Twenty years ago, IT Outsourcing was only affordable to Fortune 1000 companies. The work involved replicating mostly mainframe systems, documenting processes, and even hiring full-time employees. Discipline was strict and financial discipline, in particular, was paramount. Service levels were defined and measured, sometimes for the very first time. Changes to the contract involved a change in price and were not taken lightly. Those that were brave enough to take on outsourcing knew that it might take months for the service to "smooth itself out" after the migration to the outsource provider, so patience was the order of the day. In the beginning, Unix systems were difficult to define/price and Wintel systems, outside of desktop support, were a crap shoot when it came to pricing outcomes.
Outsourcing 2.0 or Managed Services benefits from this history. Today, we know a lot more about service levels-SLA's versus OLA's. Good contracts have metrics and some contracts should have "teeth". Today's MSP has better tools for managing those systems - rules can automate and experts are deployed much more efficiently - only when needed and for shorter periods of time. Pricing is easier as a single engineer can manage 50, 100, 200 or more systems. But the best part is that the benefits of Managed Services can be had by any size company.
"Managed Services" has leapt over "Cloud" as the most demanding topic
Managed Services has leapt over Cloud as the topic most demanding of the CIO's attention. Managed Services is significantly more relevant to your needs than Cloud in all its forms (private, hybrid, public) because Managed Services doesn't require Cloud. Most of the time, pricing improves when Managed Services are layered on top of a Cloud-based solution, but don't start with Cloud before pricing Managed Services.
Your Managed Services Provider, or MSP, should be turned loose on defining the services you require and translating that into a price. Your MSP also needs to have the freedom to provide your service using tools common to most of their other customers.
If you consider that there are many ways to provide the same service, it only makes sense that pricing and service levels become more consistent as MSP's leverage expertise in common processes, tools, and people. And important to note - if your MSP is covering one of your services as a "one off", you might need to keep looking.
Managed Services is not just about Operations
Today's Managed Services tie everything you need into an outcome for a fixed price. It has the ability to bring all the tools any operation could need-virtualization, enterprise class service levels, true 24/7 support with a call center, discipline for incident/problem/change management. How else can you upgrade your operating systems, hardware, bring old hardware/software into current maintenance? How can you leverage what you have and integrate what you need?
Compare the cost of a refreshed on premise solution to the monthly cost of Managed Services offering. You can have everything you need today, and cost to enter into that contract is a mere fraction of the cost of the on-prem upgrade. To forgo an $80,000 upgrade (capital expense) for a $2,000/month payment (operating expense) while getting bigger, better, faster is a common story. And the story gets better as the solutions get larger, and more complex.
In summary, Managed Services may still not be for everyone, but it is definitely affordable for anyone that needs it.