The State of Infrastructure: Remote Management Gains Traction
The State of Infrastructure: Remote Management Gains Traction TechWeb December 2008
Overview <ul><li>The market for remote infrastructure management (RIM) services is growing – especially in these tight economic times – as more companies turn to the remote delivery of services (often from lower cost sites globally) to increase businesses efficiencies and effectiveness, and to control costs without hurting performance or increasing full-time staff. </li></ul><ul><li>Common services provided include mainframe, network (voice and data services), help desk services and many others. </li></ul><ul><li>Buyers like the idea that they can lock into outsourcers’ core competency in handling these matters. And the ability of service providers to deliver on their promises has certainly matured since their beginnings earlier this decade. Today, providers deliver services through highly trained, certified engineers from network operation centers (NOCs) that are designed to withstand just about any force nature can throw at them. In addition, many RIM providers today have multiple world-class NOCs operating throughout the globe, including locations in the U.S., India and Asia Pacific. </li></ul>State of RIM
Methodology <ul><li>Timing: In November and December 2008, TechWeb conducted an online study on the state of remote infrastructure management for Satyam. On November 18 and December 3, TechWeb sent e-mail invitations to an N th name sample, asking recipients to participate in a brief survey. </li></ul><ul><li>Questionnaire : The questionnaire was developed by TechWeb and the sponsor company, Satyam. </li></ul><ul><ul><li>Sample and Fielding: The sample was drawn from TechWeb’s database in North America. E-mails were sent to subscribers who had agreed to be contacted by TechWeb for research purposes, inviting them to participate in an online survey. An embedded URL directed respondents to the survey hosted by our Web survey host partner, SurveyGizmo. </li></ul></ul><ul><ul><li>Incentive: Those who completed the survey could opt in to enter a drawing to receive a 16GB Apple iPod Nano, valued at $199 from TechWeb. TechWeb research was responsible for all phases of programming the survey, as well as coding and analyzing the survey responses. These procedures were carried out in strict accordance with established market research practices. </li></ul></ul><ul><li>Response: A total of 245 respondents qualified and completed the survey. To qualify, respondents confirmed that they had an active role in their organization's sourcing or management of remote infrastructure service providers and that their organization was currently engaging, or had engaged, service providers to deliver remote infrastructure management services. Data in this report is based on these 245 respondents unless otherwise noted. The total study base of 245 respondents yields a margin of error of +/- 6.3 percent. </li></ul>State of RIM
Conclusions <ul><li>The most commonly used RIM services include help desk (41 percent), server management (34 percent), network services (32 percent), data center management (27 percent) and desktop management (25 percent). </li></ul><ul><li>Close to 30 percent of surveyed respondents say they plan to increase spending on RIM services next year. </li></ul><ul><li>RIM delivers many benefits, according to respondents, but some concerns remain, particularly about delivering services according to expectations. </li></ul>State of RIM
<ul><li>The State of Infrastructure: </li></ul><ul><li>Remote Management Gains Traction </li></ul>STUDY FINDINGS
Majority Currently Source RIM Services Does your organization currently engage, or has it ever engaged, service providers to deliver remote infrastructure management (RIM) services? Single response allowed Only those respondents who said they currently use or have previously used RIM services continued with the survey. N=420 Very few organizations bring RIM services back in-house after outsourcing them – just 7 percent of survey respondents do so. A little more than one-quarter of businesses are steering clear altogether, either because they are uncomfortable outsourcing IT management functions, believe they can do it more effectively themselves, or simply have not considered the idea. But for more than half, RIM is a go. Yes, we currently do 52.7% No, we have not and don’t plan to 28.4% Yes, we previously used RIM services, but we brought the services back in-house 6.6% No, but we will be beginning an engagement next year, or might consider it 12.3%
Help Desk Most-Sourced Function What infrastructure management services are you currently sourcing? Multiple responses allowed Help desk functions top the chart when it comes to sourced services. RIM engagements in this area — and any other — are best positioned to succeed when clients explain business processes and standard procedures to partners, and transfer them over in a formalized way. 40.5% 34.5% 18.1% Help desk Other Server management Network/communications services Data center management Desktop management Mainframe services Security management Testing services Development None 32.4% 27.1% 25.2% 22.7% 5.8% 17.6% 16.7% 1.2%
Most Are Satisfied with Recent RIM Engagements Thinking specifically about services you have sourced in the last 12 months, how satisfied are you with your most recent RIM engagements? Single response allowed An argument can be made that RIM engagements are by and large successful – for each service, signifi-cantly more than half the respondents report they are somewhat or very satisfied with their engage-ments. However, some services seem more in need of improvement than others: More than 30 percent of respondents sourcing help desk and desktop management, for example, say they are somewhat or very dissatisfied with results. Help desk services Server management services Data center management services Desktop management Mainframe services Testing services Network / Communications Security management services 6.2% 21.0% 48.8% 24.0% 5.8% 21.8% 48.7% 23.7% 11.9% 20.7% 45.2% 22.2% 8.6% 20.5% 49.0% 21.9% 8.9% 19.4% 51.5% 20.2% 6.0% 23.1% 50.8% 20.1% 11.4% 20.6% 48.6% 19.4% 7.8% 19.4% 54.2% 18.6% Very dissatisfied Somewhat dissatisfied Very satisfied Somewhat satisfied 10% reported they have not used RIM services in the past 12 months.
Dissatisfaction Results From Missed Expectations If you were dissatisfied with any RIM engagement(s), what was the main reason for your dissatisfaction? Single response allowed One-third of companies reporting dissatisfaction with services attribute this to providers not delivering to contract expectations. The gap between that and the next most-cited reason, failure to consistently meet SLAs, is significant. But one shouldn’t overlook the 13 percent who note that providers couldn’t adequately react to changing business requirements – particularly in light of today’s economy and the effect it is having on increasing the pace of change in many organizations’ strategies and activities. That makes a partner’s flexibility a big virtue. 34.0% Services were not delivered to expectations of the contract Other Failure to consistently meet SLAs Inadequate lines of communication with service provider Provider couldn't adequately react to changing business requirements Services came in over budget We could not adequately track performance 20.1% 16.4% 10.1% 4.4% 13.2% 1.9%
Most Continue RIM Contracts Have you recently (in the past two years) terminated a RIM or BPO [business process outsourcing] contract early because of performance, or other issues that didn't meet expectations? No 78.5% Yes 21.5% Single response allowed It’s welcome. Under one-quarter have terminated a RIM contract due to poor performance. It’s possible more may have wanted to, but were stymied by the difficulties around doing so, whether it’s re-sourcing those skills in house or transferring them to another provider. This points out how important it is for organizations to be secure that they choose an outsourcing partner wisely, with an eye to its ability to offer the skills to support their expectations and the flexibility to meet changing business requirements.
Economic Downturn Is a Catalyst for Increasing RIM Services for One-Third of Respondents Is the economic downturn acting as a catalyst for your organization to begin to consider or increase its consideration of remote infrastructure management services? Single response allowed It’s welcome. IT budgets have not gone unscathed in these difficult times, with many analysts predicting sharply curtailed IT spending growth. That is leading more companies to consider RIM. Service providers should be better able to deliver increased efficiencies because infrastructure management is their core competency, and businesses like the idea that they can “keep the lights on” without adding full-time head- count. No 39.8% Don’t know 26.1% Yes 34.1%
RIM Services Spending: Steady or Accelerating Will the amount of your IT budget allocated toward RIM services increase or decrease in 2009 compared to 2008? Remain the Same 50.6% Decrease 21.5% Single response allowed It’s welcome. Increase 27.9% The never-ending pressure to achieve more with less will continue to accelerate RIM’s growth. RIM spending will grow for close to 30 percent of respondents. Only one-fifth anticipate any kind of a decrease in this area.
Plurality Plan to Spend Between 1% to 10% of Their IT Budgets on RIM Services How much of your IT budget will be allocated toward RIM services in 2009? Single response allowed Some companies have very aggressive targets for RIM spending. While most will keep spending at 10 percent or less of their IT budgets, a full quarter may spend as much as 25 percent of their budgets on these services. Just over 10 percent plan to spend between 26 percent and 50 percent of their budgets in this area. 1 to 10 percent 11 to 25 percent 26 to 50 percent 50 percent or more None Don’t know 29.3% 24.8% 12.4% 3.3% 4.2% 26.0%
Budget Cuts Are Catalyst for Increased Outsourcing What are the reasons for this budget increase? (Select all that apply.) Of the items you mentioned above, which is the most important reason? (Select one.) Top bar – Multiple response allowed Bottom bar – Single response allowed Question was asked of those respondents who reported an increase in RIM spending. N=67 Of course, the economic downturn factors heavily into increasing the outsourcing of RIM services – it is by a slight percentage the most important reason for most respondents to travel this road. But that factor goes hand in hand with the other prominent reason cited by respondents: the budget cuts expected by 46 percent of them. Worth noting, however, is the attention respondents place on RIM’s ability to enable them to dedicate staff to more strategic efforts and improve their effectiveness while controlling costs. All Reasons Select all that apply Most Important Reason Select only one Budget cuts require more infrastructure outsourcing 46.3% To dedicate staff to more strategic IT efforts Outsourcing has proved to increase our effectiveness, while controlling costs Business growing too fast to put into place in-house team Having trouble finding qualified hires to handle the work needed 34.7% 41.8% 22.4% 35.8% 30.6% 16.4% 10.2% 14.9% 2.1%
Security Is of the Utmost Importance How important do you consider the security controls a RIM provider puts in place to protect your confidential and proprietary information? Single response allowed Not surprisingly, security ranks as the top concern when it comes to RIM outsourcing. Contracts with vendors, including offshore providers, should establish formal, ongoing oversight of providers’ procedures and responsibilities, to ensure infrastructure and data integrity, including the protection of intellectual property. Not Important 0.4% 92% said Important/Very important Somewhat Important 7.6% Important 18.1% Very Important 73.9%
Loss of Institutional Knowledge a Concern How concerned is your organization about the potential of losing the skills, expertise and knowledge, once held in-house, to the RIM outsourcing process? Single response allowed Some see a risk in RIM: As providers take over these services, their own staff’s skills in these areas will decline. That worries some who want to keep their options open for bringing services back in- house at some point. Where to turn if in-house talent loses its expertise, and up-and-coming talent isn’t available to fill their places? Some analysts estimate that new IT workers with the skills that businesses currently need aren’t being produced quickly enough by universities to meet market demand. Not at All Concerned 23.1% Somewhat Concerned 34.3% Concerned 28.1% Very Concerned 14.5%
The eServices Capability Model <ul><li>Before the subsequent questions were asked, respondents were given the following statement to read: </li></ul><ul><li>The eServices Capability Model has 84 practices that measure every aspect of a service provider's capabilities and how the relationships with its clients unfold. These practices range from how customers and service providers are engaged, how the terms of the relationship are negotiated, to how clients interact with the provider throughout the engagement. Service providers are certified on a scale of level 1 through 5, with level 5 being assigned only to the most mature providers. </li></ul>State of RIM
Overwhelming Majority Report Traditional Vetting Processes Work for RIM How successful do you believe traditional RIM and BPO (business process outsourcing)/ITO (IT process outsourcing) provider vetting processes, such as reference checking, are when trying to select the proper RIM provider? Somewhat 75.9% Not at all 9.2% Single response allowed It’s welcome. Very 14.9% Companies need to ensure that they engage with partners who have experience in the specific service they need, in order to realize the efficiencies they expect. It’s also crucial to check a number of customer references. When discussing services with these references, companies should inquire not just about the services they’re considering now, but also ask what other RIM services they may be using, in case future plans call for additional outsourcing.
Most Would Find eServices Capability Accreditation Helpful How helpful would you find using this eServices Capability Model accreditation during RIM selection processes? Somewhat 69.0% Not at all 7.6% Single response allowed It’s welcome. Very 23.4% Increasingly, buyers will look to accreditation models such as the new eServices Capability Model for Service Providers, or eSCM-SP, to help them judge the maturity of their providers in managing and delivering engagements during the RIM selection process. For RIM services, eSCM-SP best practices in technology management — effectively managing the enabling infrastructure, including optimizing and ensuring its high availability — are among the most important measures.
RIM’s Top Benefits on Display What is the primary benefit you believe RIM provides? Single response allowed Outsourcer can perform services more efficiently than in-house, because it is the outsourcer’s core competency 31.6% Fixed costs Increase control over staffing size (layoffs during down economic times, overhiring during boom cycles) Enforceable service level agreements Other 30.4% 24.0% 7.2% 6.8% The primary benefits of RIM are two-fold: Thirty percent say its fixed-costs model is appealing for the control that it offers over spending, and 32 percent acknowledge that outsourcers can do a better job than internal staff at bringing the efficiencies they need to the table, because it’s their core competency. A strong third is the control RIM enables over IT staffing sizes — especially when IT labor costs are squeezed.
RESPONDENT DEMOGRAPHICS <ul><li>The State of Infrastructure: Remote Management Gains Traction </li></ul>
Which of the following best describes your job function? Respondent Demographics: Job Function Single response allowed IT CIO/CTO 3.2% Vice President/SVP of IT 4.0% Director of IT 8.0% IT Manager 23.9% IT Staff 19.5% IT Consultant 8.4% Corporate CEO/COO/CFO/President 2.0% Vice President/SVP (line of business) 3.2% General Manager 2.0% Director (line of business) 4.8% Manager (line of business) 12.0% Consultant 4.8% Other 4.4%
All Were Involved in Some Way With Their Organization’s RIM Sourcing or Management of RIM Providers Multiple responses allowed How are you ― or how have you been ― involved in your organization's sourcing or management of remote infrastructure service providers? 53.8% 46.9% 33.4% 13.9% Sourcing (specification, evaluation) Management (program, enabling functions) Vendor management Other
Respondent Demographics: Company Size How many employees are in your organization in total? Single response allowed Less than 50 3.6% 100 to 499 9.6% 500 to 999 8.8% 1,000 to 4,999 17.5% 10,000 or more 41.4% 50-99 3.2% 5,000 to 9,999 15.9%
Respondent Demographics: Endpoint Computing Assets Please tell us how many endpoint computing assets are in your organization in total. Single response allowed Less than 50 2.5% 100 to 499 11.1% 500 to 999 9.9% 1,000 to 4,999 20.2% 10,000 or more 37.5% 50-99 6.6% 5,000 to 9,999 12.4%
Respondent Demographics: Company Revenue Which of the following best describes your company’s annual revenue? Single response allowed Less than $6 mil 5.6% $6 mil to $49.9 mil 12.0% $50 mil to $99.9 mil 8.4% $100 mil to $499.9 mil 8.0% $500 mil to $999.9 mil 6.4% $1 bil to $4.9 bil 17.5% $5 bil or more 31.5% Don’t know/ Can’t answer 10.6%
Respondent Demographics: Industry Single response allowed Manufacturing and industrial (non-computer) 10.93% Telecommunications and ISPs 10.12% Consulting and business services 9.31% IT vendors 6.48% Healthcare and medical 6.07% Financial services/Banking 5.67% Education 5.26% Biotech, biomedical and pharmaceutical 4.45% Financial services/Insurance 4.05% Government 4.05% Retail and E-commerce 4.05% Financial services/Securities and investments 3.24% Financial services/Other 2.83% Electronics 2.43% Insurance and HMOs 2.02% Media and entertainment 2.02% Hospitality and travel 1.62% Logistics and transportation 1.62% Construction and engineering 1.21% Consumer goods 1.21% Distribution 1.21% Energy and utilities 1.21% Automotive 0.81% E-marketplace (portals or auction) 0.81% Utilities 0.81% Chemicals 0.40% Food and beverage 0.40% Metals and natural resources 0.40% Nonprofit 0.40% Real estate 0.40% Other 4.51%