Application Managed Services (AMS): How Companies of Any Size Can Benefit From It

Applications have become common place in everyday life. Companies of all sizes use a variety of applications daily to conduct business. In most cases, they make life easier for users. However, as the capabilities and subsequent complexity of applications have increased, so has the strain on IT teams. IT teams are expected to continuously maintain and monitor a multitude of business applications. When issues arise, IT is relied on to fix them and get business back up and running with minimal disruption. To keep up with the demand, IT teams need to continue to grow or outsource some processes. This is where application managed services come in.    

What is application managed services (or application management)?

Application managed services (AMS)—also known as application management or IT managed services (ITMS)—is the proactive maintenance and monitoring of a companies’ applications provided by an external service provider. Simply put, application management is when a company outsources the ongoing maintenance of one or more applications to a provider that specializes in that application. According to a report by Allied Market Research, the global AMS market was $17M+ in 2020 and is projected to reach nearly $95M by 2030.  

Most companies are familiar with time and materials (T&M) contracts, where they pay a provider for a specific set of tasks. Companies can get support from a provider for an application using a T&M contract, but it’s not necessarily the best long-term approach. Over time, T&M contracts can cost more than AMS depending on how often support is required and the scope of each project. Additionally, T&M is always reactionary, where the client must bring the problem to the provider. With AMS, the scenario is flipped; the provider notifies the client of the issue and often has a resolution before the client even knows there is a problem.

Smaller companies can benefit from application managed services, too

Many companies think AMS is only for large, complex companies with a vast application portfolio. While AMS was first widely adopted in the enterprise market, and many enterprise companies rely on AMS to keep their applications running smoothly, AMS is still affordable and beneficial to smaller companies. Here’s how it can help your company:

#1 Augment Internal IT Resources

Arguably one of the most important benefits of AMS for smaller companies is staff augmentation. IT teams are often overwhelmed and the continuous push for digital transformation is only increasing their workload. Additionally, with the added pressure of “the great resignation” and the increased labor shortage, skilled talent is becoming harder to attract and retain. AMS is a great way to offset the workload for your current resources and avoid adding additional headcounts that can drive up operational expenses.

#2 Minimize Downtime

Downtime can be detrimental and expensive. In a smaller company, if a critical system goes down or an application breaks, internal IT resources might not have the bandwidth or expertise to quickly resolve the issue. The longer the application is down, the greater the risk to the business. Additionally, IT must shift their focus and potentially put off other time-sensitive or important projects. AMS is a reliable, cost-effective way to ensure your critical applications are available when you need them.

#3 Predict Costs and Save on IT Expenses

Cost predictability is vitally important for smaller companies. AMS helps avoid unexpected costs because you will already have a plan and service level agreement in place with your provider. Additionally, companies that invest in AMS can save on IT expenses due to increased scalability. Rather than growing your internal IT team and adding resources, it’s up to the provider to ensure they can handle the bandwidth. Overall, AMS makes budgeting easy and helps avoid unforeseen expenses.

#4 Increase User Productivity and Satisfaction

End users are typically not the same individuals managing the application or with a technical skill set. Users want to be able to easily do their work without disruptions. There is nothing more frustrating to users than system issues that prevent them from doing their job. AMS ensures applications are running efficiently, which leads to increased user productivity and satisfaction.

#5 Gain Peace of Mind

Lastly, AMS gives companies peace of mind knowing that their applications will be available when they need. Companies can rely on their AMS provider to proactively notify them and resolve issues before it’s known to the users. Additionally, if an issue arises that is going to disrupt business, the AMS provider will communicate a resolution plan and timeline.

Microsoft Application Managed Services

As a Microsoft user, you may be wondering if AMS applies to your situation. The simple answer is, yes. Whether you are on an on-premises or software as a subscription (SaaS) version, AMS is still critical to keep your system running smoothly.

For Dynamics 365 Business Central (BC) SaaS users, the answer becomes a little more complicated. With a BC SaaS plan, Microsoft manages some aspects of your application but not all.

Microsoft Manages the Following for BC SaaS Users:

• Backups and recovery
• Performance monitoring for all databases
• Notification of upgrade availability
• Automatic upgrade scheduling  
• Notification of system outages
• Audit history of all applications installed  
• Database size and capacity monitoring

Microsoft Does Not Manage the Following for BC SaaS Users:

Microsoft does not manage any breaking changes from new releases for obsolete code or customizations. Microsoft will identify the break but it’s up to your IT team to fix the issue and get your system back up and running. Additionally, Microsoft will not do any testing for new releases but will run any automated tests you have set up. That may not seem like a lot to manage but breaking changes from releases can have a big impact on the workload of your IT team and the productivity of your users. Every company big or small, should consider AMS to augment your internal IT capabilities.

Interested in learning more? Talk to a BC SaaS expert to learn if application managed services are right for your company. Contact us today!

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