Managed application services vs. staff augmentation: Which is best for your company?

At first glance, application management services (AMS) might seem overly complicated, but AMS offers a practical, long-term alternative to IT staff augmentation.

In contrast, application management services (AMS or managed application services) shift from the task-based, hourly model of staff augmentation to an outcome-based model. AMS firms create service-level agreements (SLAs) based on the specific outcomes their client seeks, such as guaranteed network uptime. This paradigm shift helps organizations gain greater flexibility and scalability over the long term.

Each service has its merits and drawbacks. This post will explain the differences and explore considerations for selecting the best model for your company.

Learn more: Five trusted paths to application modernization and their benefits

Staff augmentation (aka out-tasking)

Staff augmentation contracts are founded on hourly services. Your company hires a staffing firm to meet a temporary need, and their contract expires after a certain amount of time or the short-term project ends. A key advantage of staff augmentation is that you can rapidly hire specialists without dramatically rearranging the IT department. However, many staff augmentation firms have set minimums, and if a project needs an extension, a budget can quickly get out of hand.

Pros:

Ideal for short-term projects or staffing shortages
Rapidly plug skill gaps
Decrease onboarding expenses
Highly scalable
Transparent, hourly billing

Cons:

Potential losses in knowledge and control when the contract ends
No service-level agreement contract
Labor expenses run higher than AMS
Not ideal for long-term projects
Planning and oversight are more difficult for managers to execute in this model
Fees and service levels creep over time

Also read: Four powerful questions to ask IT staffing partners

Application management services (aka outsourcing)

Managed application services are a methodical approach to outsourcing the oversight of applications. AMS addresses the obstacles met by IT staff augmentation in the past while improving overall flexibility and lowering expenses over a longer term.

Unfortunately, some negative associations surround AMS. It is perceived as overly complicated to manage, and administrators or stakeholders might fear losing oversight. In reality, admin control and knowledge are contractually protected by SLAs.

Key benefits of managed application services

AMS functions over an extended timeframe to:

Lower operating expenses and boost cost efficiency.
Scale on demand.
Maximize IT resources by outsourcing recurring tasks.
Increase planning throughout IT and across the organization.
Grant access to specialized experts and emerging technology.
Define and stabilize system access and visibility through SLAs.
Ensure stakeholder control and knowledge through contractually obligated knowledge transfers.

Also read: Industry-leading remote monitoring and management of your critical systems

Pricing: How AMS compares to hourly

Both staff augmentation and managed application services involve outside specialists supervising specific projects. But execution between each model differs in delivery and pricing. Staff augmentation is “input-based”, meaning that contractors bill for hourly services. The hourly input is what drives service creep in many organizations. In contrast, AMS must meet a specific outcome determined by the SLA. The AMS provider assumes the risk of hitting the obligatory level of service. Otherwise, their clients may be due for a refund or may not have to pay at all.

Managed application services	Staff augmentation
Well-suited for long-term projects Defined by SLAs Reduces operating expenses Avoid service creep with contractually represented scope and terms Service levels directly linked to business outcomes AMS provider takes on delivery risks Must provide documentation and knowledge transfers Fosters an organizational culture of planning	Not based on service-level agreements Hourly pricing drives scope and project creep The client takes on the delivery risk Project knowledge and control are often lost when the contracts end Elevated staffing costs

Why AMS stands apart

Many companies rely on staff augmentation for the sake of perceived simplicity—easy-to-understand hourly pricing and low impact on the existing IT department.

Service-level agreements might seem less accessible at first, but they are beneficial in the following ways:

Generates more visibility, improved planning, and finessed execution throughout the organization.
Frees up IT resources, allowing IT departments to focus on mission-critical tasks.
Pricing scales according to outcomes and service levels, which drives costs lower over time.

Also read: Nine advantages of a managed cloud environment from OnX

Choosing a trusted partner

Staff augmentation certainly has its place in the digital landscape. However, it’s a temporary solution. An organization gets into trouble when it begins to rely on staff augmentation as a primary resource, ultimately racking up costs and slowing efficiency as reliance on staff augmentation grows. But seeking a quality managed application service provider builds lasting outcomes that scale with the project or company. Application management services are one clear path to future-proofing business operations through continued access to qualified specialists and the latest technology.

OnX delivers a mutually beneficial, truly co-managed experience—clients retain control over their applications while offloading those apps’ management, security, and maintenance to OnX experts. OnX managed application services are part of our Applications, Platform, Operations (APO) framework, a holistic approach to managing, de-siloing, and optimizing technology throughout the organization. OnX’s core benefit is that we help our clients to meet their objectives by analyzing our client’s digital estates and connecting the dots to modernize applications, streamline and secure platforms, and optimize operations.