This month we are going to be talking about Applications Managed Services. It was the topic of the presentation we gave at the Microsoft Worldwide Partners Conference in Houston in July. The feedback we received indicated AMS is very much top-of-mind. If it's not, it should be. This is the next wonderfully profitable frontier for IT services firms targeting the small and mid-market space.
We are talking about Applications Managed Services and NOT Infrastructure Managed Services. The distinction between the two is akin to the distinction between the skeletal system (i.e. Infrastructure) and the circulatory, nervous, respiratory, etc organ systems (i.e. Applications) that make up the human anatomy.

As much as the organ systems are the lifeblood of the human anatomy, Applications are the lifeblood of the corporate anatomy. Keeping this lifeblood nourished, protected and maintained is where corporate America is throwing buckets of money. It's also one of the areas of the business mix that corporate executives are eager to outsource, and this spells opportunity for IT services firms that earn the right to this responsibility.

The numbers for the growth of Applications Managed Services are compelling. A benchmark study by the research firm Nemertes found that 63% of organizations in 2008 plan to use some form of managed services, up from 46% in 2007. The primary reasons, according to a study by Bell Canada, are shrinking IT and networking budgets (44%) and the growing complexity of IT and networking infrastructures (22%). The preferred solutions are outsourcing and managed services.

Outsourcing is the magical elixir that corporate executives have embraced, as it allows them to focus on doing what they do best by redirecting certain of their business functions to others to do what they do best.

Applications Managed Services is the magical elixir that IT services executives have to embrace to benefit from this trend. Being the best at Applications Managed Services is a surefire path to growth and profitability. In our June newsletter we revealed how IT services executives can become the best at what they do so they can win the trust and confidence of companies looking to outsource. In a word, it's specialization.

Doing this right is a boon for you and your clients. For you, it's the prospect of higher earnings through new revenue derived by having the specialized expertise that allows you to attract those companies whose benefit is higher earnings derived by reducing costs associated with practices not in their core competency.

So, how do IT services firms go about winning in Applications Managed Services? Read on, then please give me a call at 952-835-2333 or contact me at mharvath@revenuerocket.com.