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The failing relationship between IT departments and service providers

By Catherine Knowles, Thu 14 May 2015
FYI, this story is more than a year old

There is significant misalignment between what services IT departments want and what IT service providers are selling, according to LogicNow's Global IT Service Providers Harmony Report.

LogicNow surveyed more than 1,300 IT departments and almost 700 IT service providers across eight geographies, including Australia and New Zealand.

One of the key findings is that IT Service Providers' offerings are failing to match IT departments' priorities.

The research showed that IT departments initially reach out to IT service providers to help tackle an immediate, business-critical need.

However, in response, many IT service providers immediately try to offer a wider, more consultative service and prioritise this instead of addressing the immediate requirement.

Considering IT departments rank the provision of CIO consultancy at the very bottom of their priorities, this is an area of huge potential frustration for IT service providers’ customers, according to LogicNow.

Furthermore, the research found a substantial disconnect between how IT service providers and IT departments think their relationship should evolve.

For instance, 64% of IT service providers were keen for their customer relationships to move towards greater strategic consultancy and were keen to offer wider, more diverse knowledge-based services.

However, only 13% of IT departments felt the same, with the remainder split evenly between wanting no change at all, and wanting more focus on tactical, technical IT support instead. 

ANZ is a clear reflection of this disconnect, with 62% of CIO respondents stating they do not want their existing IT service provider relationships to change, but 73% of MSP respondents saying they would like the opportunity to provide greater strategic consultancy.

When asked where managed security offerings should improve, IT departments said they are most keen to see better email security, better web protection, and better anti-virus.

IT service providers, on the other hand, said they are planning on prioritising security consultancy and offering more proactive system updates and patching.

At 76%, nearly all IT departments want to pay for Managed Security Services with a single invoice on either a monthly, quarterly or annual basis that combines all charges.

Yet 49% of IT Service Providers are invoicing for every technology individually, or on an ad-hoc basis. On top of this, 66% are not planning to change their invoicing processes in the next 12 months.

Alistair Forbes, LogicNow general manager, says, “Despite the apparent discord, there are positives that emerge from the research.

“The market opportunity for managed services remains buoyant. Every researched country showed a strong appetite for outsourcing IT, and that service providers have a strong track record of closing managed services deals.”

“The issue is the risk of getting the relationship off on the wrong foot and ultimately the amount of potential profit being left ‘on the table’ by the mismatch between the priorities of service providers and IT departments.

“Fortunately, the solution to this problem is entirely within the service providers’ control.

"A closer match between the needs expressed by their clients and the way in which they position their services will lead to stronger and ultimately longer-lasting and more profitable business for them,” he says.

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