Managed Services Contracts: Six Costly CIO Mistakes

Managed Services Contracts: Six Costly CIO Mistakes

It's time to turn the tables here on MSPmentor. Most of our blog entries focus on business tips and technology news for managed services providers. But what about the end-customer angle? What mistakes do CIOs and IT managers make when they're negotiating managed services contracts and MSP service level agreements? Here are some clues, courtesy of Logicalis Group, a global managed services specialist with offices in Farmington Hills, Michigan.

According to Logicalis Group, CIOs make the following six managed services mistakes:

1. Failing to Prioritize: Often companies fail to take the time necessary to correctly label the urgency classification for the devices they have under their managed services contract. Customers might have a high service level on a test/dev server that is unnecessary. Prioritizing infrastructure needs prevents this, helps customers purchase the right level of service for each device, and leaves customers protected, while potentially saving the customer money, Logicalis says.

2. Paying for What You Don’t Own: On a quarterly basis, CIOs should inventory of the devices their companies have under your managed services contract. Sometimes companies find they are paying to monitor devices that they no longer own. Accurate inventory practices will ensure CIOs pay for only the equipment that MSPs are managing, Logicalis says.

3. Ignoring Ticket Volumes: To decide the level of service a CIO needs for different areas of a business, the CIO should examine ticket volumes. Reviewing past tickets tells CIOs how much work it is to support each aspect of a company's infrastructure, taking the guesswork out of choosing an accurate service level to remain properly supported, Logicalis says.

4. Overpaying for Clustering: For CIOs that have a clustered environment, single incidents on one server most likely won’t affect end users. CIOs should advantage of this by maintaining a lower urgency classification on these servers, letting an investment in clustering technology work for the business to lower your management costs, Logicalis says.

5. Being Unprepared for Change:
Be aware of the volume of change requests associated with configuration items being managed and ensure that the contract supports them. If the business don’t have enough time within a monthly contract to support the volume or types of changes normal for the IT environment, the company will incur significant incremental costs, Logicalis warns.

6.   Missing the Fine Print:
Make sure the contract clearly states the incremental costs of adding or deleting configuration items covered by the contract so the business can predict costs if the environment shrinks or grows, Logicalis advises.

Marketing 101

Why would Logicalis publish a list like this? After all, the list gives CIOs some leverage and some insight when negotiating contracts and service level agreements (SLAs) with MSPs.

But that's precisely the point: By sharing some honest advice and publishing the top-six list, Logicalis is going viral across the web. And there's a good chance CIOs will spot the top-six list -- potentially opening the door for more customers to do business with Logicalis.

Not that the company is struggling for revenue: The Logicalis Group has annualized revenues in excess of $1 billion, from operations in the UK, US, Germany, Latin America and Asia Pacific, the company says.

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