February 2000

BY CHRIS DONNER

When I have a chance to talk at length with people working directly in the communications marketplace about the future of this industry, one of the most common complaints I hear is that they don’t feel comfortable buying new equipment for fear of it becoming obsolete tomorrow, or next week. I can relate to this, at least on a personal level. I run into this problem myself whenever I buy new software or hardware for my personal PC, let alone when I consider replacing the PC itself (something I haven’t done since 1997, by the way, since it hardly seems necessary for my word processor and e-mail to work any faster).

But my small scale worries pale in comparison with what it must be like for developers, integrators, MIS directors, etc., who must commit themselves to certain purchases (and to supporting and developing on these products after they’ve been purchased) in a difficult and dynamic market. Who can even feel comfortable buying the latest cell phone or palm-held device these days, when new ones show up in each Sunday’s newspaper flyers?

Of course, this is not a new situation, and an increasing number of companies are making it their business to take on these risks of obsolescence for someone else, for a fee of course. They take the one-time risk of an equipment purchase and support decision, and they gain the regular cash flow of continuous support and warehousing agreements. This business model is certainly familiar to anyone who has been reading computer magazines or news in the past six months or so, and one example of it has become the topic du jour: the application service provider, or ASP.

But there is more than one way to outsource a service, and there is more than one service that might need to be outsourced. Another business strategy that employs this same model, and one that is especially appropriate to the world of telecommunications, is being called “netsourcing.” Essentially, netsourcing is the ASP model but minus the focus on applications.

One company who is offering netsourcing services is Intira, formerly known as dbn (digital broadcast network). In their recent press announcement of the opening of their New York City-based data center, Intira defines netsourcing as: “the outsourcing of IT and networking infrastructure for mission-critical e-business applications.”

Now if you are finding it difficult to see the difference between an ASP and a netsourcer, consider that Intira includes some ASPs among their customers, including Computron, a provider of business process automation and back office financial management software. Intira provides the mission-critical network and all the support, while the ASP is free to focus on the particular applications they want to offer their own end users.

The benefits of the netsourcing business model are readily apparent: decreased time-to-market for the customer, QoS guarantees without the QoS headaches, best-of-breed network equipment immediately with only marginal up-front cost to the customer. Intira believes in these benefits enough to bet their business on it, and they make a strong argument in favor of their gamble, including citing a Yankee Group statistic that projects that netsourcing will be a $20 billion market by 2003.

For an aspiring service provider, or even for an existing service provider looking to move into new geographical or service-type areas, the netsourcing alternative provides a way to get in quickly and gather some data before investing in a complete infrastructure build-out. Or even to avoid a complete infrastructure build-out altogether. Conceivably, a business could even test a few potential markets at once to see which would be most lucrative, and then pull out of the less lucrative markets with no real loss of investment in equipment.

Intira’s installation in Manhattan was impressive to look at too — a kind of “bridge” deck serves as the center of operations, with multiple screens showing such details as network status and alarm situations, and even handling such details as local security of the facility. Intira uses Hewlett-Packard’s OpenView Management system in its Service Management Centers for monitoring of data center and network activities, and it was certainly reassuring to see full-size wall screens alive with information from many points of the Intira network.

Of course, there are trade-offs. Any time you let someone handle “the details” for you instead of handling them yourself, there will always be trade-offs. Some loss of control is inevitable, and there may be other concerns as well: security of information, ownership of information, ease of transferring the account to another outsourcer if you should happen to be unhappy with the present service provider. These are all things that need to be taken into consideration when thinking about the outsourcing model.

However, if the outsourcing model really takes off — and more and more analysts seem to think it will — the fears that many express regarding their equipment becoming obsolete before they’ve even had a chance to set it up and offer services on it might just disappear, or at least be eased significantly. And that alone could be worth quite a bit to frustrated developers and IT managers who simply find it impossible to keep up with everything that’s out there. After all, do you want your best engineer researching and installing new NICs in all of your employee PCs, or do you want him or her working directly on developing and troubleshooting your bread-and-butter product, and keeping your business in business?

Chris Donner is associate editor for Communications Solutions™. He can be reached for comment at lguevin@tmcnet.com.