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Issue of June 2004 

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Infrastructure management is new focus

Enterprises have always focussed on RDBMS, NOS, and Web/Proxy/Mail servers. But now other areas like infrastructure management are getting more attention. by Brian Pereira

Enterprise Packaged Software (EPS) is the foundation for various IT systems within the enterprise. It forms the foundation for enterprise wide applications; both are crucial for enabling business processes.

For instance, connectivity is now essential for communications, online transactions and data exchange. But without a Network Operating System, RDBMS and Mail server, these functions would not be possible. In fact, these are the three key areas in packaged software for those who invested in EPS.

To align IT more closely with business processes, enterprises are consolidating infrastructure and going in for centralization. Standardization of IT infrastructure becomes crucial in this scenario. IT standardization is one of the top three priorities for 41 percent of the respondents. Enterprises also want to keep their infrastructure updated—in fact upgrades and replacement of existing IT infrastructure is a priority for 37 percent of the respondents.

The compelling need for IT standardization and upgrades has made Enterprise Package Software (EPS) a key focus area; the past investment in EPS is proof of this. Among the companies who invested in packaged software, on average, almost a third (29 percent) of the IT budget was spent on EPS. In the next one year these enterprises are likely to allocate a quarter of the IT budget (25 percent) for EPS.

Overall, in the past, 74 percent of the respondents invested in EPS and most of the companies investing in package software were from the Auto/Auto components and Chemical/Pharma verticals.

In 2003-2004, exactly half the respondents invested in Enterprise packaged software. And in the next one year (2004-2005), 46 percent plan to do so.

Investment in key areas to halve

Within EPS, the three main areas of investment are Network Operating System (NOS), RDBMS, and Web/proxy/mail server; this trend is consistent across all industry verticals. In comparison with investments made during 2003-2004, spending will be halved for the three major segments in the next one year.

Networking and communications is taken for granted in medium and large enterprises, and even small businesses have LANs. Therefore most of organizations already have a sizable installed base of NOS, RDBMS and Web/proxy/mail server. The investment in the EWA space is primarily driven by enterprises which are buying additional licenses or upgrading existing application platforms.

At present, 71 percent of the respondents have invested in NOS and 30 percent plan to do so in the next one year.

RDBMS is regarded as the pedestal for hosting and supporting enterprise-wide business applications like ERP, SCM and CRM. With consolidation, standardization, and centralization of IT systems, the demand for centralized and scalable RDBMS is on the rise. The other drivers for RDBMS are data warehousing, data mining and business intelligence.

At present 72 percent of the respondents have invested in RDBMS and 36 percent plan to do so in the next one year.

While RDBMS is a key investment area for all the industry verticals, many companies in the Auto/Auto components, Govt./PSU and Manufacturing/Engineering plan to invest in RDBMS.

With increased dependence on the Internet for commerce and communications, Web/Proxy/Mail servers already have a firm grounding in the enterprise. In the next one year about 34 percent plan to invest on Web/Proxy/Mail server.

Infrastructure management scale-up

Traditionally NOS, RDBMS and Web/Proxy/mail server have been the key areas for investment within packaged software. However, two areas which have always been of low priority are Infrastructure/ Network management tools and Testing and troubleshooting applications.

Enterprise networks are getting more complex with the deployment of multi-vendor solutions on different platforms across several locations. This makes such networks complex to manage. In such a scenario Infrastructure management tools simplify the task of managing diverse, spread-out infrastructure.

As networking in enterprises proliferates the investments in Infrastructure/network management tools will also go up. At present only 44 percent companies have invested in some kind of Infrastructure management tools and about 31 percent of the respondents plan to invest in this area.

There is also the smaller niche of Testing and Troubleshooting applications—solutions that let network administrators deal with problems like failed links, network bottlenecks, bandwidth glitches, buggy software, and crashing servers. Specialized testing and troubleshooting tools can identify these technical glitches, monitor application & network performance.

The Testing and Troubleshooting applications space seems to be cannibalized by Infrastructure management applications, since these management suites are tuned to perform multiple tasks that a multitude of smaller applications can perform, and that too as efficiently. Only 25 percent have invested in Testing and Troubleshooting Applications, and just 18 percent plan to do so in the next one year.

Knowledge mismanagement

The hype around Knowledge Management (KM), seems to be just that. KM as a concept came into existence in the mid-90s but doesn't seem to have taken shape in the Indian enterprise. Currently, only 18 percent of companies have adopted KM initiatives and only 17 percent plan to invest in this area in the future.

While most Indian companies have stayed away from KM solutions; they will clearly have to be a focus area in the future.

Research Snapshots
  • 50 percent of the respondents have invested in Enterprise packaged software last year and 46 percent plan to do so in 2004-05.
  • Among the companies who invested in packaged software, on average 29 percent of the IT budget was spent on software.
  • Among the companies that plan to invest in packaged software in FY 2004-05, about 25 percent of their IT budget has been allotted to this area.
  • In packaged software, the three main areas for investment have been NOS, RDBMS, and Web/proxy/mail server—and this trend is seen across all industry verticals.
  • Planned investment in the three key areas is halved this year as compared to the past year.
  • With enterprise networks becoming more complex, implementation of Infrastructure/Network Management Tools is slowly gaining significance. This year 31 percent of the respondents plan to invest in Infrastructure/Network management tools.
  • Knowledge Management (KM) hasn't grown beyond the hype cycle, currently only 18 percent companies have KM in place and 2004-05 doesn't look that promising.

NM Suggests
  • Organizations that have complex, heterogeneous IT infrastructure should invest in Infrastructure/ Network management tools. These tools make infrastructure management simple, centralized and cost-effective.
  • For many organizations it makes more sense to deploy Infrastructure Management (IM) applications than specialized Testing and troubleshooting tools, except in certain areas (like Telecom, Datacenters, ISPs, etc) where these tools are a necessity.
  • Knowledge Management is one area that needs immediate attention in the Indian enterprise. Companies need to seriously consider Knowledge Management initiatives in order to capture and retain existing knowledge within an organization.

BPL mobile uses BI to promote business
BPL mobile, with over 1.2 million customers rightly believes that its customers are the company's largest non-replicable asset. It uses Business Intelligence (BI) tools to help deliver focussed services and generate better value from its existing subscriber base. BI helps the company identify new business segments, cross-sell and up-sell services, identify user needs in particular segments, create retention strategies, and empower its business users with timely relevant information.

Blurring differentiation

"We've come to a crossroad where the only long-term key business differentiator from other mobile telecom operators is customer service," explained Deepak Varma, Senior Vice President and Chief Operating Officer, BPL. "Since the customer is our most valuable asset, it makes perfect sense to understand this asset in detail."

The BI in BPL mobile

The company uses BI tools from SAS to help perform customer asset management. "With these tools we can look across usage tabs and identify potentially beneficial segments. The marketing and sales teams can pro-actively create the necessary strategies and execute the same. Cross-selling becomes easy, and up-selling becomes a win-win proposition," said Varma.

The BI tools provide information about subscriber calling behavior, usage pattern, payment patterns, and history of his/her getting in touch with the company. This behavior pattern is matched with other subscribers to identify potential voluntary or involuntary turnover (churn).

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