Choosing a Managed IT Services Provider: 10 Key Questions

When businesses look to outsource some of their technology hosting and/or administration to an external managed IT services provider, they do so expecting significant operational and financial benefits. The extent to which those benefits are realized however, is largely dictated by the people and capabilities of the managed IT services provider they choose. After years in the managed IT services space, I’ve often been amazed at how cavalierly some businesses approach the process of selecting their IT service provider. Some managers seem to view the process as buying a pair of shoes, effectively saying, “We’ll give it a try and if it doesn’t work, we’ll try another outfit.” However, there are significant risks to this approach. Migrating a service, defining roles and procedures, and kicking off an outsourced IT service takes a significant up-front investment. Further, a service provider’s failures can present significant risks for an enterprise, including lost data, lost revenues and lost customers. That’s why taking the time before hand to thoroughly research prospective vendors is such a worthwhile investment. By eliminating the cost and headaches of a failed outsourcing relationship, and the time and effort required to start the process again, businesses will be in a much better position to maximize the benefits they’re looking for, and see the gains faster. The fact is there are a lot of IT outsource companies, some excellent, some not. Further, the right service provider for one business won’t be the best for another. To guide those in the process of searching for a new managed IT services provider, I’ve laid out a series of questions that businesses’ executives should ask prospective IT outsource companies.

Can I see your service catalog?

A managed IT services provider’s service catalog can say a lot about the vendor, and it’s a great first step in assessing whether a vendor’s a good fit. First, and most obviously, make sure the services outlined are a good fit for the IT service you’re looking to outsource. Next, the service catalog can provide a lot of insights into how formalized their service offerings are. For example, they should provide clear delineations as to what services and capabilities are provided. If different tiers are provided, it should be clear what you pay and what you get as you move up each tier. Looking at the service catalog can be an easy way to spot those service providers that are trying to be all things to all people—adding new capabilities in a reactive fashion to meet near-term sales objectives— rather than having an organization that’s been proven to deliver a given service effectively. Look for a service focus as a means to assess whether they’re really equipped to deliver on their commitments. That said, you may also want an IT service provider that can accommodate additional types of offerings in the future, so assessing the breadth of offerings, and how it maps to potential future needs, will also be important.

Do you have proven experience?

The last thing your business needs is to have a service provider that’s learning on the fly. You need an IT services provider that has direct, long-standing experience in the services you’ve decided to outsource. Have the folks in your business that have been relevant experience ask detailed questions, and ensure the answers they’re given speak to deep technical and operational expertise. Also, try to assess how and whether a service provider can meet longer term needs. While the crystal ball can be blurry for all of us, try to look at the emerging requirements, both from a technology and scalability standpoint. While it’s most important to find a fit that works now, the better an IT services provider can grow and adapt along with your business, the more value you’ll realize from the relationship over time.

 Who will our day-to-day contacts be?

We’ve all had this experience: Vendor representatives come in during the sales process and amaze everyone with their savvy and expertise. After the contract’s signed, those folks are never seen again, and you’re left with a junior team members still finding their way. This is particularly devastating in an IT service provider context, where success truly is about the people. It’s therefore essential to identify and interview the people who’ll be day-to-day contacts for account management and technical support. Treat it as a job interview and get a detailed understanding of their approach to communication, their experience and their makeup. Look for tenure, both with the service provider and within the market segment.

What kinds of migration services are provided?

Depending on the type of service being outsourced, migrating from an internal to externally sourced service can require significant effort. How much assistance does the IT services provider offer? What are the responsibilities of the business’ team and what will the vendor handle? What are typical lead times required until the service is fully deployed? What services are included in the overall service cost and what are one-time expenses? Getting clarity and honesty at this point can be vital in terms of expectation setting and can provide a lot of insight into the vendor. Look for vendors that approach this upfront process as the building of a long term relationship, rather than a one-time transaction.

How strong is your business?

To work with an IT services provider and enjoy value in the long term, long-term viability is key. To start, look at the numbers. Assess profits, operating cash flow, resource utilization, cash flow and long term debt. However, don’t rely solely on numbers. If the market meltdown of the past couple of years showed us anything, it’s that numbers, wherever you read them, can’t be trusted. Part of this requires a healthy skepticism. Do a vendor’s claims sound too good to be true? If so, they very well may be. Another key to viability is a track record. While, as any mutual fund prospectus will tell you, “past results are no guarantee of future performance,” a long track record is hard to beat. If they’ve made it through the past 5-10 years, they must be doing some things right. Finally, take a look at the customer base—does one customer represent lion’s share of revenues? In addition, look at how the customer base maps to your business. While you don’t necessarily want them to have your top competitors as clients, if they have experience with customers that are similar, whether in terms of size, industry, or business model, that background can be a strong selling point.

What’s in your data center?

Depending on the nature of the IT service being outsourced, the issues and concerns to focus on in this area can vary significantly. At a high level, it’s important to gauge the IT services provider’s sophistication. For example, if a high degree of performance and scalability is required, does the vendor’s infrastructure leverage virtualization to more efficiently handle traffic spikes? If you decide to have the vendor take on another service, how quickly can the additional capacity required be online? If reporting is important, how are reports generated? Manual reports compiled in Excel? Automated reports that provide easy customization? Automation, sophistication, agility are all keys to making service providers good at what they do, and a lot of that stems from the sophistication of the infrastructure they have in place.

 Can I tour your facilities?

If the answer to this question is no, start looking elsewhere. If a managed IT services provider doesn’t let you to see their facilities for yourself, they most likely have something to hide. While you can only tell so much from a tour of an IT service provider’s facility, you can get a good reading for the people and the way they’ve set their infrastructure up. While walking past a server rack won’t tell you whether their servers are patched correctly, or whether they’re running optimally, you can see what they’re running, whether they’re in a good, climate controlled environment and more. This can be a good time to verify security and availability measures as well.

Can I speak with five customer references?

Talking to a managed IT services provider’s customers is probably the most vital step of all. It’s a critical way to verify that the service provider’s answers to all your other questions are accurate and forthcoming. Does the customer attest to the company’s claims of being responsive to inquiries? Does the up time the customer has been seeing jibe with the commitments the vendor is making? Also, look at the tenure of the customer’s engagements. Here again, long track records are great to see. While ultimately you’re going to need to have trust in what these customer references are telling you, try to verify whether customers have an investment in the service provider’s business or otherwise have a stake in the vendor relationship that may influence their responses.

Do you outsource any parts of your infrastructure to other it service providers?

As prevalent as IT outsourcing is today, it can make perfect sense for an IT service provider to outsource part of their operations to an external provider. However, it is important to understand this up front. What you don’t want is to encounter an issue and start seeing finger pointing among various IT outsource companies. If a vendor does use external IT services providers, make sure your clear on accountability, escalation processes and commitments. Also, take a look at the vendor’s vendors, where are they located, what was the vetting process and how many years have they been working together.

Can I see your contracts and service level agreements?

Early on, try to assess the agreements you’d be getting into if you move forward with a new managed IT services provider. Get clarification on what obligations are. If, after a few weeks of signing up with the IT service provider, what happens if you want to terminate? What are acceptable grounds for termination? Will a refund be provided?

Also, look at what kind of service level agreements are in place. What kind of commitments do they make and what happens if service levels are missed? Here, beyond the specifics of the agreements, you can also infer a lot in terms of how the IT service provider stands behind their people and obligations. Once you’ve decided on an IT service provider, read the following section to get some pointers on structuring the relationship to optimize your IT outsourcing success.