Business Benefits and Challenges

Today, you can outsource just about every part of your IT infrastructure, or
even the whole IT infrastructure (called total outsourcing). The latest
additions to this hot market are managed unified communication services,
storage, security, DR and Business Continuity, and several others. For long,
organizations have been skeptical about outsourcing these facilities, due to
reasons like data security, etc, but the slowdown has forced everyone to
re-consider their decisions.

With so much action in the market, we decided to determine the actual
adoption and usage of managed IT services across Indian enterprises. For this,
we surveyed 40 key CIOs and IT decision makers from mid to large organizations,
with annual turnover ranging from 500 Cr to 10,000 Cr. In fact, nearly 50% of
our respondents belonged to large enterprises with 10K+ Cr turnover.

Our survey suggests that there's a clear need for managed IT services in the
market. Over 80% of the respondents were already using the same, and 60% were
actively looking out to outsource even more. There are many benefits of using
managed IT services. Once a part of your IT infrastructure has been outsourced,
you don't have to worry about assigning day-to-day tasks to individuals.
Instead, you have to focus on ensuring that the guidelines defined in your SLAs
are followed. Presented here are some core benefits to be gained by using
managed IT services.

Greater focus on core tasks is one key benefit of using managed IT services. You
don't have to worry about the technical nitty-gritty required in a particular
task. That's the MSP's job now.

Survey Respondents' Profile

What you do need to worry about is ensure that whatever technology is
deployed is mapped correctly to your business requirement and delivers.

Availability of more skilled manpower for the job is a key benefit of using
managed IT services. You don't have to worry about training and retaining
quality manpower for every technical role in your organization. You don't even
have to worry about finding replacements when a key person leaves for greener
pastures, because it's the MSP's job. Not only that, but during crucial
situations wherein a highly technical or complex task needs to be performed,
such as an ERP upgrade, or a complex SAN deployment, you have the benefit of
asking for more manpower when required. So in effect, having a MSP gives you
access to a much larger pool of technical expertise to get your job done, should
the need be. You can't really have that luxury with an inhouse team. That's why
it's extremely important to check the technical competency levels of a managed
IT services provider before signing the contract.

More streamlined internal processes is another benefit of using a managed IT
services provider. It brings all your internal systems in order. You clearly
define what you want, and setup appropriate monitoring and management mechanisms
in the form of SLAs. These then improve the quality of service, reduce the
costs, and of course increase the overall efficiency of operation. This benefit
indeed sounds good, but isn't as easy to achieve as it sounds. Defining
appropriate SLAs with clearly defined measures is not an easy job. Therefore,
ask your MSP to give you a set of best practices for your industry, and then
customize those as per your requirement.

You get the right technology to meet your business requirements, without
worrying about choosing the right technology. The managed IT services does that
for you. Moreover, you don't even have to worry about technology obsolescence.
Upgrades and updates are also the MSP's headache. This brings better cost
control within the system.

Challenges in adopting Managed IT Services

The biggest challenge, according to our survey was in finding the 'hidden'
costs in a managed IT services deal. The only way to to resolve this issue is to
be as clear as possible when doing the deal. Make sure you define your objective
very clearly, and the tasks that the MSP must perform to achieve it. So if the
task is to manage your security setup, then you have to clearly define which
security devices need to be managed, what activities would be performed to do
it, which tools would be used, etc. The overall objective in this case would be
to keep all security threats out. Having internally documented processes could
come in handy here, to help the MSP understand the task better. Finding the
hidden costs is of course easier said than done, but then the best way to
determine those is to ask for a detailed cost break-up and be vigilant about the
value of each cost head.

Next is to articulate the business benefits of using managed IT services.
Without this, you'll find it difficult to convince the management. The third
biggest challenge was convincing top management. This is again very difficult
without gaining a clear understanding of the business benefits.

Choosing the right MSP

It's very important to have the right MSP in order to reap all the benefits
of outsourcing your IT infrastructure management. Several things can be done to
find the right MSP. Our survey indicated the MSP's technology setup is the
topmost criteria in the process. Does the MSP have requisite tools and
technologies to be able to manage your IT infrastructure? The only way to find
out is to see it yourself. Ask the MSP to take you on a tour of his facilities
and judge it yourself.

The next most important criteria is to determine the track record and market
reputation of the MSPs you're considering. For this, it's important to get into
the past performance record of the MSP, no. of years of existence, total
customers serviced, types of customers serviced. The third most important
criteria is the customer references provided by the MSP. You could determine
whether the MSP has offered services to similar companies as yours in the past.

Some other parameters to consider while negotiating a deal include the price
offered by a MSP, knowledge level of the sales person making the pitch,
geographical reach, etc.

"Protection of the brand's reputation is the fear that drives most MSPs."

Aditya Singhal Country Manager Infrastructure Services, IBM How do you see the managed IT services market shaping up? Are more parts of the IT infrastructure getting added to it? Managed IT services isn't new and has been around for decade. Initially, large enterprises looked at outsourcing because they were growing, but couldn't manage their IT infrastructure with the same pace. We've come a long way since then. In last one to one and half years, we're seeing managed IT services pick up even in tier II cities, where customers were initially reluctant to go for it . They felt comfortable carrying out all management activities inhouse, and were worried that external people would steal their data. Now that trend is changing, and one reason for it is the economic slowdown. people are looking at cutting costs, but without cutting down on the quality of service delivery. Initially, outsourcing was used as a way to augment resources that were not available internally. This was called facilities management. But now, we're moving into a managed IT services kind of environment, where customers are willing to offload their entire or part of IT services spectrum. So now you can have managed services for servers, distributed desktops, security, business continuity, and much more.  How can a CIO convince the mgmt about delivering the same quality with managed IT services? Unfortunately, most CIOs claim to have internal SLAs, but don't really have any. Internal IT mgmt is mostly done as fire fighting. But when you outsource, you define your SLAs, and then simply monitor them. A lot of CIOs feel that they're doing a much better job internally, but slowly people are realizing that IT service mgmt is a complex job. It's not about managing a setup with some internal resources. Today, the IT infrastructure supports the business 24x7. It needs to be protected against downtime, data theft, etc. How do you ensure that? There are govt. policies to be compliant with. Is your IT infrastructure up to it? How do you deal with change management? SLAs have to kick in with well-defined processes for each and every activity that you carry out. Mature organizations with a mature IT environment are able to bring in those kinds of practices, but most are not. Managed IT services helps in these situations. How important is the tech setup of a MSP for CIOs? Managed services business revolves around several things-People, processes, and tools to automate those processes. So a CIO should look at all three while choosing a MSP. Good tech setup without good people is like a school with a fancy building and air-conditioned classrooms, but poor faculty. What mistakes should a CIO avoid while going for managed IT services? From a CIO's perspective, trust is important, because he/she is passing the entire managed operations to somebody else. The most important is the brand reputation of your MSP. That's the fear that drives MSP, nothing else. Any new and interesting managed IT services you offer? Work area recovery services, wherein we have a a unique center, where people come and work in case a disaster strikes. e.g. floods in Mumbai prevent employees from reaching their workplace. They can come to this facility and use it as a business center. Managed virtual desktop environment is another growing area, called a smart cloud for the desktop. Here, the desktop environment exists in the data center. A lot of cost saving can happen through this, with pay back period of 12-18 months. Managed security services is also growing. It's called ISS Xforce. We're so sure that we'll not let a single security incident/gap happen that we're willing to pay USD 50,000 if it happens. But just to qualify that, you'll need to host certain devices in your network. We'll ensure that those devices are up to date, because viruses and attacks happen daily. Another interesting service is called managed backup service, wherein the moment you connect to the Net, your data is backed up using differential backup. So if you own a laptop that gets stolen, this service will help you recover your data.

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Re-Negotiating Contracts