Getting Ahead With Managed Services

Managing client satisfaction has become a challenge for contemporary solution
providers (SPs) because customer expectations have not only gone up, but they
have also become varied and difficult to gauge. They double up more as fire
fighters, taking action on various infrastructure issues, as and when they crop
up.

Managed service has become a highly fashionable term to flaunt these days,
close on the heels of cloud computing. In very simple terms, managed service is
provided by a third party, where he is responsible for monitoring and
maintaining his client's infrastructure, including the hardware, software and
network.

Often the actual equipment may be deployed at the client's site or in a data
center, or the partner might host it at his own network operated center.
Irrespective of this, he is responsible for the entire infrastructure and has to
ensure that it is running as per the defined service level agreement (SLA).

While most solution partners already offer managed service of some nature, it
is largely manual. This means that when an end-point fails, they send a
technician to diagnose the problem and resolve it.

Here comes the challenge

Tier-2 SPs who have been managing end points of their clients in this
traditional fashion are becoming aware of the myriad of challenges staring them
in the eye. Firstly, the number of end points that they now manage has grown up
exponentially in the past few years. Since most of these end points are serviced
manually, it calls for a big staff of qualified technicians in hand, which in
turn can be a huge drain on the company's finances.

This aside, partners are now seeing that few IT assets can be managed well,
but even with these assets, it is difficult to have a consistent problem
resolution time. Predictability, when it comes to the nature of service
delivery, is impossible. This is a challenge because all customers rely on IT as
their core business driver.

"To compound it, there is the problem of manpower efficiency. With the
increase in road traffic, the number of calls attended by a service engineer has
gone down, while their salaries have gone up," highlighted RS Shanbhag of
Valuepoint Systems. As the number of client calls increase, there is a reduction
in the SP's profitability.

If these are some of the issues which confront you as you cradle yet another
irate client's call in the nook of your shoulder, then it is time you consider
offering automated managed services. A lot of partners have been procrastinating
about making this plunge, but the reason they forestalled it has been because
they are often driven by the vision of their vendors. They wait for these
vendors to chart out a business plan and define the policies, than run the risk
of devising one for themselves.

Ratnakar Kanchan of Lauren Information Technologists said, "In IT, when
everything goes well, then there is no problem. But if a problem arises, then
everything goes for a toss. That's when we start thinking of the best plan of
action." This is called the 'break-fix model' where a solution is offered only
after a system fails, which is reactive in nature.

It is precisely in order to have a little more predictability in the service
delivery model that DQ Channels and Kaseya had organized an SP CEO Conclave in
Bentota, Sri Lanka between Nov 19-21, 2009, which saw the participation of the
country's top 25 SPs debating on how they can transform their business for the
future using managed services.

Why opt for it?

The SP CEO Conclave saw a panel discussion about managed services and how
SPs can offer it to scale their growth. At this event, the message driven home
was that companies are now more reliant on IT for its core operations.

According to Ovum, the global managed services market is expected to reach
$41.5 billion per year by 2009-end. Springboard Research stated that Indian
enterprises are increasingly accepting managed services as the need to reduce
overall costs of IT functions becomes critical. Enterprises are under intense
pressure to increase profitability and show higher value to stakeholders.

"While IT operations continue to be a critical element in the overall
corporate spending, there's increasing pressure on CIOs to justify investments
and fully utilize current IT facilities," said Sanchit Vir Gogia, Sr Analyst,
Springboard Research.

A decade ago, if a client's PC did not work for a week, he was not very
concerned because he would have a file where the data would be saved and he
could do things manually. Those manual procedures have been replaced by
dependence on computing. This dependence has changed the way IT infrastructure
is now viewed. Companies can no longer afford downtime as it directly results in
loss of profitability, and it now has real value.

This is when managed services evolved. And it further evolved into automated
managed services to avoid issues that can be avoided. "Today when we buy a car,
we don't drive it till it is out of fuel or oil. We keep maintaining it,"
pointed out Martin Ashby, Executive VP-APAC, Kaseya Software. "But customers
don't think of IT on these lines. They wait for the system to crash and then
call the service provider," he opined.

Managed service translates into uptime, system availability and optimal
performance. When automated it also means that it no longer needs the deployment
of several people by the solution provider for doing routine mundane maintenance
tasks. Instead, these people can be used for other initiatives increasing their
productivity.

Convincing the client

The resistance for automated managed service comes from various quarters and
one of them is from the client's CIO, because they either fear that their
infrastructure will be compromised or the SLAs will not be adhered to. On a
personal level, the CIO might even fear being replaced by the automated software
which will predict failures and repair it without manual intervention.

And the biggest hurdle a solution provider faces when he discusses automated
managed service with his clients is the cost they will have to pay. In most
cases, clients even ask it for free.

Avinash Pitale of Omnitech Infosolutions cited an instance when his customer
asked for these services for free and suggested that instead of merging it with
the entire infrastructure management proposal at lower costs. "You can tell
customers that by running this model, they can be assured of better response
time, and therefore better adherence to SLA from us."

This aside, Biren Selarka of Acma Computers pointed out that often when the
client is managing components of their infrastructure, there might be certain
activities they are doing partially or not at all. "Often when a machine
crashes, we see that it is because the software patch management has not been
done for several weeks," he added.

This is why, he advised that managed services can be blended into the
infrastructure agreement, where the SP can also offer continuous backup
recovery, date restoration, patch management, etc-all without having a resident
engineer posted on their premises.

And a few months down the line, a report can be presented to the client on
the benefits he has enjoyed in terms of automated management of his
infrastructure, sometimes without his knowledge. This will underline how his
uptime has been ensured without any physical intervention.

For first time customers to automate managed services, Ashby of Kaseya
suggests that SPs can use their spare licenses to conduct a complete audit of
the client's network. "You should deliver an upgrade plan and proactive
maintenance program in lieu of the existing SLA. You can also use spare licenses
for free promotions where the results are almost the same as for the paid
promotions, so that you can convert current users to automated managed
services," he stated.

Cracking the hard nuts

All these ideas and suggestions might not translate into customers accepting
automated managed services with open arms. Most of the panelists at the SP CEO
Conclave agreed that around 10 percent of a partner's customer base might not
opt for the solution despite being presented with its merits.

But these steps will nonetheless create a recall in their mind, either when
their business grows or the incidences of failure increases. At the time they
will gravitate towards the partner who had first mooted the concept to him.

Selarka of Acma Computers has managed to convince several of his clients to
move to automated managed services and has now found that there are a good
percentage of people who are willing to pay for managed services, because they
don't want to or don't have the bandwidth to manage their infrastructure
themselves. "In some cases, they don't want someone on their premises trying to
resolve issues, as their staff productivity is affected," he added.

Ajay Sawant of Orient Technologies too has partnered with a Canada-based
remote infrastructure management service provider and has since managed to move
a good percentage of his client base to this model. "In most cases, they are
happy because their systems are being managed without anyone's intrusion on
their premises and all of it is happening on the backend. They are willing to
even pay money for this, because it is automated managed services, where their
problems will resolved before it occurs," he claimed.

When it comes to convincing the reluctant client, Tarun Seth of Microclinic
India said that partners should drive home the point of return on investment.
"Most clients have a misconception that a branded machine does not fail. Part of
this is because the parameters that need to be taken to maintain these machines
are often not taken. At the same time, today people's productivity in an
organization is based on the uptime of their IT infrastructure. When we show
them in simple terms how their employee productivity is improved, then they will
use it," he said.

Girish Krishnamurthy, MD, Kaseya India said that SPs should educate their
customers that 44 percent of their IT manager's time can be saved if he opts for
the automated managed service. "This is the message which has to be strongly
communicated to the customers, besides the other value additions you will be
offering with this service," he stated.

Selecting the right clientèle

Ranjan Chopra of Team Computers gave an instance of one of this customers to
whom he had broached this concept. "When we told them that we were moving from a
reactive to proactive model of managed service delivery, they were glad. This
was because even a two-minute downtime for this financial client they lose close
to Rs 24 lakh per minute," he said.

But this might not hold true for other verticals. Tarun Seth told that some
clients who approached for automated managed service said that if a system
fails, then they will fix it because work will still go on. "The only strategy
which works across industry is high quality at low cost, so you have to match
their expectation with your offering," he said.

When Shanbhag started approaching customers for automated managed services
contracts, he realized that they needed IT governance, predictable
infrastructure, highest uptime, fastest response turnaround time and more secure
manageability. And all these, preferably for free! "But now they are moving away
from this concept once you give proofs and reports and show them how the system
is working and the RoI," he added.

At the same time, Shanbhag had one legal knowledge processing client who was
keen to opt for the solution but were clear that no data could go out of their
unit. "So we hosted server at our premises and are now managing it for them,
successfully," he added.

Sanjay Sacchdev of Leading Edge Communications caters largely to the
government and defense verticals, where security is of prime importance. He
doubts that his set of clients would want to opt for managed services outside of
their immediate perimeter of control. But he agreed that there are other
verticals which will quickly imbibe automated managed services.

What's next?

One reason why automated managed services will be apt for tier-2 SP,
vis-a-vis the tier-1 systems integrators, is because the former are catering to
a different genre of clientèle. The tier-1 SI, given the sheer scale of their
operations, will find it difficult it quickly adapt to this solution and roll it
out to their existing customers.

Incidentally, Tarun Seth had an interesting observation to make. "We thought
large corporate have their infrastructure in place.

But when we started speaking to some of them we found this is not necessarily
true," he added. This shows that a lot of education needs to be done to
evangelize what automated managed service is all about and how it can offer
better RoI.

Coming back to the earlier argument, there is no denying that tier-2 SPs are
more agile in offering services faster to their existing customers. This aside,
they cater to the burgeoning SMB customer base, which do not have the IT
manpower to manage their infrastructure and need someone who can do it
autonomously.

Offering what most vendors are propounding will be the future of the services
delivery model. This will also help the SPs to get the first mover advantage and
differentiate themselves from their peers.

However, it has to be borne in mind that the automated managed services
business is still in its infancy. Partners need to be ready with the right
business case when they approach their clients. Unless they are well prepared,
there is a good chance they will fail and the blame might fall on automated
managed service as a concept.

Vinita Bhatia

vinitavs@cybermedia.co.in