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Home > Cover Story

Management Services

The next wave in facilities management

Following 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?

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

TWO 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?

INDUSTRY POTENTIAL

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 and client.

"Economies 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.

‘Pure-play’ MSPs (those whose entire services portfolio is based on the subscription model), may be a minority. META predicts that 25

percent of pure-play MSPs will cease operations next year due to lack of funds.

MARKET REACTION

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 network management.')

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.

Brian Pereira can be reached at brianp@rediffmail.com

Why 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 professionals.
  • 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.

What 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:

  • Performance monitoring
  • Network management
  • Operational testing
  • Intrusion detection
  • VPN
  • PKI
  • Managed firewalls
  • Vulnerability scanning
  • Helpdesk
  • Storage on demand
  • Availability monitoring
  • Service-level verification

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