Shared Services vs. Managed Services: What’s the Difference?

from the size of your company to the skills of the personnel who are working for your business.

Typically, there are only two options in information technology (IT) when it comes to service types: shared services vs. managed services.

What is a Shared Service Model?

Shared services is a business model that allows resources to be leveraged across an organization, which results in lower costs with customer service levels that were agreed upon. It is a separate business unit created to deliver a variety of services to both the corporate functions and operating business units.

The shared service model was created around the goal to allow each business division to concentrate its limited resources on the activities that support the division’s business goals.

What are the Benefits of a Shared Service Model?

There are several benefits of a shared services model, including the following:

  • Cost EfficiencyBack-office operations are centralized that are used by multiple divisions of the same company and eliminate redundancy
  • CulturePeople with the skill and mindset to optimize the model beyond the back-office
  • Decision Support  Data analyzed and delivered as reliable and actionable information
  • ScalabilityThe shared services model can be scaled for both acquisition/geographic and service scope expansion with a relatively low additional cost
  • Free to FocusOperating units will be free to focus on their operations and external customers because of the reliance on the shared services model for support

What is a Managed Services Model?

A managed services model, also known as a fully outsourced model, is a distinct kind of outsourcing that covers all IT functions. In a managed services model, the provider takes over all the technology decisions as long as the decisions are within the parameters that the business has set. The only significant role the business has in the managed services model is to review the processes.

The managed IT service provider is a company that works remotely to manage their customer’s IT infrastructure and/or end-user systems. This is usually done on a proactive basis and attached to a subscription model.

What are the Benefits of a Managed Services Model?

There are numerous benefits of a managed services model, including the following four below:

  • Risk Reduction In a managed services model, the managed IT service provider takes all the risks. This means that if technology is damaged in any way, the provider is the one that is responsible to repair it.
  • Fixed Cost This refers to a month-to-month payments that will never fluctuate so a business is able to know precisely how much it will need to budget for its IT.
  • Knowledge Retention – Since the company’s IT department is run by an outsourced vendor, there is no employee turnover. Also, the managed IT services provider will keep the information about your company on file and the expertise that company has gained through its clients.
  • Focus on Core Business – The managed services model will free up the rest of your employees from any IT concerns and will scale out any processes that are not helping the company reach its goals.

The managed services model is one that Dynamix Solutions knows extremely well. As a managed IT service provider, we help to streamline IT departments and increase overall efficiency for numerous companies.

If you think that the managed services model beats shared services in the shared services vs. managed services comparison, contact us today!

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