What Are Managed Services and What Are Their Benefits?

Infrastructure building blocks of the AWS ecosystem, like EC2 instances for compute, EBS volumes for storage, and VPCs and subnets for networking, are all used in a very traditional way of systems administration. We build our solution based on pieces of infrastructure that we connect ourselves, just like physical hardware is assembled in a data center. That is, we buy a rack-mount server, add a few hard drives for storage, plug it into the router, and set up the networking.

Now, we will see a higher level of abstraction by taking a look at managed services.

What are managed resources, and why are they so powerful?

According to PalachukPalachuk, Karl (January 2013). Managed Services in a Month. Great Little Book Publishing Co., Inc. p. 208. ISBN 978-0981997858., managed resources are defined as:

Managed services is the practice of outsourcing the responsibility for maintaining, and anticipating need for, a range of processes and functions to improve operations and reduce expenses. Adopting managed services is intended to be an efficient way to stay up to date on technology, have access to skills and address issues related to cost, quality of service, and risk.

Let’s go through the quote and see what we can learn about managed services. Managed services are about outsourcing (someone else doing some of the work and taking over some of the responsibility) to improve operations and reduce expenses.

Improved operations

Improved operations could be rephrased as having a lower workload ourselves or making ourselves more efficient. Because most of the work is already done by a third party, we’re free to do other things or more things at the same time.

Reduced expenses

Reduced expenses is a bit harder to argue. Usually the price of managed services looks higher than just renting a server and running the software on it ourselves. However, to get a more accurate picture, we need to consider the time spent on maintaining it as a cost as well. You, as an administrator, are spending time on maintenance and are most likely paid for it. So, from the perspective of your company, this cost needs to be added on top of the cost for the resources. This is called total cost of ownership (TCO) and includes the direct and indirect cost of using a product or service.

Example

Suppose we want to run a database on AWS. We could either start an EC2 instance and install and maintain the database software ourselves on it or use an AWS managed service to provision the database for us. The direct costs for both approaches are as follows:

• An t3.micro EC2 instance costs $0.0104 per hour (roughly $7.50 per month).
• A AWS managed database (RDS) running on a t3.micro costs $0.017 per hour (roughly $12.24 per month).

So just looking at the direct costs, the managed service is more expensive, almost 60% more!

But what if we need to spend eight hours a month on maintenance, updates, and security monitoring for the self-managed database? This is the indirect cost, and it’s surely more than the difference of $4.74 between the EC2 instance and the AWS managed database.

Therefore, managed services can be indeed a lot cheaper and are surely a lot less hassle for us.