When maximizing productivity and minimizing expenses, companies prioritize efficiency, cost-effectiveness, and smooth operations. Businesses frequently adopt specialized service models like managed and shared services to accomplish these objectives. These strategies simplify procedures, boost efficiency, and enable organizations to concentrate on their primary strengths.
Nonetheless, grasping the disparities between managed services vs shared services is essential for making well-informed choices about which model best aligns with individual business requirements. There are dedicated managed IT services models that businesses can outsource to achieve excellent results in business operations.
This blog will explain the key differences between managed services and shared services and help you select the best and most unique solutions faster according to your operating business processes.
An Overview and Defining Managed Services
Managed services involve delegating everyday managerial duties and tasks to an external entity as a strategic approach to enhancing operations and reducing costs. In this setup, a third-party provider, such as a managed IT services provider, oversees and provides a specific range of services to the customer. These services may cover diverse domains such as information technology infrastructure, network protection, cloud services, and additional areas crucial for business functioning.
Services are usually delivered through subscription plans or payment schemes based on usage. The benefits of adopting a managed services approach include IT support services, efficient supervision of IT setups, enhanced control over potential risks, consistent cost projections, and the capacity to focus on fundamental business strategies and goals. This unique model enables businesses to maintain a streamlined IT infrastructure while mitigating risks, ensuring financial predictability, and prioritizing core business endeavors.
Primary Characteristics of Managed Services
Outsourcing Benefits
Managed services entail delegating specific tasks or functions to a specialized provider outside the company, enabling the client to benefit from the skills and knowledge of external professionals. By outsourcing, businesses can access specialized expertise without hiring and training internal staff.
Proactive Management
A Managed IT services provider commonly employs proactive monitoring and maintenance techniques to anticipate and prevent issues before they occur. This proactive approach ensures that systems run smoothly, minimizing downtime and maximizing reliability for the client.
Service Level Agreements (SLAs)
Agreements between the client and the IT support services provider detail the terms, expectations, and performance benchmarks for the services provided. These contracts establish clear accountability and transparency, ensuring both parties understand their responsibilities and obligations.
Scalability
Managed services offer the flexibility to scale up or down according to changing business needs without requiring significant upfront investments. This scalability allows businesses to adapt their service levels as demand fluctuates, ensuring they have the resources they need while maintaining financial stability.
Cost Predictability
Clients typically pay a fixed monthly or annual fee for managed services, which provides predictable costs and eliminates unexpected expenses associated with managing systems in-house. This predictable pricing structure allows businesses to budget more effectively and avoid sudden financial surprises.
After knowing the characteristics of managed services, you can learn the difference between managed IT and co-managed IT services.
An Overview And Defining Shared Services
Conversely, shared services are managed IT services models that combine typical business functions or processes from various departments or divisions within a company into a single centralized service unit. Unlike outsourcing to external providers, shared services streamline resources internally, enhancing efficiency and minimizing redundant efforts throughout the organization. This consolidation approach enables better coordination and utilization of resources, leading to improved productivity and cost-effectiveness.
This model offers various advantages, including centralizing back-end operations, enhancing cost-effectiveness, enabling better IT decision-making, improving scalability, and providing the freedom to focus on the primary goals of the core business.
Primary Characteristics of the Shared Services Model
Centralization
Shared services concentrate repetitive functions or tasks into one central unit within the organization, eliminating isolated operations and encouraging teamwork across departments. By centralizing these activities, companies can streamline workflows and enhance communication and cooperation among different parts of the organization.
Standardization
Implementing uniform processes and protocols across various departments ensures consistency, enhances quality, and simplifies the integration of technologies and best practices. This standardization promotes efficiency and reduces confusion by establishing clear guidelines and procedures that everyone follows.
Cost Allocation
Shared services is a managed IT services model that typically distributes the expenses associated with their operations among the departments or divisions utilizing their services. This unique method allows for more effective cost management and budgeting, as each department only bears the portion of costs relevant to their usage of shared services.
Service Catalog
Shared service units often maintain a catalog detailing the services they offer, associated fees, service levels, and contact information for assistance. This catalog serves as a reference point for departments seeking specific services and aids in understanding the available resources and their associated costs.
Internal Customers
Departments or divisions act as internal clients, accessing shared services based on their needs and requirements. This customer-provider dynamic ensures that shared services are tailored to meet the diverse needs of different parts of the organization, fostering collaboration and efficiency.
By knowing the characteristics of shared services, you can save money by outsourcing major business services to managed IT services for increased productivity.
Key Differences Between Managed Services and Shared Services
While both managed services and shared services share the goal of enhancing efficiency and reducing expenses, they diverge in several primary aspects.
Scope of Services
Managed services typically involves hiring external providers, such as a managed IT services provider, to handle specific tasks or functions.
In contrast, shared services consolidate routine business operations within the organization. It means that managed services involve seeking expertise from outside the company, whereas shared services streamline operations within the company's organization.
Ownership and Control
In managed services, the service provider controls and owns the outsourced functions, whereas the organization manages shared services internally. This implies that with managed services, the external provider takes responsibility for the tasks they are contracted to handle, while with shared services, the organization retains control over its operations.
Flexibility and Customization
Managed services offer businesses more freedom to adjust and customize services according to their specific needs, unlike shared services, which are generally standardized and may offer less flexibility. It means managed services can be tailored to meet each client's unique requirements, while shared services may have more rigid structures.
Cost Structure
Managed services typically follow a subscription-based or fixed-fee model, ensuring clients clearly understand their expenses.
In contrast, shared services often distribute costs among internal departments based on usage, leading to potential fluctuations over time. This indicates that managed services provide more predictable costs, whereas shared services may involve varying expenses depending on usage.
Responsiveness and Accountability
Managed IT service providers are contractually obligated to meet specific service levels and performance metrics outlined in SLAs, ensuring they remain accountable and responsive to client needs.
On the other hand, shared services rely on internal governance structures for oversight and accountability, meaning that accountability within shared services is managed internally rather than through external contracts.
Get Expert Advice Regarding the Selection Between Managed Services vs Shared Services
Both managed and shared services are beneficial approaches to improving business operations. Yet, they address separate objectives and accommodate different organizational demands. By comprehending the disparities between these service models, like managed services vs shared services, and seamlessly evaluating your business needs, you can make knowledgeable selections that promote efficiency, creativity, and expansion.
Whether you choose managed services or shared services, the overarching aim remains unchanged: to boost operational effectiveness, minimize expenses, and empower your organization to concentrate on its fundamental strengths within a competitive business environment.
Suppose you are a business that requires a robust IT infrastructure and managed IT services. You can contact IT consulting firms that provide customizable solutions for your business needs.
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