WHY WOULD AN ENTERPRISE WITH ITS OWN IT STAFF HAND OVER THE MANAGEMENT OF CRITICAL NETWORK FUNCTIONS AND TECHNOLOGIES TO A SERVICE PROVIDER?
Enterprises have many reasons for using managed services, including reducing operating costs, streamlining IT operations, and migrating to converged, feature-rich IP networks. Still, the most important benefit of managed services – also the simplest in concept – is often overlooked: focusing on core competencies.
To remain successful, senior managers need to evaluate each of their operations and ask themselves how critical it is to their company’s business, explains David Tapper, senior analyst of outsourcing and managed services for market-research firm IDC. The company should consider outsourcing any operation that is not considered a core competency. “There are hundreds of things the staff at any given company can do, from sweeping floors to building microprocessors,” Tapper explains. “But that doesn't mean it makes sense for them to do those things.” Yet many businesses choose to manage network services themselves simply because they already have their own equipment, software, and IT knowledge. “The typical thinking is: Why hire someone else to do what they themselves can do?”
What’s more, emerging network technologies, such as IP telephony, can prove challenging for enterprise IT departments to design, deploy, and maintain – particularly when those companies must modify the existing legacy infrastructure to do so. In such a case, the management team must consider whether dedicating staff and financial resources toward developing in-house expertise matches the overall enterprise business goals. If it does not, the company is wiser turning the job over to a service provider for which managing IP telephony services is a core competency.
Services on Demand
Managed services range from outsourcing a particular network function (network security, for example) to out-tasking the entire design, deployment, and maintenance of local-area networks (LANs), wide-area networks (WANs), and wireless LANs.
Many enterprises today want everything from network service and global security to converged IP networks, which provide the ability to move data, voice, and video applications across a single connection. “Their focus is more in tune with performance, reliability, and price than on the detailed technical capabilities that make up the service,” says Charles Salameh, vice president of data and managed solutions for Bell Canada.
At the same time, enterprises were expanding globally and depending more on the Internet, notes Sandra Palumbo, an analyst in the Yankee Group’s Telecommunications Strategies practice. As a result, corporate IT staff were spending more time and resources on day-to-day operations and network management, while decreasing the time they had to focus on strategic initiatives that supported the organization’s core business goals.
A Look at the Landscape
“Managed security is probably the hottest service today,” says Eric Goodness, an analyst for Gartner. VPN and IP telephony are also currently in high demand, observers say. Ongoing denial-of-service network attacks, viruses, and potential cyberterrorism are fuelling stronger interest in managed network security services. Vigilantly monitoring network security and maintaining updates is demanding and costly, and companies that specialize in network security often best accomplish these tasks.
Managed services have not yet been widely adopted by businesses, but that’s about to change. Up to 30% of companies are willing to turn to a service provider for the design, construction, and management of their IP network solutions, according to a 2002 report conducted by IDC and Nielsen and commissioned by Cisco Systems. The study results indicate that the majority of these enterprises will implement managed services within 24 months.
The reason an enterprise should use a managed service provider boils down to a simple fact: usually, the provider can manage a network service better and cheaper than the enterprise can. Why? “Because it's their core competency,” says Peter Wells, director of field operations in the ILEC group at Cisco.
Abridged from an article by James A Martin in Cisco Systems iQ Magazine
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