In my role selling professional consulting services and IT solutions to Fortune 500 customers, I see a variety of support models ranging from simple staff augmentation to large-scale managed services contracts. Although best practices across multiple industries over the last 10 years has seen a gradual migration away from staff augmentation towards managed services, I still see push back for various logical (and illogical) reasons.
What if there was a intermediate step between staff-aug and managed services? Fortunately, there is such a step called “Managed Capacity.” This support model combines many of the perceived benefits of staff augmentation (flexibility, onboarding consultants quickly) with the benefits of managed services (vendor takes on responsibilities for deliverables, outcomes, and management of resources). We still recommend that clients start on the path to managed services, but we have seen the best outcomes when customers start with managed capacity to get accustomed to an outcome-based support model, then move to managed services with all of the enterprise advantages that it brings. Here are the 5 signs you are ready and should move from staff augmentation to managed capacity.
- Reason #1: You are seeing budget constraints from unplanned staffing or project costs.
Every organization experiences unplanned costs due to staffing, projects, or changes in direction / strategy. Unfortunately, the easiest (and costliest) way to deal with this is to throw more bodies at the issue through staffing. In my experience, we have helped clients work through these issues via managed capacity where we take on the burden of managing deliverables, outcomes, and time/cost tracking.
- Reason #2: You aren’t seeing the project outcomes / progress that you expect from your vendors.
No enterprise project portfolio is perfect and issues / failures do happen. However, if you are seeing a pattern of delays, quality issues, and/or project failures, then maybe the delivery model needs to be adjusted. One question I get from customers is “How would managed capacity help with project delays/failures?” One way in which managed capacity helps is the focus on delivery of required skills to get the project done and not just a “butt in a seat.” Secondly, customers get predictable and cost-effective outcomes. Third and most importantly, customers get active knowledge management that is retained and shared across the customer and project teams, reducing the risk of valuable IC leaving the if there is staff turnover.
- Reason #3: You constantly need to ramp teams up and down quickly for new projects or initiatives.
Projects are one of the core elements of an enterprise and ideally, you would only work on planned projects on a carefully crafted roadmap. However, anyone that spent any time on a medium-to-large organization call attest that this is not always possible due to competing priorities, internal politics, and sometime just dumb luck. This is where managed capacity can help manage the shock of fluctuating project needs by outsourcing the overhead and maintenance of staff capacity to an external vendor with the experience and track record of outcome-based delivery.
- Reason #4: You are working on new, complex projects requiring specialized skills.
Many projects that enterprises undertake are pretty routine and straightforward (maintenance, enhancements, etc.). However, in order to stay competitive, organizations must innovate with complex projects requiring specialized skills such as new application development, data migration, cloud migration, or new strategy development. Managed Capacity allows us to support a range of skills with minimal risk to the customer. We take on the staffing, deliverable, and outcome risks of complex projects where there many “unknown unknowns.”
- Reason #5: You are facing new threats (internal and external) and need your project teams to be more efficient and effective.
There are always new threats to your organization (both internal and external) that you need to address and overcome on a daily basis. How you take on these threats can affect your success or failure in the short-, medium-, and long-term. If you go with a pure staffing model, you will get the ramp up in bodies, but what is the guarantee that you will have the staff you need in the right place at the right time? With new pressures from large enterprises, SMBs and startups, the ability to deliver better outcomes at a lower overall cost could be the key to your organization keeping into advantages and the key to your individual success as a manager or executive.
If you are interested in learning more about managed capacity or managed services, feel free to contact me in the comments or on LinkedIn.