• United States
Managing Director, TC2(UK)

How to navigate the co-management conundrum in MSP engagements

Jun 19, 20237 mins

Enterprise IT teams and MSPs need to iron out the right approach to co-management. Here’s how to make it work.

tech workers in data center outsourcing

Co-management is a key part of many arrangements between enterprise IT teams and their managed service providers (MSP), but it’s not always clear where the management boundaries and overlaps exist and how they should be handled.

Oftentimes, enterprises land on a co-management approach because they don’t want to give up total control, and the MSP may be promising productive cooperation with prospective customers to provide reassurance and close the deal. In practice, co-managed technology services can vary widely depending on the type of services being offered and the parties involved.

For the sake of this article, let’s assume that enterprises are already committed to outsourcing some elements of their IT and communications services to an MSP partner. The benefits of outsourcing – such as expense or headcount reduction, increased expertise, improved productivity, core business focus and enhanced capability – are well established, and the potential risks and concerns – including loss of control, reduced flexibility, dwindling internal expertise and fears about data protection and ownership – are also well known.

What’s relevant is that these benefits and concerns often influence the level co-management that might be the best fit for a particular enterprise and MSP partnership.

For starters, there must always some level of co-management in the relationship to successfully deliver the applicable services. As a minimum, the client needs an effective contractual framework (and some assigned people) to allow monitoring, feedback, and control levers to keep the service provision commercially and operationally on track. Without these, the enterprise will be left exposed to the potential degradation of MSP service provision over time, and vulnerable to cost increases or scope gaps.

But this isn’t what many people think of when co-management is raised. So, what are the factors that an enterprise should consider in trying to strike the right balance in terms of more hands-on co-management with its MSP partners?

Transformation requires hands-on involvement

First, you cannot expect an MSP partner to drive the transformation of your IT and communications services on its own; they rarely have the awareness and or quite the same focus on the customer business objectives and target outcomes for the transformation. It is essential that an enterprise keeps enough expert resources in the mix to maximize the chances of the right outcomes. That is not just technical specialists but at least one or two technology-aware individuals with a more strategic perspective.

Transformation is hard to outsource. Enterprises should expect to provide the strategic vision, additional energy and drive, and regular checking of alignment with business needs to a transformation. To do this, an enterprise team must be engaged with the MSP’s activities, and have the right skills to help validate decisions, review progress, engage in problem solving and ensure that actions are properly aligned with the businesses’ imperatives.

Hands-off transformation leads to frustration and under achievement. Moreover, transformation isn’t a one-and-done activity. Think of it as a journey where you have a capable MSP crew, but you need some of the officers, some key roles, and the captain (or at least a first officer) to be from the enterprise team to help keep the ship sailing in the right direction and at the right speed. It’s the same principle for smaller programs and projects within a more established technology environment and outsourced service delivery arrangement.

Cooperative vs. transactional approach to co-management

Ironically, enterprises can often suppress innovation by using MSPs transactionally. If the enterprise team has active roles in the delivery of services, it can help mitigate against thinking transactionally and foster a more cooperative style from both parties.

If the enterprise team behaves transactionally, because they don’t work alongside the MSP but focus only on inputs and outputs or reported results, then, eventually, the MSP team can also tend to behave more transactionally. This places an unwanted governor on good ideas and flexibility from within the established collective resources. This doesn’t mean that there isn’t the need to have a robust management framework, including a statement of work (SOW) where commitments are clearly articulated. However, even if obligations are ultimately with the MSP, co-management of some of the task inputs or signoffs under a SOW can sometimes lead to more pragmatic, dispute-avoiding working practices.

Plan for enterprise roles to be involved in service delivery

For bigger outsource deals, some of the enterprise resources may transfer to the MSP team. At least for a time, in some instances a very long time, this can reduce the need for co-management as some of the MSP retains a strong affiliation with its former employer. That said, this is not always the case.

However, it’s shortsighted to hope that this will appropriately protect the enterprise’s interests. A better approach is to keep some of those internal resources and build them into co-managed service delivery from the outset. Trying to do this later, when you have given up key roles and responsibilities and/or would need to renegotiate a lengthy contract SOW, is much harder to do.

Some enterprises have experienced disputes or poor performance with MSPs that has led them to reestablish internal resources, or, because the relationship hasn’t worked, seek a new MSP partner. Either route can be more painful, and costly, than planning for enterprise roles in the service delivery from the outset.

Consider MSP hiring and retention challenges

MSP employee recruitment and retention can also be a material consideration. How much of a consideration can depend on the level of on-shore versus off-shore resourcing in the support model and the labor-market forces at play in the regions where the support and services teams (including lower-level first line resources and more skilled and experienced individuals) are based.

Co-management decisions can be influenced by these factors. For example, retaining a few internal experienced enterprise network managers or IT experts can pay huge dividends for the formulation and oversight of projects. They’re also critical in terms of having a knowledgeable eye on the effectiveness of operations and, ultimately, the impact on service delivery from an end-user perspective.

Equally, undertaking volume or low-level tasks doesn’t bring such benefits and should be left the provider. Additionally, it might be sensible to seek at least some level of time-zone or skill-set matchups between some internal roles and the MSP. When respect and rapport is established between competent MSP and customer team members, it can be a force for good.

Plan for changes, refinements and reviews

So, how best to solve the co-management conundrum?

First, note that the performance pendulum swings over the life of a service delivery contract. Build in some flexibility to deal with change, both on the MSP’s funding side and also for potential staff augmentation arrangements to address gaps and temporary shortfalls in staffing resources either on the MSP or enterprise side.

Plan to have a progressive implementation over an extended period to refine the co-management boundaries and processes, so even if your end-state desire is a very skinny internal organization, the enterprise can incrementally validate the MSP’s performance against your expectations before losing your internal resource, and the MSP has an opportunity the adapt to resolve any deficiencies.

Engage in dialogue on the operational processes prior to contract finalization (and even during MSP selection) on where enterprise resource can most effectively team with the MSP resource. Typically, this means identifying the enterprise’s most valued and competent staff assets and mapping those against what the MSP will and won’t be doing. Sometimes, there is a blurring between knowing the history and being the most competent resource going forward, so the identification and review of internal resource should still be with a critical eye.

To establish rapport, the best way is to ensure everyone has roles and that the customer is not just undertaking a checking and oversight role. Certainly, that’s part of the job but, in the end, co-management also means having collective skin in the game in some of the decisions and solution development for projects and the day-to-day service delivery.

Managing Director, TC2(UK)

Based in London but working globally, Mark Sheard is part of TechCaliber Consulting, LLC, a global IT and telecom consultancy headquartered in Washington, D.C. that advises the world's largest companies on transformational strategies for reducing their costs for telecom and IT products and services.

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