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Managed-Service-as-Software: Leveraging AI for Scalable, High-Margin Service Delivery

Time for some Friday Big ideas, and I’ll explain why in the show close.

Information Week with “What You Can Learn from a Failed IT Project.”   When an IT project fails, it is important for IT leaders to view failure as a learning opportunity and to communicate and align with stakeholders. Understanding the reasons for failure can help identify areas for improvement and prevent similar mistakes in the future. IT leaders should create an environment that supports reflection, feedback, and necessary changes. It is crucial to be aligned with business strategy, have a solid change management plan, and adjust project management styles. Failure should be seen as an opportunity to learn, optimize processes, and drive innovation. Recognizing failures early allows for necessary adjustments and developing a continuous improvement culture.

I spotted a Substack with “The Managed-Service-as-Software (M-SaS) Startup.  The article introduces the concept of Managed-Service-as-Software (M-SaS) startups, where AI-powered services businesses can achieve high gross margins by using AI themselves instead of selling AI to customers. The article discusses transitioning from labor-intensive service delivery to technology-enhanced services with SaaS-like margins. It highlights the importance of automation and AI tooling in driving efficiency and scalability. The author suggests that startups can start with a labor-first approach, gradually reducing reliance on labor and increasing GPU utilization to improve margins and service delivery.

Which leads me to “Have we seen the end of the ‘true’ MSP?” in IT Pro.  The article discusses the transformation and growth of the managed services model over the past three decades. It explores the expanding range of IT solutions managed service providers (MSPs) offer and the strategic aspects of being a true MSP partner. The article also highlights the need for MSPs to continually innovate and adapt to meet customer expectations, navigate technological changes, and capitalize on growth opportunities. To thrive in an increasingly competitive market, MSPs should focus on talent acquisition, workforce skills development, automation, regulatory compliance, and providing expertise to help customers achieve their digital ambitions.

Finally, from State Scoop, “AI is beyond government control.” State governments are enacting laws and policies to regulate the potential harms of generative artificial intelligence (AI), but the rapidly evolving technology is proving to be beyond their control. Concerns about AI’s ability to amplify biases, spread misinformation, and disrupt work and personal life are validated by its presence in social media, software, and the physical world. Government officials acknowledge their dependence on vendors and the challenge of making ethical decisions regarding AI. States proactively govern AI with numerous bills, committees, and task forces, but the absence of comprehensive federal AI legislation leaves room for missed opportunities. The use of AI in government projects raises ethical considerations, and the challenge of cleaning and preparing data for AI models persists. Despite efforts by technology companies to address ethical concerns, the future of AI technologies remains beyond government control.

Why do we care?

Some points to make quickly.     

Managed Service As Software could be interpreted as automation to it’s natural conclusion.    It’s certainly something to consider, very much linked to the continuing evolution of IT services.  I spent some time on the Wednesday live show talking about this same evolution, with providers leaning into advanced skills and expertise.

Which is why the other two articles are useful – first, to learn from mistakes, and second, to identify where the services needs for private companies are, versus what will be defined by regulation.      I give you lots to ponder.