Rethinking application managed services

We live in a time of rapid change. Fast-evolving enterprise technologies like cloud computing, data analytics, and artificial intelligence are becoming increasingly critical drivers of business success. And maintaining a competitive edge increasingly relies on speed, insight and responsiveness.

But what about the way companies actually run and manage their technologies day to day? In most large organizations, managed services relationships are the primary delivery mechanism for enterprise IT. It’s where mission-critical applications are turned into real experiences and real value for the business and its customers.

Too often, however, the expectations organizations have about their application managed services partnerships haven’t kept pace with the rest of enterprise IT.

The more things change...

Recently, I found myself reflecting on this point with seasoned veterans of application managed services—individuals with extensive experience procuring, selling, and delivering large multi-year client contracts.

As we looked back on the technological advances we’d seen over our careers, from the days of clunky Nokia phones to the rise of the iPhone generation, one thing stood out: The fundamentals of many managed services arrangements are still largely the same as they were 30 years ago.

There’s been innovation in delivery, of course. Companies have taken automation to unprecedented levels and driven up significant efficiency through offshoring. But many of these changes were made incrementally, by implementing new platforms, upgrading skills and evaluating technologies for adoption over a gradual process of evolution.

As the pace of change accelerates, however, the luxury of time has evaporated. And many of the traditional sources of cost efficiency are running out of road. At the same time, CIOs are under intensifying pressure not just to transform costs, but also to deliver unprecedented speed, agility and innovation. They need to align with new business objectives, improve observability across complex hybrid environments, and unlock the full potential of their technology investments, while also keeping their IT workforces upskilled and relevant.

It’s not an easy task. Especially when you need to run new and legacy technologies in tandem. In a typical large organization like a bank, for example, we often see IT teams spending around 70% of their time on traditional “run” activities, and just 30% on change. In fact, companies should be aiming for the complete opposite, spending the vast majority of their effort on driving change.

New sources of value

This is why we believe it’s time to think differently about application managed services. To use an old industry adage, it can’t simply be about “your mess for less” any longer. We need to be aiming for much “less mess” overall. And much more speed and innovation.

That means working with managed services partners who can not only deliver the traditional focus on cost efficiency, but also open up other essential new sources of value that address efficiency and effectiveness. There are three key sources of value to consider:

• Hybrid environments provide a modern technology foundation that integrates infrastructure, security and applications. This means the opportunity exists to deliver “IT as a Service,” creating significant efficiency and also the ability to scale and build applications faster.
  
  
• Continuous reinvention of applications allows companies to modernize the enterprise stack, minimize technology debt, and ensure IT keeps pace with evolving business needs. This can be combined with new ways of working that significantly increase the capacity of existing resources.
  
  
• Leveraging the latest era-defining technologies like generative AI allows companies to radically enhance productivity and drive innovation across the technology development lifecycle.

Run to New

At Accenture, we believe these broader sources of value should now be the baseline expectation for any managed services partnership. And we’ve designed our application managed services offering to help companies capture them.

Our flexible “Run to New” approach recognizes there’s no one-size-fits-all solution to today’s IT challenges. It’s important to assess the organization’s current state of maturity and have a realistic roadmap to pivot to an agile and highly productive IT delivery ecosystem. With this in mind, our approach is built around six core building blocks:

1. Technology foundation. Enabling the organization to integrate infrastructure, applications, security and data in an agile digital core.
   
   
2. AI automation. Institutionalizing generative AI across the technology development lifecycle, building on existing automation tools and AI solutions.
   
   
3. Continuous reinvention. Reinventing the way companies build software, focusing on simplification and modernization to create a platform for growth.
   
   
4. Service experience. Measuring success through outcome-focused KPIs that align with the priorities of the business, not just IT.
   
   
5. Observability. Enhancing security, availability and reliability by providing holistic, data-driven insights into how all the components of complex hybrid systems work together.
   
   
6. Talent. Helping organizations not only fill their skills gaps but also upskill their own people for the needs of today.

The key point is that, having invested so heavily in new technologies in recent years, CIOs and CTOs are under greater pressure to realize tangible returns and deliver opportunities for innovation.

Application managed services are a key piece of that puzzle. By leveraging partnerships focused on new sources of value, companies can not only deliver operational efficiency but also create a platform for sustainable growth and innovation.