In-Depth

An Outsourcing Trend

• 10/01/1998

The mainframe is dead, long live the mainframe is the resounding cry heard in many corporate IS shops these days. The mainframe has been resurrected worldwide as an efficient server, as a secure Web server and as a 99.9 percent reliable core for distributed enterprises. This is not to say, however, that the networked system will be a thing of the past. On the contrary, the mainframe and the network are destined to enjoy a long life together.

This rediscovered client-server model has compounded the demands placed on system managers. From remote user access to mobile workers, from geographical dispersion to the Internet face a daunting challenge when it comes to controlling the mainframe enterprise of future. Statistically, an overwhelming number of managers are looking outside the glass house for help when it comes to managing networked systems.

According to Datapro, outsourcing as a general practice represents one of the hottest growing trends in technology today. According to Outsourcing Institute, it has experienced a 500 percent growth rate since 1990, from only $7.2 billion to an astonishing $38 billion dollars in 1996. In fact, 50 percent of all companies with more than $5 million IT budgets are expected to outsource IT tasks in one form or another. The global IT outsourcing market is expected to exceed $100 billion by the year 2000.

Network Management

How does network management fit into this scenario? During the past three years, networks have become more complex and more distributed than ever before - the number of devices within a network have exploded. Networks contain software, hardware and circuits; any of these components can fail. If a network fails, then all applications dependent on that network will not function either. Thus, network availability can be a critical factor in the success or failure of an organization.

Moreover, network management goes deeper than simply the assessment of network availability. Many network problems are related to a gradual erosion of performance due to capacity, unusual traffic, device faults, etc., and can be detected well in advance of the actual event. Hence, network management should encompass the analysis and resolution of these issues as well.

In a nutshell, once a network has been installed, it is imperative that it be managed properly in order to avoid failure and ensure maximum efficiency in the usage of its resources and flow of information.

Why Outsource Network Management?

Organizations choose to outsource network management functions for the following main reasons:

1. Cut costs.
If they had to perform the network management functions themselves, they would have to purchase appropriate network monitoring tools, purchase the hardware required to run the applications, license a software support agreement with the vendor and, most expensive of all, hire skilled technicians that are experienced in using these tools.
2. Focus on Core Mission Requirements.
Outsourcing network management functions allow an organization to focus on its key strategic objectives, instead of time-consuming network management issues and details. Its personnel can be freed up to concentrate on more strategic matters.
3. Take Advantage of the Latest Technological Advances.
Since network management is a versatile and fast-paced industry, organizations need not spend time researching and implementing new network management technologies
4. Take Advantage of Highly Specialized Skills on a Contract-by-Contract Basis.
Organizations can take advantage of highly skilled personnel provided by their outsourcer for the duration of time that best fits their overall business objectives.

Network Management Services

Generally speaking, network management functions can be categorized into the following five categories (called FCAPS):

• F
ault management. Monitoring the network so as to identify those conditions that fall outside the boundary of what is considered "acceptable."
• C
onfiguration management. Configuring various elements/devices comprising the network and the routing of information through the network.
• A
ccounting management. The inventorying and allocating of costs for the network.
• P
erformance management. Mostly monitoring the traffic and capacity of a network.
• S
ecurity management. Controlling access to various components and services of the network.

In the early days, network management was nothing more than modem management through small, primitive devices with LED displays. As networks have become more complex, varied and distributed, network management platforms have also become more sophisticated, comprising mostly of UNIX-based workstations with large color monitors, user-friendly GUI front ends and color-coded representation of the status of equipment and conditions.

Although sophisticated network management tools continue to emerge in the market, these tools require major investments of user time to understand and operate them. Ideally, companies would prefer to concentrate on their overall business objectives; however, the cost, complexity and legal ramifications of managing a global network turn out to be their overwhelming priority. Voice and data networks are required to be operational 24 hours a day, 7 days a week. Consequently, outsourcing network management becomes the most obvious and feasible solution to the problem.

Network management service offerings are becoming increasingly diversified in scope. Customers can pick and choose between the type of network management services they require; they need not hand off their entire network to a third party. For example, a customer may decide to outsource router management and performance monitoring tasks only, while performing its own security and accounting management. Furthermore, network management services can also vary geographically, regional or global support, and in their coverage. They can offer services for different types of devices, such as WAN, LAN or desktop, and offer different types of technologies to monitor their client’s networks, such as custom, off-the-shelf or a combination thereof.

The Niche That No One Has

Datapro maintains that the market for network management outsourcing is expected to grow at a 30 percent compound rate into the year 2000. Network management service revenues are expected to reach $100 million in 1997. Yet, the surprising fact is, not a single service provider currently holds a major share of this lucrative market.

And according to surveys conducted by G2 Research (a California-based consulting firm), AT&T Solutions, Hewlett Packard and IBM are some of the leading vendors in network outsourcing.

Forrester Research includes the British Telecom (BT)-MCI joint venture known as Concert and Unisys as one of the top five network management service providers.

AT&T Solutions, led by Rick Roscitt, delivers professional services in four areas - one of which is Outsourcing. AT&T Solutions provides accounting, configuration, fault, security and performance monitoring services. In comparison, Hewlett Packard provides various types of outsourcing services through its Selective Outsourcing division. HP provides accounting, fault, security and performance monitoring services. IBM’s Network Outsourcing Services, a division of IBM Global Services, has been rated as one of the world’s best by Network World. IBM provides accounting, fault, security and performance monitoring services. Concert is a partnership that is 75 percent owned by British Telecom and 25 percent by MCI. It has been in existence for three years and now has 44 partners worldwide with coverage for more than 800 cities in 50 countries.

Each of these companies provide their customers with the capability to pick and choose the exact network management functions they wish to outsource. However, there is clearly a window of opportunity here for any one of these major players, since none of these corporations hold more than a 2 percent share of the market. The trick lies in a company being able to offer enhanced value in its network management service offerings over its competitors. The sidebar Table offers ten steps to help you decide which outsouring vendor is right for you.

Follow the guidelines listed below in choosing an outsourcer that is just right for you.

The following table provides a listing of the top five Network Management Service Providers as rated by Forrester Research. It describes the services they provide, and where to find additional information for them on the Internet. Vendors are listed in order of rating.

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