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Analysis of MF

  1. 1. A REPORT ONCustomer Segmentation Analysis of Managed Services: A case study of Oracle Solution Services India (SSI) BY Vishesh Kumar (Enrollment No. 10BSP1181) Name of the organisation: ORACLE SOLUTION SERVICES INDIA
  2. 2. A REPORT ON Customer Segmentation Analysis of Managed Services: A case study of Oracle Solution Services India (SSI) By Vishesh Kumar (Enrollment No.-10BSP1181) ORACLE SOLUTION SERVICES INDIAA report submitted in partial fulfilment of the requirements of PGPM Program of IBS Bangalore Distribution List:Faculty guide Company guideDr. Ashish Dash Mr. Suresh SeetharamanDate of Submission: 01-12-2012
  3. 3. AuthorisationI hereby authorise that the project entitled ―Customer Segmentation Analysis of Managed Services:A case study of Oracle Solution Services India‖ conducted at Oracle Solution Services IndiaPvt.Ltd. is a record work carried out by me during the academic year 2011 under the guidance ofmy faculty guide, Dr Ashish Dash, faculty for economics at IBS-B, Bangalore and my companyguide Mr. Suresh Seetharaman. I also declare that this project is the result of my effort and has notbeen submitted to any other university or institution for the award of any degree, or personal favourwhatsoever. I also declare that all the details and analysis provided in the report hold true and to thebest of my knowledge.Place – BangaloreDate – 10th May, 2011
  4. 4. AcknowledgementI hereby take this wonderful opportunity to thank all those people who have helped me in one wayor the other in successful completion of the project. The guidance and support of these people havebeen immense and invaluable throughout the project.I extend my heartiest gratitude to Mr. Tarakesh Tummapudi and Mr. Anand Huchappa, of OracleSolution Services India Pvt. Ltd. for giving me the best opportunity to work as an intern in such anesteemed organisation.I also thank my company guide Mr. Suresh Seetharaman for his valuable inputs at various stageswhich has proved to be really useful in structuring and carrying out the project.I would specially thank my faculty guide Dr. Ashish Dash, faculty of economics at IBS-B for allthe encouragement and indispensable feedback.I also take this opportunity to thank all the people who have been directly or indirectly related tothis project and have helped me in some way or another.
  5. 5. CONTENT1. Executive Summary2. Managed Service Industry Analysis a. Global Market b. Indian Market3. Managed Services Benefits & Challenges4. Competitor Analysis a. HP b. IBM c. HCL d. Wipro Infotech e. Rolta TUSC f. TCS g. Accenture h. Dell5. KYC Analysis6. Appendix A (Delivery Models)7. Appendix B (Pricing Model)8. Appendix C (Major Deals)9. Appendix D (MS Applications & Technology Updated Data)
  6. 6. Executive SummaryThis report is the result of the research and survey conducted by me, Vishesh Kumar(Enrolment No. 10BSP1188) while working as an intern in Oracle Solutions Services IndiaPvt. Ltd. situated in Bangalore.Oracle SSI is a premier offshore consulting division of Oracle Corporation. Customerengagement happens through Oracle’s local service organization to deliver services &solutions to Oracle customers across the EMEA, APAC & North America (limited coverage)regions.Title of Project: Customer Segmentation Analysis of Managed Services: A case study ofOracle Solution Services India(SSI).Objective: In-depth analysis of managed services industry and competitor analysis. Analysisof the OSSI customers. Recommend a better bidding process for OSSI.BackgroundThis report is based on the secondary data collected from the internet. First part of this reportcontains the analysis of market opportunities for managed services both in global context andin Indian market. The second part contains the analysis of the managed services provided bysome of the key players such as: • Dell • TCS • HP • Accenture • IBM • Wipro Infotech • HCL • Rolta TUSCThe third part of the report contains findings about oracles customers segment and the SWOTanalysis of oracle managed services along with recommendation for a better bidding process.In order to make this report I have collected secondary data from latest published reports bysome of the prominent information technology research and advisory firms. I have alsoprepared a questionnaire to collect primary data on oracles internal customers.Findings & ConclusionOn completion of my tenure of 14 weeks of work at OSSI I found that global market formanaged services is showing a huge potential and is growing at almost 30% compoundedannual growth rate, the research also indicates that Indian managed services market is hugeand is growing at a tremendous rate and is expected to reach US$3.8 billion by 2013.After analyzing all the data I concluded that Oracle needs to curve out their niche market inthe managed services industry and should focus on retaining their existing customers as theyare offering only limited services.I would like to recommend OSSI that they should focus on improving their bidding processand strengthening their resource pool in order to get a large share in the exponentiallygrowing managed services market.
  7. 7. INTRODUCTIONThis report is based on the research I have done in the managed services industry whileworking as an intern in Oracle Solution Services India Pvt. Ltd. (henceforth used as OracleSSI) starting from 1st March 2011 up to 30th April 2011. During my period of work in OracleSSI a lot of important topics have been covered and a lot of secondary data has been collectedon the managed services industry. The findings of the research are given.Included in the report are some analysis of the industry like who are the top players in termsof revenue, what are the services offered by them. The report is also closed with references.I hope that this report serves well to all the readers who need information on the Managedservices industry.
  8. 8. Company and Industry InformationOracle SSI:Oracle SSI is a premier offshore consulting division of Oracle Corporation. More than 1000consultants focus entirely on Oracle Applications & Technology at SSI. The team brings tofore its experience of having executed more than 1200 engagements across 35 countries & 15industry domains. Customer engagement happens through Oracle’s local service organization(maintaining the single point of accountability) to deliver services & solutions to Oraclecustomers across the EMEA, APAC & North America (limited coverage) regions.Services are offered for all stages of the solution lifecycle, from design, implementation,maintenance, optimization to upgrades. Applications covered include Oracle E-BusinessSuite, Siebel, Oracle Retail, PeopleSoft, JD Edwards, OTM, Demantra & Agile. Technologyservices and skills cover integration and SOA, security services, J2EE, rapid applicationsdevelopment, content and collaboration, business intelligence, data warehousing,architecture, upgrades and migration, and so on.Co-located with the Oracle’s product development & support teams, Oracle SSI leveragesaccess to various Oracle teams to build industry solutions, best practices & services that helpcustomers best leverage their Oracle investments.Industry DefinitionManaged Services: According to Wikipedia ―Managed services are the practice oftransferring day-to-day related management responsibility as a strategic method for improvedeffective and efficient operations. It’s a remote management of information technology tosupport a business customer’s processes. A managed service typically contains the followingcharacteristics: remote provisioning and trouble management, remote monitoring of allsolution elements, detailed service-level agreements, and contracts that extend beyond oneyear.‖
  9. 9. Managed Services Industry AnalysisGlobal MarketOvum, a consulting firm that specializes in telecom and software consulting, released a studyprojecting that the global market for managed services will deliver revenues of $66 billion by2012.The study, which collected data from more than 1,300 enterprise managed service users in 14countries, projects that managed IP-based services will see a compound annual growth rate of18% over the next four years.Overall, the study finds that the managed services generating the most interest amongcorporate users are managed metro Ethernet, managed IP, VPNs, managed VoIP andmanaged security.IP VPN services are the largest global managed services market, with revenues totaling $17billion, the study finds. While the study projects VPN services to remain the most widelydeployed managed service in 2012, it also says that VoIP will experience the fastest growthover the next four years with a 39% compound annual growth rate (CAGR).Other studies have also shown a fast-growing market for managed security services. Datapublished by business research and consulting firm Frost & Sullivan, for instance, projectsthat the managed security services will exceed $6 billion by 2011.In addition to its findings on global managed services growth, the study also projects thatNorth America has overtaken Europe as the largest overall market for managed services, andthat the Asia-Pacific managed services market will see 27% CAGR that the study says will bedriven mostly by growth in India and China.1Fig: Global Managed Services Growth Rates.Source: ―Next-Generation Managed Services: Winning Strategies for Network Service Providers,‖ Cisco IBSG, October2008. Additional analysis provided by Datamonitor; IDC; Frost & Sullivan; Forrester Research; and Gartner, Inc.1 Study conducted by Ovum Consulting firm that specializes in telecom and software consulting.
  10. 10. Indian MarketThe IT managed services market in India is growing at a CAGR of 22.8%, according to ITmarket research specialist Springboard Researchs newly released report Indian Managed ITServices Market.The market is expected to reach US$3.8 billion in 2013 from US$1.6 billion in 2009, and thisgrowth is higher than the growth rate of the overall IT services market.The report says that Wipro Infotech has the highest market share, and HCL Infosystemsleads in user satisfaction.By 2013, the highest growth will be recorded by managed application services that arepredicted to grow at a CAGR of 26.2%.2The worldwide recession and the competitive market have made the companies realize theimportance of making the optimum use of their IT infrastructure and finding innovative waysto reduce the cost. In addition, as the companies grow, they have to deploy complexapplications to function efficiently; and deployment of such applications leads to issues likesecurity, business continuity, disaster recovery, controlling and monitoring etc. In midst of allthese companies also have to ensure that they provide quality services to their users. TheManaged Services providers (MSPs) have come as blessing for the companies to take care ofall the above mentioned issues and problems.The Indian managed services market is huge and is growing at a tremendous pace. Some ofthe current trends in the Indian market are:3 Managed Application Services: It has gained prominence as applications have become more complex and mission critical; as a result proactive and 24x7 monitoring of applications for performance, capacity and availability have become extremely important. Integrated Application Support Services: It involves all the end-to-end application support, and different lines of support services. Application Maintenance Support Services: It includes end user support, code maintenance and bug fixation, data conversion and migration, specialized reports, application interfacing, integration etc. Managed Security Services: All the companies have become extremely security conscious but instead of hiring people on their own, they seem to prefer to outsource to the security management services providers who are clearly the domain experts. Managed Load Balancing Services: Major Telecom and IT companies are slowly outsourcing their load balancing (which ensures that the work is equally divided between the servers) services. Managed VoIP Services: Many companies prefer to outsource the deployment and maintenance their new VoIP solution, as well as the maintenance of their existing telephony solutions. Managed Data Center Services: It involves the management of servers, storage and network services of companies. It also covers all IT infrastructure components of the data center including virtualization, automation and integration.2 Findings are based on Springboards latest research titled “Indian Managed IT Services Market”(April 2010),which was conducted on 187 CIOs and IT budget decision makers in enterprises large and small in India.3 Managed Services-The Cost Effective Model for Enterprises :
  11. 11. Managed Storage and Backup Services: It involves all backup of the applications and data, and different storage requirements of the companies. Infrastructure Support Services: It includes operating system management, hot fixes and security patches, disaster recovery planning, testing and verification, security management end user support etc.Managed Services Benefits & ChallengesThe usage of managed services, undoubtedly, limits the risks related to economic andtechnological investments of the companies. As the businesses look for ways to reduce costbut continue with the best of class services, the dependency on MSPs is bound to increase.The importance of MSPs will increase in this cost conscious market as they offer costeffective bundled solutions that are customized to the companies needs and requirements,and as they provide services to manage and monitor all the mission critical aspects requiredfor the growth and survival of the businesses.There are several reasons why outsourcing IT-related functions to MSPs has become anessential component of business growth and development: Enables the company to focus on its core competency It reduces IT support costs by enhancing efficiency levels Quick access to highly-trained and on-call IT professionals Availability of 24/7 support Remote access to the companys computing environment which allows the IT personnel to quickly resolve issues Constant analysis and monitoring of IT-related problems MSPs set strict SLAs (Service Level Agreements) so companies are assured that systems are always functioning wellThere are definite challenges and limiting factors that are hindering the growth of managedservices in India. Traditionally, the Indian companies are bit hesitant about outsourcing theirmission critical operations to others. So the main challenge for the MSPs would beconvincing these hesitant customers that managed services would be secured, best of the classquality and would ensure a faster ROI. In addition, defining or creating service definitions,determining the appropriate pricing and migrating existing customers to the new managedservices model are some challenges in the Indian market.
  12. 12. World-wide IT Spending Forecast by Sector, 2011-2015: 2011 2012 2013 2014 2015 CAGR (%) 2011- 2015Computing Hardware 409 438 469 505 554 8.2Spending ($B)Annual Growth (%) - 7.2 7.1 7.6 9.6 -SoftwareSpending ($B) 255 273 291 309 328 6.7Annual Growth (%) - 6.8 6.5 6.3 6.2 -IT ServicesSpending ($B) 824 862 901 944 989 4.7Annual Growth (%) - 4.5 4.6 4.7 4.8 -TelecommunicationsSpending ($B) 2,110 2,186 2,271 2,355 2,430 3.9Annual Growth (%) - 3.6 3.9 3.7 3.2 -All ITSpending ($B) 3,598 3,759 3,932 4,112 4,301 4.8Annual Growth (%) - 4.5 4.6 4.6 4.6 -Overall IT (Excl. TelecomServices)Spending ($B) 1941 2057 2179 2305 2448 6.2Annual Growth (%) - 5.9 5.9 5.8 6.2 -CAGR: CAGR = Compound Annual Growth RateSource: Gartner (March 2011)Forrester Wave™: North American Applications Outsourcing, Q3 ’10:Source: Forrester Research Inc.
  13. 13. Competitor Analysis HP Services for Oracle Solutions:4 Service Offerings Overview HP performs a detailed assessment of your current E- Business Suite, PeopleSoft, JD Edwards or Siebel Application architecture assessment environment and the architectural considerations associated with a future move. During system installation, HP configures recommended kernel or registry parameters that are Application configuration optimization specific to E-Business Suite, PeopleSoft, JD Edwards, or Siebel rollout, then reviews configuration files for database, the application suite, and associated third- party applications. During peak utilization, HP measures performance and makes observations regarding current configuration, Application systems performance analysis followed by high level recommendations for parameters and capacity requirements for E-Business Suite, PeopleSoft, JD Edwards, or Siebel implementation. Based on a repeatable load test provided by client, HP Application systems performance tuning tunes client’s E-Business Suite, PeopleSoft, JD Edwards, or Siebel environment to optimize performance. HP helps configure and deploy a basic E-Business Suite, PeopleSoft, JD Edwards, or Siebel applicationApplication jumpstart and migration services with demo database. HP can also help with certain maintenance upgrades and database or operating system migrations. HP can help to install, migrate, upgrade, or optimize Oracle database. With its specific content knowledge Oracle database services around Oracle database, RAC, and grid solutions, backed by HP server and storage expertise, HP Services offers the experience need to optimize client’s solution. HP offers services to help build a Service Oriented Oracle middleware services Architecture (SOA) built on Oracle middleware. 4
  14. 14. IBM Application Services for Oracle:5 Provides cost-effective management of Oracle E-Business Suite Simplifying IT management with the help of on demand solutions and services Optimizing solution capabilities with the help of professional services Offering a choice of delivery models to support unique needs Reducing cost and complexity with the help of automationProvides cost-effective management of Oracle E-Business SuiteThe Applications on Demand service gives the flexibility to deploy Oracle EBS on IBM’sinfrastructure or to have IBM’s experts manage the application on existing assets. Engaging IBMmeans that key IT talent is freed up to focus on strategic initiatives such as building your company’score business and sustaining competitive advantage.Simplifying IT management with the help of on demand solutions and servicesClients can access Oracle E-Business Suite without running and maintaining the application in-house.Applications on Demand delivers reliable and scalable access to expert managed services without theoverhead of retaining full-time staff. Applications on Demand offers IBM Application Services forOracle – Onsite to deliver applications management for Oracle E-Business Suite running on yourinfrastructure and IBM Application Services for Oracle - Full Service for an end-to-end managedservice, including managed infrastructure.Optimizing solution capabilities with the help of professional servicesIBM Professional Services for Oracle allow our clients to tap into an experienced pool of certifiedprofessionals for help with:• Performance testing• New implementations or new functionality• Upgrades• Project management• New development, customizations, interfaces• Offshore services• Integration servicesReducing cost and complexity with the help of automationIBM automations for Oracle include:• Oracle environment creation/refresh• Oracle object migration• Oracle patch application5
  15. 15. HCL Technologies Ltd:6HCLs Oracle Universe (OU) is a 2500+ strong integrated services group developing highvalue solutions in Oracle, PeopleSoft, Siebel, JD Edwards, Hyperion, Agile, OracleTransportation Management, Stellent, and other Oracle Edge applications and technologyproducts. Our dedicated CoEs in CRM, SCM, ERP, HCM and Technology developtechnology-based business optimization solutions on Package Applications, FusionMiddleware, and Business Intelligence & Data Warehousing.HCLs OU provides service delivery excellence through proven solution accelerators andproprietary tools, built to support the Oracle product suite. In addition to professionalservices, OU provides Product Engineering on Oracle Applications and Fusion Middleware,building connectors for Oracles Content Management products, and testing services forOracle product suites.Wipro Infotech :Wipro’s Application Management Services focus on application management and productionsupport of enterprise applications. Application management service offerings are aimed atensuring interoperability, performance and availability of the enterprise application and itsecosystem.6
  16. 16. Wipro’s ORACLE Application Support and Database Administration ORACLE Application Services ORACLE Core DBA ORACLE Applications DBA ORACLE Apps techno-functional Support Upgrade/Migration Services Audit Services Consulting Portfolio Analysis Backup and Recovery Solution, and Validation Database consolidation Capacity planning ORACLE RAC, standby, replication for business continuity and disaster recovery planning ORACLE Application HelpdeskRolta TUSC Managed Services7:Rolta TUSC provides expert-level support for all Oracle Database, middle-tier, Unix OS,Linux, E-Business Suite, and SQL Server system needs.Rolta TUSC Managed Services covers: Database (Oracle, SQL Server) Oracle E-Business Suite (technical and functional) Middle-tier and Operating SystemOracle Applications Implementation and Support (includes E-Business Suite):Oracle E-Business Suite (EBS) provides global, integrated business applications that drivebusiness performance.SOLUTION OVERVIEWRolta TUSC provides full lifecycle implementation and support services for core EBSapplication modules, including: Financial Supply Chain Management Distribution Human Resource Management Systems Customer Relationship Management7
  17. 17. Tata Consultancy Services Offerings8:Expertise spans across Oracle Enterprise Applications (Oracle E-Business Suite, PeopleSoft,JD Edwards, Retek, and Siebel) and Technologies (Database and Fusion Middleware such asApplication Server, Development Tools, Analytics, Integration, and Security). Our extensiveindustry experience, comprehensive knowledge, and strong partnership have enabled us tomanage and execute complex end-to-end enterprise solutions based on Oracle platforms,involving diverse technologies, across multiple geographies, always on time and withinbudget.8 Oracle Enterprise Solutions A4_Web250607.pdf
  18. 18. Accenture’s Services for Oracle Solutions:Accenture has Oracle applications-specific delivery centers across the globe—giving ourclients a great deal of flexibility in implementing and operating Oracle applications.Accenture centers in Chicago, India, Malaga, Manila, Mauritius, Montreal, Sao Paulo and theUnited Kingdom provide Oracle E-Business Suite capabilities; centers in Almere (theNetherlands), Atlanta, Cincinnati, India, Manila, Mauritius, Paris, Reston, Sao Paulo, andToronto provide PeopleSoft and JD Edwards capabilities; centers in Bratislava, India,London, Manila, Mauritius, Riga, Sao Paulo and Toronto offer Siebel capabilities; andcenters in India and Manila offer Oracle Retail capabilities.Accenture SOA Reference Based on Oracle’s Fusion Middleware platform, thisArchitecture for Oracle solution includes a set of definitions, frameworks, best practices, decision trees, and code to help design and build a service-oriented architecture (SOA)—helping reduce technical architecture challenges, design and development time, and delivery risk.Accenture Midtier Retail This solution provides an implementation and hostingProposition for Oracle approach based on software products from Oracle Retail, covering merchandising, planning, financials, human resources, store systems, supplier collaboration, and customer interaction, and geared specifically for the middle market.Accenture HR Online Support Helping companies to achieve high performance through HRCenter leveraging Oracle Fusion.Accenture Loyalty Solutions Accenture has a long history of helping develop and deliver Oracle’s Siebel Customer Relationship Management (CRM) family of products. Accenture takes a scientific, data-driven approach to analyzing clients’ loyalty drivers and executing full-circle lifetime loyalty management.Accenture Delivery Tools Accenture Delivery Tools for Oracle Applications is a set of tools that can be used to support the entire Oracle project lifecycle.
  19. 19. Services offered for Oracle Application by competitors:ORACLE Wipro HCL Dell Rolta HP TCSApplication Infotech TUSCSupport andDatabaseAdministrationORACLEApplicationServicesORACLE Core     DBAORACLE   Applications DBAORACLE Apps techno-functionalSupportPeopleSoft Human    ResourceManagementSystemOracle E-Business     ERP ApplicationsSiebel CRM   JD Edwards SCM    Upgrade/Migration  ServicesAudit Services  ConsultingPortfolio Analysis Backup and Recovery Solution,and ValidationDatabase  consolidationCapacity planning ORACLE RAC, standby, replicationfor businesscontinuity anddisaster recoveryplanningORACLE ApplicationHelpdeskOracle Edge Applications
  20. 20. Oracle’s Solution & Service Map:Services/Features Software Software User Optimal Performance Software Best Fixing Operation Guidance Usage monitoring Update practicessDBA: Remote  MonitoringsDBA: Application    DBAsDBA: FMW    AdministrationsDBA: Health   CheckssDBA: Hosting sHD: Service Desk   sHD: Functional  Help DesksHD: IT OperationsConsultingESAS: CEMLI SupportESAS: Bespoke ApplicationSupportTCS: Testing  AMS: Application       ManagementService
  21. 21. Providers’ Top Three Applications Outsourcing Verticals:Source:
  22. 22. Delivery Models of CompetitorsIBM delivery models to support unique needs9: IBM Full Service All applications management and infrastructure to deliver applications on demand IBM OnSite Expert remote managed services of applications running on your infrastructure IBM Development A fully patched development environment in as little as ten days IBM Enhancements Application enhancements with fixed pricing based on deliverables, not hours IBM Professional Expert implementations, upgrades and project help ServicesIBM offers different delivery models to suit your applications management needs. Full Service is an end-to-end enterprise solution delivering applications management and infrastructure support services—servers, storage, networking, monitoring, security, 24x7 break/fix support and data center for a predictable monthly fee. OnSite is a remote applications management service for Oracle EBS instances running on client-managed infrastructure and is available for a predictable monthly fee. OnSite allows clients to benefit from IBM’s application management expertise and leverage existing investments in client infrastructure. OnSite represents the fastest, least-expensive means to access experienced applications management talent, tools and automations to eliminate patch management challenges and support Oracle E-Business Suite in a scalable 24x7 model. Development offers a fully installed Oracle environment deployed in as little as ten days, within a ―pay-as-you-go,‖ utility-like model. Development represents all of the benefits of having your own solution center at a fraction of the cost of having to build one. Development helps IT organizations reduce operational expenses by accelerating projects and deferring long-term investments in assets that are only required temporarily. Enhancements is a set of fixed-priced application enhancements, such as reports, modifications, customizations or interfaces, for Oracle E-Business Suite. Enhancements is delivered from a menu of fixed-priced, high-quality event based deliverables. Enhancements shifts clients away from a focus on FTEs or hourly rates, and provide predictable pricing. Professional Services allow our clients to tap into an experienced pool of certified professionals for help with: • Performance testing • Offshore services • New implementations or new functionality • Integration services9
  23. 23. • Upgrades • Project management • New development, customizations, interfacesHCL’s Engagement Models: HCL is known to collaborate with forward – lookingcustomers through the following 3 engagement models: Systems Integration- Focus on Complex implementation involving multiple technologies with turnkey program management and partnerships across IT and Non IT like IBMS, DC Build components. Managed Services- ITIL driven Proactive Full or Discrete IT Managed Services delivered in various models like RIM, complete onsite or hybrid. A strong pedigree of Network & Managed security services in India we have today leadership positioning in RIM with right Global partnerships available like Cisco Managed Service Partner, HP, BMC, IBM and large skill pool of ITIL certifications. Strategic Sourcing- Focus on transformation benefits to the customer in a collaborative model to resolve common business problems using the right mix of people, technology and processHCL’s Oracle universe (OU)10: HCLs Oracle Universe (OU) has a large customer base in the Americas, EMEA, APAC andANZ regions, helping over 190+ customers across various industries transform theirbusinesses.10
  24. 24. Patni’s Consumption-based Flexible AMS Delivery ModelMost production support models impose a fixed cost upon IT budgets irrespective of thevolume of work delivered or the utilization rate of the production support team. Patni’s SAPApplication Management Services (AMS) offers enterprises a consumption-based model thatis more agile than existing support models. It significantly improves resource utilization andensures rapid cost structure transformation including a potential reduction of more than 30%in application spend and significant enhancement in operational efficiencies.Patni’s flexible support model creates variability of costs in sync with the organizations’workload by proactively reacting to its business needs, and charges the customer for theactual amount of service it consumes. This substantially improves utilization of resources andreduces cost. The model also helps create better alignment with business needs withsubstantial improvements in support and delivery practices and end-user satisfaction levels.
  25. 25. Managed Services Pricing Models11 The "Value-Pricing" Model The “Per Device” Pricing Model The "Tiered" or “Gold/Silver/Bronze” Pricing Model The “Pick 5” Pricing Model The “Á La Carte” Pricing Model The “Monitoring Only” Pricing Model 1. The "Value-Pricing" Model This model tremendously benefits the MSP as well as the client. For the provider, it allows the freedom to customize the monthly fee in each and every Service Agreement for maximum profitability Because a component of your sales presentation is based upon how much you can potentially save the client when they enlist your services, when the sales process is executed properly, you should be able to sign clients to Agreements worth much more than other pricing models might allow. There are several variations to this model, but the general concept is to provide a flat fee for all support rendered to the client each month, which can include Remote Support, Onsite Support, Lab/Bench time, or all three. 2. The “Per Device” Pricing Model This pricing model is fairly simple, and many MSPs utilize it primarily for its simplicity. The premise is to develop a flat fee for each type of device that is supported in a client’s environment. For instance, a basic Per Device pricing model might designate a flat fee of $49 per Desktop, $199 per Server, $29 per Network Printer and $99 per Network managed. The benefits of this pricing model include that it is very easy to quote and illustrate costs for prospective clients, as well as the facility it affords the MSP to modify the monthly service fee as the client adds additional devices in the future. Something to think about when evaluating this model is that it can lend itself to selling Managed Services based more upon price, rather than value. The experienced MSP will realize this, and modify their sales presentation accordingly. 3. The "Tiered" or “Gold/Silver/Bronze” Pricing Model This model may be the most popular among MSPs. The premise is to build several bundled packages of services, with each increasingly more expensive package providing more services to the potential client. For instance, a ―Bronze‖ Managed Services package may include basic phone and remote support, Patch Management and Virus and AdWare Removal for an entry level price. Bumping up to the higher-priced ―Silver‖ Managed Services package may include onsite visits, and the ―Gold‖ package may include Emergency After-Hours Support, being the highest-priced package. This pricing model lends itself well to all devices in the client’s environment. Additional Services to round out a full offering with the ―Tiered‖ Pricing Model are usually made available á la carte.11
  26. 26. 4. The “Pick 5” Pricing Model This Managed Services Pricing Model is an interesting combination of the ―Tiered‖ Pricing Model with an ―á la carte‖ twist. The basic premise here is to identify three or more successively higher-priced categories with a specific list of services available in each. The client gets their choice of picking a set number of services from the one category they wish their Managed Services Agreement to cover. For instance, let’s say you have categories named Basic, Advanced and Premium. In the Basic category you have 8 services available to choose from, including Phone Support, Remote Support, Patch Management, AdWare Management, License Management, Case Management, Backup Management and Monitoring. The client would choose 5 of these, and a Service Agreement would be created to support them. For the Advanced Category, you might add limited After-Hours and Onsite Support for a higher flat fee than the Basic category, allowing the client to choose from these additional Services. The Premium Category may include Emergency 24 Hour Support, 1 Hour Response Time and Disaster Recovery of the Server(s) as additional options for a higher flat fee than the Basic and Advanced Categories, and the client would now be able to choose from these additional services to create their Managed Services support plan. MSPs contemplating the implementation of this pricing model should carefully choose the minimum required services available in each category to insure that they are selected, in order to provide the best possible support for the client.5. The “Á La Carte” Pricing Model Possibly the most difficult pricing model to sell and maintain profitably, the ―Á La Carte‖ model may be the least popular discussed here. The basic premise of this pricing model is to allow the client to pick and choose the Managed Services they would like from a large menu of individually priced services. The dangers inherent with a pricing model of this type include giving the client too many decisions to make, thereby slowing the sale. The more choices the client needs to make, the more confused they might get, leading them to skip selecting services that they really need, and/or choosing services that might not be so critical to their particular environment. In addition, this pricing model may again skew the client’s perception of these services to a cost, rather than a value perspective. To top it all off, putting together the Managed Services Agreement for the ―Á La Carte‖ Pricing Model is the most time- consuming of all models in this discussion.
  27. 27. 6. The “Monitoring Only” Pricing Model Often seen in Medium to Enterprise engagements, and usually where the client has in- House IT staff, the ―Monitoring Only‖ Pricing Model provides Network Monitoring Services and Alerting to the MSP, the Client’s in-house IT staff, or both. In this scenario, several different service levels can be employed, from a very basic requirement to forward all alerts to the client’s in-house IT staff only, allowing them to address and perform all incident management, to a scenario where the MSP participates in basic incident resolution or even more advanced support.MSP may also simply resell their chosen Vendor’s Network Monitoring Service to the clientin a larger environment, and have no direct or indirect responsibility after the sale.Whichever Managed Services Pricing Model you choose, you should always have a―Monitoring Only‖ service available to market to those clients who may not immediately optfor a more robust Managed Services deliverable, but would say yes to a lower-costalternative. The MSP will then have their foot in the door, and can work over time to provethe value of additional services.
  28. 28. SWOT Analysis of OSSI Strength Opportunities Oracle branding Tech stack getting complex Some mature services (ESAS for eBS, Working with On-Demand DBA, Testing, Hosting. Scope for creating value in solutions Oracle install base Market untapped in many geographies Oracle On-Demand has market presence. Upselling opportunities (extended Global support infrastructure warranty, upgrade) Access to Oracle development. SOA will result in software rearchitecture- Global delivery model-geographic could create MS opportunities coverage MS for acquired applications Experience working across several countries Early access to new releases / products Good people: interpersonal skills, customer orientation Good DBAWeaknesses Threats No differentiation Stiff competition Oracle not seen as a player in this business Retaining people Pricing to end customer need to be more Competition has a broader portfolio competitive On Demand/ACS have overlapping charter Need stronger business development focus Alliance channels encourage partners Bid response turn around needs to be better Quality processes need strengthening Need more senior resources in the team Need for diverse & skill depth Over years when software become stable, customer either do not renew or ask very low rates SSI provides only a subset of portfolio other competition provides Customer will expect support for bespoke & 3rd party applications from same vendor Customer hesitant to open up production for remote support Need to have formal SLAs Complexity of knowledge transfer
  29. 29. KYC AnalysisAfter analyzing the data collected from the managed services managers of OSSI I concludedthe following facts about the customers of Oracle:Why customers are coming to Oracle: They have skill shortage (mainly on DBA). Very Small In-house IT department. They are taking EBS & Retail Apps which signifies that it’s difficult to find substitutes on these Applications.Why customers had left Oracle: Staff Shortage in PSFT Technical/Function and DBA services. Pricing on the high side for 24X7 shared services model.The findings suggest that since oracle is providing services for very limited applications itneeds to put extra efforts on retaining and tapping that niche market by increasing itsresources and coming up with a better competitive pricing strategy to get new customers andalso to retain the old ones. They need to project themselves as the best service provider in thiscategory.Bidding Plan Analysis:After reviewing the existing bidding process I would recommend the following points toOSSI to increase the effectiveness of their bidding:Improve Focus Consider dedicated Bidding Lead Role (with backup)Improve Bidding Process Reduce bid turnaround times Improve Proposal templates to be more friendly , directly customer facing, review terms & conditions to make them more friendly Build an integrated estimator that includes ESAS (eBS, PSFT, Siebel, Retek), DBA Services, Hosting, Testing, Service Desk, Tech Upgrade and Customization Upgrades Review competitiveness of pricing Build capability to deal directly with end customers in countries where knowledge of managed services is lacking