An Outsourcing Trend

Company budgets for outsourcing are going through the roof. And with networks becoming more complex and distributed, organizations are discovering that outsourcing network management can be a tricky and costly task.

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.
  2. 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.
  3. Focus on Core Mission Requirements.
  4. 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.
  5. Take Advantage of the Latest Technological Advances.
  6. Since network management is a versatile and fast-paced industry, organizations need not spend time researching and implementing new network management technologies
  7. Take Advantage of Highly Specialized Skills on a Contract-by-Contract Basis.
  8. 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.


10 Steps to Choosing and Evaluating an Outsourcer

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

Step #

Step Summary



Evaluate your company, your network and related resources

Understand your company’s current position, future goals, and its ability to meet these goals with or without outsourcing. Resources include equipment and personnel.


Formulate initial cost vs. savings plan

Evaluate what it would cost you to manage your network yourself, compare against what it would cost to outsource, add maintenance costs and additional charges for the duration of the contract and the difference between the two.


Identify the specific services that are to be outsourced

You can categorize your network services as listed under "Network Management Services." Match your list with what the service provider offers. It should be a close match.


Identify the devices that the service provider covers

Ensure that all of your device types are covered.


Identify the provider’s geographical areas of coverage

Ensure that their coverage matches your corporation’s network domain.


Check reports

Check into the kinds of reports the provider will supply, and how. Reports are the usual way that providers keep their customers informed of the status of their network. Reports can be transmitted via FTP, in hard copy format via mail or over the Web. Ensure the feasibility of the method of display within your corporation. Review sample reports for relevance, content and style.


Ask your provider how it plans to manage your network

Will your network be managed remotely or will they provide on-site help? Will they use shrink-wrapped or custom applications? Consider the feasibility of their offerings within the infrastructure of your network.


Ensure sufficient personnel will manage your network

Ensure that your provider has enough skilled staff to manage your network. Find out if it sub-contracts its services. If so, consider the feasibility of subcontracted work within your company’s infrastructure.


Check security issues

If the provider manages your network remotely, ensure that security does not become an issue, as they download information for your network to their network management center.


Last but not least, ensure that the provider can live up to its promises

It would be best if these "promises" are listed within the SLA (Service Level Agreement). Establish minimum performance standards and financial penalties if these are not met. It would not hurt to check references either.


Major Network Management Outsourcing Vendors

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.

Service Provider

Services Provided

Information Links and Description



800-426-3333 for the address of local office (US)

Services are provided through its Managed Data Network Services and Network Outsourcing Services within IBM Global Services.

Provide Fault management, Accounting, Performance monitoring and Security management

IBM’s home page

Description of IBM’s Global Services and links to all divisions within Global Services, including Managed Data Network Services and Network Outsourcing Services

Description of services offered by Managed Data Network Services; highlights, services at-a-glance, coverage plus links to other Managed Network Services

Description of services offered by Network Outsourcing Services; benefits, coverage, plus links to other Managed Network Services



Basking Ridge

New Jersey


Services are provided through the AT&T Solutions Unit.

Provide management of resources, overall support and management of AT&T Services.

Provide full FCAPS support (Fault, Configuration, Accounting, Performance and Security Management).

Provide support of PBXs, multiplexers, modems, switches, routers, hubs, bridges, operating systems, servers, desktops, ATM, frame relay, SDN, 800 Accunet, Network Notes and Netware Connect.

AT&T Solutions Home Page

AT&T Solutions FAQ. What is AT&T Solutions; who are its clients; relationship with other business units; how it can help you and career opportunities

AT&T Solutions Focus; four practices it is comprised of (Consulting, Systems Integration, Outsourcing, and Customer Care); and support provided by AT&T Laboratories

Description of its Customer Care practice; key services offered, and industry awards earned



Call local regional MCI office or find it on the web:

Concert Communications Services provide the full suite of network management services.

BT Network Management Services are provided through Enterprise Solutions.

MCI Network Management Services are provided through networkMCI.

Concert Home Page

Description of Managed Data Services provided by Concert, plus links to included specialized services

BT Home Page

Description of BT Enterprise Solutions

Detailed book-like discussion of the advantages of Managed Network Services. Contains links to subsequent sections (i.e., book2.html; book3.html, etc.)

MCI Home page


Description of complete list of services provided by networkMCI



Description of services provided by networkMCI Enterprise Management, which specifically provides network management services

Unisys Corporation

Blue Bell, Pennsylvania


Services are provided through its NetWORKS™ Command Center.

Provide comprehensive remote management and full FCAPS support (Fault, Configuration, Accounting, Performance and Security Management).

Unisys Home Page

Description of services provided by NetWORKS™, customer profiles, Network Enable (Network Integration Services) and contact information

Overview of NetWORKS™ services


NetWORKS™ Reporter, provides information about the health and operation of customer’s network. Links to sample reports and Performance Management documentation



Palo Alto



Services are provided through its HP Network Management Services.

Provide Fault management, Configuration management, Accounting, Performance monitoring and Security management

Hewlett-Packard’s home page

Description of the advantages of selective outsourcing, and links to all of HP’s outsourcing services (Systems Management, Network Management, Enterprise Desktop Management Services, Business Recovery and SAP Operations)



Source: Forrester Research



Saba Zamir is the Editor in Chief for the Advanced and Emerging Communications Technologies Series (CRC Press), and has authored technical books for McGraw-Hill and is a freelance writer for technical journals.

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