What is Value-Added Service in IT?

What are Value-Added Services in IT? 

Value-added services (VAS) are supplementary features, enhancements, or offerings beyond core IT infrastructure and standard service delivery. Although these are not essential for your primary product or service to operate, they optimize efficiency, enhance business outcomes, and add additional value.

Value-added services include both technological and operational components that 

• Augment existing external services and internal services

• Improve business process efficiency

• Reduce operational overhead and technical debt

• Accelerate digital transformation

• Enhance post-purchase experience and productivity

• Reduce the time-to-market for new products or features

How about some examples?

Testing services are a critical value-added product. They help with bug detection, performance testing, and UX validation, to reduce production issues.

Managed services are perhaps the most transformative value add. With advanced monitoring and automation tools, these platforms enable proactive system vigilance, automatic updates, and rapid incident response. This frees up IT teams and removes the hassle of day-to-day maintenance.

Why Should IT Teams Care About Value-Added Services?

89% of large companies globally have digital transformation efforts underway. But the sad truth is only 31% have achieved the expected revenue lift.  

Among many others, a big reason for this is that they fail to provide additional value beyond their core services. And when ten other companies are offering the same thing as you, and probably even more, clients and customers will jump ship.

To a large extent, value-added services fill this gap and retain your clients. 

This need for value-added services is rooted in the messy ecosystem where internal IT teams struggle to manage every aspect of technology delivery in isolation. IT teams are constantly under pressure to deliver innovation while maintaining existing systems.

But how does value-added service benefit you in practice?

They reduce vendor complexity

Multiple vendors for your IT needs will inevitably lead to inefficiencies, misaligned priorities, and compliance risks. Instead, relying on a VAS provider gives you a broad portfolio of services under a single contract.

Instead of managing multiple contracts, Service Level Agreements (SLAs), and points of contact, you deal with one provider who manages everything from procurement to support. 

Providers often bundle hardware, software, and consulting—meaning better compatibility and less troubleshooting time. 

A single provider will offer economies of scale, and you’ll get discounts for bundled services and better budget predictability.

You benefit from maximized resource allocation

Routine IT tasks like system updates, patch management and Tier 1 support eat up a lot of time and resources for IT teams. You can offload all of these routine tasks to VAS providers so that your in-house staff can focus on high-value projects.

Many VAS providers even have specialists with niche expertise in areas like DevOps, AI/ML integration, or legacy system modernization. 

Will Venters from the London School of Economics chimes in on this: 

“Many industries have tight labor pools and a competitive market for finding and retaining good talent, which has motivated organizations to contract with managed service providers to supplement their in-house staff.”

They accelerate delivery times

With many VAS offerings, you get pre-built templates, automation scripts, and standardized workflows. You can start and execute projects significantly faster with the help of these. VAS also gives you scalable solutions without the overhead of long-term staffing, be it for a short-term project or for additional bandwidth during peak times.

Remember that with this outsourcing, there are also risks of data leakage, resource drain, and more. 

Rudy Hirschheim, an IT expert from Louisiana State University advises having “tight legal contracts, skilled internal talent to monitor these engagements, and provisions to ensure that data doesn’t fall into the wrong hands.”

Value-Added Services IT Teams Should Consider

• Software Testing

As a VAS, software testing is improving the quality, reliability, and efficiency of software products through systematics testing processes beyond defect detection. It turns testing from a necessary cost center to an activity that delivers measurable benefits to businesses and end-users.

Via KPMG 

If you're getting your software tested, it's mainly to identify defects early in the development cycle so that the final product meets user expectations and quality standards.

But how does this approach, also known as Testing as a Service (TaaS), differ from in-house testing? 

TaaS brings cost-effectiveness, scalability, flexibility, faster time-to-market, and access to expertise, while the only obvious benefits of traditional testing include better data security and more control over processes. 

Some common examples of software testing as a value-added service include:

• Test automation: Automating mundane tests increases efficiency and maintains accuracy.

• Regression testing: Checks that updates or changes do not introduce new defects.

• Performance testing: Validates that the software can handle expected workloads.

• Security testing: identifies vulnerabilities that hackers could attack.

• User acceptance testing (UAT): Confirms that the product meets end-user needs before release.

Now, let’s reverse roles. If you are a software manufacturing company, providing software testing as a value-added service makes perfect sense, as you already have a testing team. When you are not testing your in-house software or have the bandwidth for additional testing, offering testing as a VAS is the natural next step. 

It also earns you more average revenue and saves your existing clients from outsourcing testing to another firm. And since you are both developing and testing the software, the development cycle speeds up.

• Testing and adoption support

This one is a given if you want to differentiate your organization with better client satisfaction and ensure that your solutions are successful in the long run. In a nutshell, training and adoption support means happy clients, reduced resistance to new tech, better productivity, and minimal technical missteps. 

Most IT solutions have moderate to steep learning curves. Users can fully utilize these products' potential only when they understand their functionality. The problem is that even the most advanced solutions fail if users resist change or lack the confidence to use the tools.

Effective training and user adoption are the solution here. In fact, 72% of companies believe that proper user adoption is the most essential factor in realizing the value of their enterprise software. 

As a VAS, it usually involves customized training sessions ranging from basic software usage to high-level troubleshooting, onboarding assistance, advisory services, and ongoing support. For instance, if you rely on CRM software, the CRM provider will teach your team shortcuts and additional features.

• Managed services

Managed services refers to managing customers’ IT environments on an ongoing basis with standardized offerings that are governed by service-level agreements (SLAs). These services are designed just to handle business-critical functions that are essential to an organization’s operations.

As a VAS, Managed services are a step above your usual IT support. Here, the focus is on ongoing and proactive management rather than just reactive problem-solving. 

Managed service providers, or MSPs, like IBM, Accenture, and Cognizant add a layer on top of your basic services and turn them from “best-effort” offerings to reliable and skeletal solutions. In fact, most organizations pay a hefty premium for managed services, 20% to even 400% more than unmanaged services. This goes on to show what kind of value managed services provide you.

Okay, that’s all right, but how do you actually benefit? Here are the key value propositions:

• Complexity management 

MSPs take on the responsibility of managing your IT environments; they’ll handle end-to-end service management, including active monitoring, fault detection, and incident resolution. They are also responsible for updating systems, managing configurations, and ensuring service continuity.

• Business-critical app support

Specific providers also support many critical business functions in a range of industries. 

Hotel key-card computer systems that need 24/7 reliability, SAP modules controlling just-in-time manufacturing, data center operations for stock exchanges, flight control systems, and payment systems for retail operations all rely on MSPs for smooth functioning.

• Better operational reliability

Standardized SLAs and professional management naturally mean better than in-house service reliability. 

Via Arthur D Little 

For instance, while standard telecom operators generally offer a 99% to 99.5% uptime, that means somewhere between 3.6 to 1.8 days lost annually as downtime. In comparison, an MSP that offers telecommunication as a VAS might have 99.99% uptime, that just 53 minutes of downtime annually.

MSPs usually cover six product groups—enterprise networks, data center and cloud, equipment, security, applications, and voice and data. What does this mean for you? 

Instead of managing a long list of vendors and service interfaces, you receive cohesive service delivery across your entire tech stack. 

Apart from these, you also reduce capital expenditure by utilizing provider infrastructure.

• Staff augmentation

This one is for organizations looking for rapid access to specialized capabilities and for filling staff shortages in unexpected scenarios.

Staff augmentation is a temporary staffing model where you supplement your existing IT workforce by hiring contractors or external resources to fill specific skill gaps or handle increased workloads, typically on an hourly rate basis.

As a temporary solution, staff augmentation has a lot of upsides. The biggest advantage is that you can quickly scale your workforce up or down based on demand without incurring permanent hiring and firing costs. The cost model is transparent—usually based on hours worked—and the contracting process is straightforward. 

Moreover, you don’t need to make many changes to the organization's existing operating model.

Via CGI

However, we advise against relying on staff augmentation as a permanent operating model. Believe us, use this long-term, and it can actually destroy value rather than create it. Why?

First, higher labor costs, which include overhead and margin for contracting organizations, become a burden when the arrangement extends indefinitely. 

More concerning is the development of poor management practices—you tend to become less disciplined about resource planning since additional staff is easily accessible. This leads to gradual "staff creep" and an unofficial headcount often bypassing normal human resource governance.

Managed services are a much better VAS alternative to consider in the long run. Unlike staff augmentation's focus on "inputs" (hours worked), MSPs commit to delivering specific "outcomes" at defined prices.

Moreover, if you currently rely on staff augmentation, transitioning to a managed services model would realistically create economic and service value. 

As the MSP assumes delivery risk at a fixed cost, it incentivizes them to establish productivity measures, implement tools and processes, and maintain comprehensive documentation. This typically results in lower overall costs and more predictable service delivery.

• Integration services 

Last but not least, we have integration services. Gartner defines them as “detailed design and implementation services that link application functionality (custom software or package software) and/or data with each other or with the established or planned IT infrastructure.”

These services include project planning, project management, detailed design or implementation of application programming interfaces, web services, or middleware systems.

They help you create, maintain, and control bespoke integrations for the cloud-based systems and apps your organization relies on.

For instance, you might rely on Salesforce for CRM, SAP for ERP, Workday for HR, and other custom apps for specific business functions. Integration services will create frictionless data flows between these systems. They will ensure that customer data entered in Salesforce automatically updates relevant records in SAP, triggers appropriate workflows in custom applications, and maintains data consistency across the enterprise.

Cloud integration has become a highlight as organizations are moving towards hybrid and multi-cloud architectures.

The Other Side of The Coin: Downsides and Challenges 

Value-added services won't magically turn your organization to its optimal state unless you manage to stay clear of these challenges.

• Over-reliance on external providers for VAS introduces risks like limited control over service delivery timelines and vendor lock-in due to proprietary technologies or long-term contracts.

• VAS dependence makes you vulnerable to service interruptions caused by third-party issues like outages or compliance failures.

• One of the biggest hurdles you’ll face is justifying costs to stakeholders without clear, quantifiable benefits. Balancing short-term operational budgets with long-term benefits also becomes an issue.

• Many IT environments rely on legacy systems that are incompatible with modern tools or services. Integration hurdles also include incompatibility of APIs or data formats and complexity with hybrid environments.

• Resistance to change is a common barrier to successfully adopting new services. Usually, this is a signal of inadequate training or support for IT teams and end-users.

Metrics To Measure VAS Effectiveness

After adding VAS to your organization, the next sensible step is to quantify the impact of these services. These are some important markers:

Project delivery times

Measure reductions in time-to-completion for IT initiatives after implementing value-added services. Pay attention to the average time to deploy new applications or services.

Cost savings

Your finances get a huge boost with automation, outsourcing, or enhanced resource utilization. It's a great indicator of quantifying the costs you save from VAS. You'll also see savings in vendor management costs through optimized contracts or reduced dependency.

System reliability

Track system availability and performance improvements after deploying services like managed IT or enhanced monitoring. Important metrics include system uptime percentages (like achieving 99.99% uptime).

And reduced frequency and duration of system outages.

Adoption rates

Adoption rates help you determine how quickly employees and teams welcome new tools or processes. The number of active users vs. total potential users within specific timeframes is an important marker of how your services are performing.

Value-Added Services are the Next Big Thing for Your Organization

If you're a new company, value-added services are the logical next step to improve your service quality and internal processes. If you've been in the business for long, there's no better time to invest in value-added services. 

Regardless, there is a sea of options and providers out there. Come check out Workwize, if you need a world-class device lifecycle management solution to manage your IT assets from procurement to disposal and save your IT team a lot of valuable time.

Book a Workwize demo now.