> Cover Story
next wave in facilities management
a global trend, hosting providers, systems integrators,
and xSPs in India are quickly adapting infrastructure for
management services. Some Management Services Providers
are investing heavily in new infrastructure. But how can
your company benefit from MSP offerings and how does one
ensure that an MSP delivers the promised levels of service?
the Indian market is quite fragmented with various hosting
providers claiming to offer some sort of Management Service.
The term 'pure-play' MSP now describes a service provider
with an entire service portfolio based on the subscription
years ago, people were talking about the ASP (Application
Service Provider) model and the benefits it offers. Many
businesses find it cost-effective to rent applications from
an ASP on a pay-and-use basis, rather than pay for multiple
software seats. The same concept has now been extended to
IT infrastructure (corporate networks). A new breed of Management
Services Providers (MSPs) has arrived they rent out infrastructure,
network resources and skilled manpower. What's more, they'll
(continuously) monitor your network and ensure maximum uptime.
Organizations the world over are waking up to the fact that
they can actually cut down operational costs and reduce
IT spending by outsourcing these services (See box, 'Why
it makes sense to outsource.') CIOs want to know exactly
how an MSP can help cut costs, and what are type of services
they offer. But what exactly is an MSP anyway?
IDC defines MSP as: "a company or division of
a company that delivers subscription-based IT infrastructure
management of some type as a bundle of management tools
and services that are used by the customer to manage the
infrastructure." In other words, an MSP is an ASP for
system and network management.
Simply put, MSPs deliver IT infrastructure management services
to businesses (over a network) on a subscription basis,
and bill their clients on a recurring basis. The management
services could be on-site, off-site (i.e. remote management)
or a mix of both. A customer may choose the kind of operations/functions
he wishes to outsource, and then manage core business functions.
The MSP provides the client with a Service Level Agreement
(SLA), to ensure service commitment and Quality of Service
(See box, 'Examine that SLA.')
So is MSP just another term in acronym city, or is it
something we should take seriously?
The META Group expects the global market for MSPs to reach
$10 billion by 2004. By then 40 percent of all MSP type
services will be consumed by enterprises for managing functions
not related to e-business, says META.
Last year, market researcher IDC gave a more conservative
estimate. IDC said worldwide revenues for Management Services
would reach $524 million by 2004.
No figures were available for the Indian MSP market, which
is still emerging.
The reasons for this huge market potential mainly center
on cost savings and it's a win-win situation for both, MSP
of scale and the flexibility to deploy resources across
multiple clients, puts IT management services providers
in a good position to offer services to their clients at
costs that are much lower than what the clients would have
to incur on their in-house departments," says Ravindra
Datar, Principal Analyst (India)-IT Services, AMCPL, research
partner for Gartner in India.
By outsourcing management services, organizations can slash
annual IT budgets and worry less about finding skilled technicians
(who are in short supply) to manage IT infrastructure.
The META Group says that when it comes to delivering services
to enterprises, the hosting providers will be major players
50 percent of hosting revenue will come from management
services. ISVs (Independent Software Vendors) are also entering
the MSP space, and by 2003, 50 percent of large ISVs will
include MSP offerings in their portfolio of services.
MSPs (those whose entire services portfolio is based on
the subscription model), may be a minority. META predicts
percent of pure-play MSPs will cease operations next year
due to lack of funds.
Services companies have acknowledged the huge potential
in the Management Services market and are now gearing up
to offer enterprises such services (See page 26 for a detailed
list of MSP services offered in India).
The cost of setting up a Network Operations Center (NOC)
for management services is phenomenal. Bangalore Labs for
instance, a local forerunner in MSP services invested close
to $1.5 million in a world-class NOC at Bangalore.
It makes more sense for those who earlier made investments
in similar infrastructure to move on to the MSP business.
That's why xSPs the ISPs, ASPs, SSPs (storage/security service
providers); systems integrators, hosting providers, and
data center businesses are upgrading facilities and hopping
on to the MSP bandwagon.
Hosting companies in India are quick to follow this global
trend and already, we have a couple of Indian MSPs offering
various management services (See our next story, 'Outsourcing
Presently, the Indian market is quite fragmented with various
hosting providers claiming to offer some sort of Management
Service. The term 'pure-play' MSP now describes a service
provider with an entire service portfolio based on the subscription
model, and one who is willing to shoulder complete responsibility
for the client's network. Further, a pure-play MSP has its
own NOC with facilities for managing multiple networks remotely.
Says Joy Nandi, executive VP-Marketing & Alliances,
Bangalore Labs, "MSPs in India are still an evolving
concept. There aren't many companies here that have a core
focus in providing Management Services. It's simply an add-on,
and in many cases, more a marketing gimmick than an ability
to deliver. Many of these players have re-christened their
existing services VSAT/leased line management, managed hosting
or facilities management services are now being repackaged
as MSP services."
Whatever may be the case, CIOs and IS staff should be cautious
when outsourcing IT infrastructure management to MSPs. The
MSP-client relationship can be strengthened through a service
level agreement. With proper processes and checks in place,
MSPs can win favor with clients.
Pereira can be reached at email@example.com
it makes sense to outsource
Outsourcing makes IT costs predictable. Instead of paying
up-front for software licenses (network management software),
businesses can pay for it on a monthly basis.
Try before buying - If CIOs are unsure about the suitability
of certain applications, they can sample the MSP's offerings
for a certain period before deciding which one to buy.
Skilled manpower - Outsourcing can eliminate the need
to attract, hire and retain skilled IT personnel. There
is a perennial shortage of skilled manpower in the industry.
The cost of employing experienced staff can surpass
IT budgets. Then, there's concern of how to retain experienced
An MSP has technically proficient teams that have deep
understanding of applications integration and networking
systems. By outsourcing, a company can acquire lots
of expertise quickly.
Outsourcing reduces upgradation costs - As networks
grow and storage demands increase, network resources
need to be upgraded every year. That calls for huge
IT spending. The MSP can bear this cost by investing
in the latest software and hardware and letting all
its clients use these resources on a shared basis.
Focus on core business - When businesses are heavily
dependent on IT infrastructure, organizations give too
much attention to systems management, thereby neglecting
core business functions. By outsourcing the management
of IT infrastructure, one can focus on core competency.
an MSP can offer
Some of the key concerns that CIOs and Admins (Network Administrators)
have are security, storage, bandwidth usage/allocation,
resource usage/allocation, and network uptime/performance.
Naturally, MSPs focus their attention on these concerns
and take over these responsibilities. According to the META
Group, typical MSP services include:
Storage on demand