architect, implement, operate, and continually refresh
IT landscapes to support evolving digital
business models.
Additionally, the increasing scrutiny of IT budgets will
continue to weigh in on IT spending, slowing down
the transition to digital businesses. Currently, 69% of
tech leaders worldwide are very concerned about the
growing amount of technology investments required
to remain competitive. A quarter of CEOs surveyed
by IDC said that reducing the total cost of IT by
simplifying IT and minimizing technical debt will be a
critical technology initiative for their organization in
2024. With inflation and budget pressures mounting,
organizations need to optimize IT spending,
especially across infrastructure and applications. This
increasing scrutiny will also mean that business and
IT leaders will be pressed to deliver outcomes from
investments in technology. According to IDC’s 2024
Worldwide CEO Survey, 20% of CEOs emphasize
the growing expectation from CIOs to drive digital
transformation with the objective of creating new
revenue streams and achieving better business
outcomes in the next two years.
Delivering Outcomes From IT
Investments Requires a New Way of
Managing IT and Business Services
IDC believes that the current model for consuming
IT (Cloud infrastructure, applications, PaaS, etc.) and
business services is shifting to a consumption-driven
model that hinges its value on outcomes achieved
rather than a transaction-centric model heavy on
upfront investments.
Continue reading >
Technology-Driven Landscape
As enterprises transition from the era of digital
transformation to the era of digital businesses,
technology is the critical enabler that drives success.
According to IDC’s 2024 Worldwide CEO Survey,
February 2024, digital products and services are
expected to make up about half of an organization’s
revenues in the next five years. This seismic shift
indicates that Digital First is not merely about
deploying the latest technological solutions or
transformation in silos, but also about running a
scalable business model rooted in technology.
To stay competitive, organizations will continue
to build business models rooted in technology,
consequently driving waves of investment into digital
infrastructure and intelligent applications,
among others.
Taking an Outcome-Based Approach
Will Make Technology Landscapes More
Complex and Increase Cost Pressures
IDC research shows that enterprises anticipate
significant growth in their current application
landscapes and the usage of the cloud as an
operating model to drive further innovation.
According to the IDC Application Services Survey,
3Q23, organizations estimate that nearly 43% of their
application portfolios are hosted on the cloud today;
and in five years, they expect that more than 51%
of their application portfolios will be hosted on the
cloud. These transitions in the digital landscape will
have a profound impact on the enterprise’s ability to
architect, implement, operate, and continually refresh
IT landscapes to support evolving digital
business models.
Additionally, the increasing scrutiny of IT budgets will
continue to weigh in on IT spending, slowing down
the transition to digital businesses. Currently, 69% of
tech leaders worldwide are very concerned about the
growing amount of technology investments required
to remain competitive. A quarter of CEOs surveyed
by IDC said that reducing the total cost of IT by
simplifying IT and minimizing technical debt will be a
critical technology initiative for their organization in
2024. With inflation and budget pressures mounting,
organizations need to optimize IT spending,
especially across infrastructure and applications. This
increasing scrutiny will also mean that business and
IT leaders will be pressed to deliver outcomes from
investments in technology. According to IDC’s 2024
Worldwide CEO Survey, 20% of CEOs emphasize
the growing expectation from CIOs to drive digital
transformation with the objective of creating new
revenue streams and achieving better business
outcomes in the next two years.
Delivering Outcomes From IT
Investments Requires a New Way of
Managing IT and Business Services
IDC believes that the current model for consuming
IT (Cloud infrastructure, applications, PaaS, etc.) and
business services is shifting to a consumption-driven
model that hinges its value on outcomes achieved
rather than a transaction-centric model heavy on
upfront investments.
Continue reading >
Accelerate the Journey to Modern IT — Embracing a New Way to Manage and Consume Technology Investments• Transaction-centric: This relationship model is
highly service-level agreement-driven, where
the customer leverages a third-party vendor for
their expertise in a specific domain. The vendor
delivers the service or product stipulated in each
contract. This is a capex model of investment
where the customer is responsible for the IT
investments and manages vendor relations.
• Partnership model: Managed service providers
(SPs) could manage and execute business
functions, own (or lease) cloud and application
infrastructure (e.g., licenses, compute, storage,
network) and offer pay-as-you-go services,
resulting in end-to-end, pay-as-you-go managed
IT and business services. Managed service
providers own the vendor relationships and
commitment for outcomes.
A managed service provider-led approach to
business and IT management shifts crucial roles of
vendor management, negotiations, service-level
agreement (SLA) tracking, and delivering outcomes
to the managed service provider and the customers
focus on their core businesses.
Managed Service Providers Go Beyond
“Keeping the Lights On”
IDC research shows that managed SPs have
now evolved to enable a broad set of IT and
business outcomes, beyond cost management.
A quarter of enterprises surveyed as part of the
IDC’s Worldwide Managed Services Survey 2023
indicated that managed SPs are instrumental in
simplifying and standardizing IT, utilizing a series
of key building blocks that include standardized
architectures, particularly across multiple clouds
and applications; centralizing consumption of IT via
the use of unified single-pane-of-glass platforms
that can support delivering a single instance of
the truth; and multicloud operations that involves
deploying the same process (e.g., DevOps, CI/CD,
recovery), technologies, management approach (e.g.,
containers, APIs), and/or protocols and procedures
(e.g., security, compliance) across two or more
cloud IaaS providers (e.g., AWS, Google, Azure, IBM,
Alibaba). Additionally, the same respondents also
indicated that by consolidating IT spending (software,
hardware, services, and support) with the managed
SPs, they were able to achieve more predictability in
IT finances.
Source:
Market Analysis Perspective: Worldwide Managed Cloud Services,
2024 US51723224
IDC’s Managed Cloud View 2024: Survey Findings, Part 1 — Strategic
Factors Shaping Managed Multicloud Services, US52318424
Business and Technology Drivers for Managed Services, US51494124
Moving From Cost Arbitrage to Value
Arbitrage in Business Services
An MSP-led approach to business services creates
a comprehensive view of business operations,
enabling organizations to respond swiftly to issues
and bottlenecks, thereby improving decision-making.
According to IDC’s Worldwide and U.S. Business
Process Outsourcing Services Forecast, 2024–2028,
enterprise buyers are gravitating towards business
service providers that prioritize value arbitrage and
commitment to business outcomes rather than cost-
saving and labor arbitrage enabled by traditional
BPO providers. This value arbitrage encompasses
next-gen business process as a service (BPaaS), real-
time access to business data, the ability to optimize
operational costs through automation and pay-per-
use models, access to talent with expertise in specific
business functions, and enhanced security and
governance of processes.
Continue reading >
highly service-level agreement-driven, where
the customer leverages a third-party vendor for
their expertise in a specific domain. The vendor
delivers the service or product stipulated in each
contract. This is a capex model of investment
where the customer is responsible for the IT
investments and manages vendor relations.
• Partnership model: Managed service providers
(SPs) could manage and execute business
functions, own (or lease) cloud and application
infrastructure (e.g., licenses, compute, storage,
network) and offer pay-as-you-go services,
resulting in end-to-end, pay-as-you-go managed
IT and business services. Managed service
providers own the vendor relationships and
commitment for outcomes.
A managed service provider-led approach to
business and IT management shifts crucial roles of
vendor management, negotiations, service-level
agreement (SLA) tracking, and delivering outcomes
to the managed service provider and the customers
focus on their core businesses.
Managed Service Providers Go Beyond
“Keeping the Lights On”
IDC research shows that managed SPs have
now evolved to enable a broad set of IT and
business outcomes, beyond cost management.
A quarter of enterprises surveyed as part of the
IDC’s Worldwide Managed Services Survey 2023
indicated that managed SPs are instrumental in
simplifying and standardizing IT, utilizing a series
of key building blocks that include standardized
architectures, particularly across multiple clouds
and applications; centralizing consumption of IT via
the use of unified single-pane-of-glass platforms
that can support delivering a single instance of
the truth; and multicloud operations that involves
deploying the same process (e.g., DevOps, CI/CD,
recovery), technologies, management approach (e.g.,
containers, APIs), and/or protocols and procedures
(e.g., security, compliance) across two or more
cloud IaaS providers (e.g., AWS, Google, Azure, IBM,
Alibaba). Additionally, the same respondents also
indicated that by consolidating IT spending (software,
hardware, services, and support) with the managed
SPs, they were able to achieve more predictability in
IT finances.
Source:
Market Analysis Perspective: Worldwide Managed Cloud Services,
2024 US51723224
IDC’s Managed Cloud View 2024: Survey Findings, Part 1 — Strategic
Factors Shaping Managed Multicloud Services, US52318424
Business and Technology Drivers for Managed Services, US51494124
Moving From Cost Arbitrage to Value
Arbitrage in Business Services
An MSP-led approach to business services creates
a comprehensive view of business operations,
enabling organizations to respond swiftly to issues
and bottlenecks, thereby improving decision-making.
According to IDC’s Worldwide and U.S. Business
Process Outsourcing Services Forecast, 2024–2028,
enterprise buyers are gravitating towards business
service providers that prioritize value arbitrage and
commitment to business outcomes rather than cost-
saving and labor arbitrage enabled by traditional
BPO providers. This value arbitrage encompasses
next-gen business process as a service (BPaaS), real-
time access to business data, the ability to optimize
operational costs through automation and pay-per-
use models, access to talent with expertise in specific
business functions, and enhanced security and
governance of processes.
Continue reading >
Accelerate the Journey to Modern IT — Embracing a New Way to Manage and Consume Technology InvestmentsBefore deciding on a managed SP partner to run
your business and IT environments, organizations
must also evaluate if a managed SP-led approach is
right for their business. This could include a series
of assessments to check the current maturity of
the organization’s IT sourcing teams, the current
bandwidth of business stakeholders to negotiate
with technology providers, and most of all, internal
capabilities to manage the system design and
operations across technology stacks to deliver
business line-specific outcomes.
Some of the key characteristics of a next-gen
managed SP include:
• Well-rounded offerings to enable agility and
resiliency in IT: This includes ensuring availability
(e.g., application and infrastructure), backup and
recovery, security, speed of repatriation between
cloud and application environments, access to
IT resources, and the ability to switch technology
providers easily.
• Business transformation and change
management services: Strong consulting
expertise (functional and industry-led) and ability
to manage the change from technology upgrades
or modernization. Additionally, managed SPs
will use best practices to map IT investments to
business outcomes.
• Data-led approach to cost management and
process transformation: Enable the use of
business intelligence for process transformation
and data warehousing with the cloud, as well
as incorporate financial operations (FinOps) to
optimize cost management.
• Technology-led business process management:
Next-generation BPaaS platforms with built-in AI/
ML and RPA capabilities to improve operational
efficiency and improve visibility into end-to-
end processes and business flows with real-
time insights.
• Governance across complex IT landscapes: The
ability to effectively manage the complexity of
hybrid clouds and applications with a governance
structure (e.g., a centralized organization with
federated capabilities), tools (e.g., multicloud
and application management platform), and
advanced processes (e.g., DevOps, site reliability
engineering, and CI/CD), along with the ability to
automate and standardize hybrid IT environments.
• Assets and IP to enhance time to value:
Availability of OOB solutions to standardize
delivery and quicken time to value. This
encompasses IT assets to streamline
implementation activities and manage the entire
portfolio of the technology stack, as well as
business and industry-specific assets tailored
to optimize and reshape current processes for
efficiencies.
• Localization: Ability to bring global expertise
to local customers and service the client where
they operate.
Managed Service Providers (MSP’s) deliver “as-a-service” offerings across SAP Business
Suite and cloud product portfolio. SAP customers can access and consume fully managed
end-to-end services including transformation and deployment/migration, partners/providers’
own IP, and other solutions packaged with SAP cloud solutions – all through one subscription
and single point of contact from their trusted provider/partner.
Message from
the Sponsor
Learn more at
Produced by:
Info Snapshot, sponsored by SAP | January 2025 | IDC #AP249586X
IDC Custom Solutions produced this publication. This IDC material is licensed for external use and in no way does the use
or publication of IDC research indicate IDC’s endorsement of the sponsor’s or licensee’s products or strategies.
©2024 IDC. Reproduction is forbidden unless authorized. All rights reserved. CCPA @idc
idc.com
@idc
How Do You Identify the Right Managed Service Provider?
your business and IT environments, organizations
must also evaluate if a managed SP-led approach is
right for their business. This could include a series
of assessments to check the current maturity of
the organization’s IT sourcing teams, the current
bandwidth of business stakeholders to negotiate
with technology providers, and most of all, internal
capabilities to manage the system design and
operations across technology stacks to deliver
business line-specific outcomes.
Some of the key characteristics of a next-gen
managed SP include:
• Well-rounded offerings to enable agility and
resiliency in IT: This includes ensuring availability
(e.g., application and infrastructure), backup and
recovery, security, speed of repatriation between
cloud and application environments, access to
IT resources, and the ability to switch technology
providers easily.
• Business transformation and change
management services: Strong consulting
expertise (functional and industry-led) and ability
to manage the change from technology upgrades
or modernization. Additionally, managed SPs
will use best practices to map IT investments to
business outcomes.
• Data-led approach to cost management and
process transformation: Enable the use of
business intelligence for process transformation
and data warehousing with the cloud, as well
as incorporate financial operations (FinOps) to
optimize cost management.
• Technology-led business process management:
Next-generation BPaaS platforms with built-in AI/
ML and RPA capabilities to improve operational
efficiency and improve visibility into end-to-
end processes and business flows with real-
time insights.
• Governance across complex IT landscapes: The
ability to effectively manage the complexity of
hybrid clouds and applications with a governance
structure (e.g., a centralized organization with
federated capabilities), tools (e.g., multicloud
and application management platform), and
advanced processes (e.g., DevOps, site reliability
engineering, and CI/CD), along with the ability to
automate and standardize hybrid IT environments.
• Assets and IP to enhance time to value:
Availability of OOB solutions to standardize
delivery and quicken time to value. This
encompasses IT assets to streamline
implementation activities and manage the entire
portfolio of the technology stack, as well as
business and industry-specific assets tailored
to optimize and reshape current processes for
efficiencies.
• Localization: Ability to bring global expertise
to local customers and service the client where
they operate.
Managed Service Providers (MSP’s) deliver “as-a-service” offerings across SAP Business
Suite and cloud product portfolio. SAP customers can access and consume fully managed
end-to-end services including transformation and deployment/migration, partners/providers’
own IP, and other solutions packaged with SAP cloud solutions – all through one subscription
and single point of contact from their trusted provider/partner.
Message from
the Sponsor
Learn more at
Produced by:
Info Snapshot, sponsored by SAP | January 2025 | IDC #AP249586X
IDC Custom Solutions produced this publication. This IDC material is licensed for external use and in no way does the use
or publication of IDC research indicate IDC’s endorsement of the sponsor’s or licensee’s products or strategies.
©2024 IDC. Reproduction is forbidden unless authorized. All rights reserved. CCPA @idc
idc.com
@idc
How Do You Identify the Right Managed Service Provider?