A new class of ASP, the managed service provider, can do remotely and at a lower cost what many IT shops find difficult to do on their own: monitor and manage systems operations.
Monitoring and managing applications is often so complex that IT doesn't even know that a system or network is down until users start calling--or, more likely, screaming. "We didn't have a good problem-tracking system. Things would get missed," admits Rob Walsh, systems operations manager at SupportKids Inc., an Austin, Texas, company that tracks down parents who aren't paying child support. But if users are calling, then things have already reached the crisis stage.
When SupportKids officials found their company in this position, their initial response was to buy a management tool. "We looked at buying Remedy or another help-desk system. Then we found TriActive and realized that we wouldn't have to support a separate help-desk system," says Walsh. TriActive Inc., also of Austin, is one of the new breed of managed service providers (MSPs). It manages help-desk tickets for SupportKids as well as provides system monitoring, system inventory, and asset management services over the Internet.
|AT A GLANCE - Marconi Medical Systems Inc. |
The company: Cleveland-based Marconi Medical Systems, part of Marconi plc, is a global supplier of clinically focused medical imaging systems, services, and information central to modern patient care.
The problem: The company needed to monitor and manage its increasingly complex, increasingly strategic, global network and improve communication of network status to managers.
The solution: Marconi outsourced the operation and management of its network to a network operations center and turned to Silverback Technologies Inc. of Billerica, Mass., a managed service provider, to continually monitor the network and provide real-time network status directly to Marconi managers via the Internet.
For years, vendors have offered management software tools, but those products never really worked as promised. For one thing, these tools typically were point solutions, each with a different interface and different skills requirements. The grand enterprise management tools that promise to do it all, like the Tivoli's and Unicenter's of this world, are costly to license, take years to implement, and are more likely to fail than work, notes Corey Ferengul, senior program manager with Meta Group, of Stamford, Conn.
Enter MSPs. This new class of application service provider (ASP), which uses the ASP model but delivers systems management services rather than business applications, is rapidly pushing ASPs out of the spotlight. MSPs provide remote systems and network infrastructure management via the Internet. Not only does this system work, say IT managers, but the cost savings are staggering, bordering on the too-good-to-be-true.
Initially, the MSP concept focused on the management of large server farms that were co-located in an Internet data center. Quickly, the concept caught on. Today, organizations can find a wide range of functions delivered through an MSP model. These include data center operations, Web site performance, testing, help-desk management, and storage. "MSPs today are doing anything involved with performance monitoring, infrastructure operations, and the management of the application infrastructure," Ferengul says.
It's just in the past year that the MSP concept has taken off. "Unlike the ASP market, where there are few customers, we are seeing quite a bit of MSP adoption," he notes. Using a broad definition of MSP, which includes storage service providers, Meta Group projects $10 billion in MSP revenue by 2005. Ferengul counted as many as 84 MSPs as of November 2000, and is noticing the appearance of new MSPs almost every week. Even co-location providers and Web hosting companies are adding MSP capabilities.
International Data Corp. (IDC) of Framingham, Mass., takes a narrower view of the MSP market. It estimates worldwide MSP revenues will reach $78 million in 2000 and grow to $524 million by 2004.
While both ASPs and MSPs represent forms of outsourcing, the ASP focuses on the application--enterprise applications, e-commerce sites, Web site hosting, and even extra storage--and downplays any cost savings. The MSP focuses on monitoring the systems and the network. With an MSP, the sophisticated management tools already are up and running, and the MSP has people on staff who know how to use those tools. Users just have to plug into the management tools and expertise via the Internet.
One doesn't replace the other, and companies might use both an ASP and an MSP together. However, "it would be hard for an ASP to do what an MSP does. They would have to build the management capabilities and the network operations center," Ferengul says. Looking ahead, ASPs and MSPs will likely partner to deliver a fully managed ASP offering.
Like the ASP, the decision to use an MSP comes down to a classic build-versus-buy choice. But unlike applications, managing data centers and networks is not usually a strategic focus for most organizations. "You have to compare the expertise the MSP brings with the cost of hiring that level of expertise. Even if you already have a management tool in-house, you probably are not taking advantage of it to the depth that an MSP goes to," says Michael Coffield, president of the MSP Association in Wakefield, Mass., the MSP industry's trade group.
"It becomes a question of how we allocate our resources. We know we can't provide world-class service alone," says Tom Gildea, CEO at Paperhub Co., a Downers Grove, Ill., online exchange for the paper industry. Paperhub turned to MSP NuClio Corp. for data center and network services. NuClio, based in Oakbrook Terrace, Ill., not only manages Paperhub's systems but also monitors the actual applications. "It will generate alerts or take appropriate actions whenever there is a problem," he says.
|Tom Gildea, CEO at Paperhub Co. |
BuildPoint Corp., an online marketplace for the construction industry based in Redwood City, Calif., turned to nearby iSharp Inc., also of Redwood City, for managed performance testing after growing dissatisfied with in-house testing tools. Although the company's developers continue to use testing tools in house during development, "we use iSharp for final large-scale testing," says Chris Corzine, director/information technology. "It is a huge cost saver, by an order of magnitude."
For a small monthly fee, the MSP will point sophisticated management tools at a company's systems, usually running in an Internet data center, and keep officials instantly abreast of what is happening. "Just look at the cost of installing something like Tivoli or Unicenter to manage your systems. You could easily spend $3 to $6 million to acquire and implement a tool like that, and 75% of the implementations still fail," Ferengul says.
Many managers are jumping at the cost savings. "Can you imagine what it would cost us if we were to try to staff a data center for 24x7 operations? That is a minimum of five skilled people. SiteRock [Corp. of Emeryville, Calif.] costs us the equivalent of one person," says Jim Hannan, general manager/free dial access group at 1stUp.com. "And, I don't have to manage employees or absorb any of the overhead associated with hiring and HR." Cost is important to 1stUP.com, a financially struggling CMGI company that provides private label Internet access to organizations that want to offer free Internet access.
Benefits For All
The majority of MSP customers are coming from the e-business ranks where 24x7 performance is essential. They include both young dot-com startups and e-business initiatives within established conventional companies. "It is pretty easy for a company to make the leap to an MSP," Ferengul notes.
Typically, there is no initial set up cost, implementation is straightforward, and results are almost immediate. "MSPs are ideal for a startup. It lets you amass a lot of talent instantly," says Paperhub's Gildea. The downside of MSPs is loss of control. But many organizations, especially startups, never had control of their systems and networks to begin with, Ferengul adds.
A company doesn't, however, have to be a startup dot-com to benefit from an MSP. Cleveland-based Marconi Medical Systems Inc., for example, puts medical imaging systems into hospitals worldwide. It installs and maintains hardware and software, and sells the disposable supplies, such as media, that go along with imaging systems. Until it discovered the MSP concept, "we relied on one guy to handle the network and fix problems," says David Wither, manager/network infrastructure. It didn't take much before he was overloaded.
What Marconi needed was a full-scale, 24x7 network operations center (NOC) to run the network, but NOCs are costly to build and difficult to staff. Instead, the company enlisted IntelliNet Corp. of Richmond Heights, Ohio, which provides NOC services. But a NOC typically only reacts to problems. For more proactive management, Marconi hired Silverback Technologies Inc. of Billerica, Mass., which provides network performance monitoring and reporting.
|Lessons Learned about Managed Service Providers |
When it comes to managing IT systems and network infrastructure, outsourcing to an MSP is a far better deal financially and in terms of speed of deployment.
Pick an MSP carefully. Many are small startups. Make sure it has the financial backing for the long haul.
Have a contingency plan in case the MSP fails.
Insist on a service-level agreement.
Check the MSP's standard service-level agreement very carefully and make changes to reflect specific company concerns.
"With IntelliNet and Silverback, I now have control," says Wither. Through Silverback, which took one day to implement, Wither is able to monitor the network and track individual circuits. To keep abreast of what is happening, Withers simply logs onto the Silverback portal and checks the status of Marconi's circuits in real time, drilling down for more detail when necessary.
The combined cost of IntelliNet and Silverback comes to $7,500 per month, which Wither considers a bargain compared to the cost of building and operating a NOC and managing the network. But the payoff goes beyond the out-of-pocket savings. "The communications channel has become strategic. With Silverback, we have moved information about the channel from the technician in the basement to the user community," Wither says. When there is a problem, he can alert employees and customers.
Pacific Coast Building Products Inc. of Sacramento, Calif., another conventional company, turned to Luminate of Redwood City, Calif. Pacific Coast runs SAP R/3 enterprise resource planning (ERP) applications in multiple locations. "I was just one person, and I could never complete all the daily tasks and checklists SAP throws at you," reports Dean Hancock, technical team lead.
Now Luminate monitors SAP, the network, and the database. Instead of facing a mountain of chores every morning, Hancock finds an e-mail from Luminate detailing the status of the system in prioritized order. "Instead of spending half of each day running around trying to check 40 things, I do three or four things that are important," he notes. The alternative, Hancock adds, is to invest in an enterprise management tool, which costs a fortune but offers results that are far from certain.
Picking the right MSP is critical. As another form of outsourcing, selecting an MSP is similar to choosing any outsourcing vendor. And since the MSP may need to work with other IT services providers, such as an ASP or Internet data center, the IT department may have to get these parties involved, too.
Managers also need to carefully scrutinize services and service-level agreements, and insist that the MSP actually demonstrate the promised capabilities. "There is still a lot of vaporware in the market," Hancock warns.
Many of the MSPs are startups, too. Managers will need to assure themselves that the MSP has the partnerships and financing in place for long-term survival. "Space4Rent is in its second round of financing so, sure, I'm concerned," says Drake Philbrook, CEO of Globalogic Corp., in San Diego. Globalogic, a consulting firm, turned to Space4Rent.com of Carlsbad, Calif., for Web hosting and management services. While he is very satisfied with Space4Rent to date, Philbrook has a contingency plan in mind that entails bringing the services in-house if necessary.
|Drake Philbrook, CEO/|
President Globalogic Corp.
"Look at the viability of any MSP. Do your due diligence," advises Coffield, of the MSP Association.
Remember, MSPs became possible because of the Internet. It's the Net which allows IT to leverage more sophisticated, automated management systems and expertise remotely than it could provide in house, and at a far lower cost. As companies get a taste for MSPs, they want to extend the concept to other areas of their operation, including storage, testing, and Web site performance. "Customers are pushing the MSPs," Ferengul notes.
At the same time, this is leading to MSP creep, where MSPs scramble to add new functionality. Anything that can be managed over Internet is fair game. //
Alan Radding is a freelance writer based in Newton, MA, specializing in technology and business. Visit his Web site at www.technologywriter.com.