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October 2001

In The Smorgasbord MSP Market, Scrutiny Is Key


The MSP Association defines a management service provider (MSP) as a company that delivers information technology infrastructure management services over a network to multiple customers on a subscription basis. Traditionally, MSPs either provide tools to the customer to enable them to manage their network in-house, or they manage customer networks from their own network operations center (NOC). Apart from traditional MSPs, certain infrastructure providers offer a complete turnkey solution under the managed services umbrella. They not only host customers' applications, but also manage the application and accompanying hardware and software, thereby providing a managed service.

The benefits of outsourcing to an MSP, outlined later, can be quantified. However, in today's marketplace, with its proliferation of vendors and their accompanying menus of services, one thing is critical: you must choose your outsourcing partner carefully.

To eliminate some of the confusion caused by the glut of MSP models in this new and immature market, most MSPs can be segmented into two business models: NOC-in-a-box or NOC-for-hire.

The NOC-in-a-box MSP provides the hosted management application on a lease basis to the end customer, much like a hosted application model offered by an application service provider (ASP). This MSP hosts the management application; handles maintenance, back-ups and upgrades; and provides the user interface to the customer. The customer then manages the networks, systems and applications using the tools provided by the MSP. This model allows the customer to retain control of what is managed and how it is managed. In reality, this is only partial outsourcing; however, it can reduce overall infrastructure management costs. For example, the customer's IT team needs operators to monitor screens, but highly paid network analyst positions can be reduced or eliminated.

The NOC-for-hire is a full-service MSP, offering network management tools plus processes and operations staff. At the MSP's NOC, an operations staff monitors the customer's network and manages its day-to-day operational tasks. Although the monthly subscription charge is higher for this type of service, it provides significantly higher value.

It is important to note that some MSPs offer both models to enable the customer to choose their preference.

The cost for MSP services can range widely depending on the type of MSP and the services it offers. Some MSPs specialize only in certain functions such as help desk, security or database management, while others offer an ' la carte menu of services, enabling a company to select what it needs. Monthly subscription fees for ' la carte service vary greatly -- from $500 to $10,000 or more, depending on the size of the managed network. Some MSPs, however, charge a flat monthly fee to manage an entire network, regardless of its size and complexity.

Regardless of the business model adopted by an MSP, the following tangible benefits can be realized by outsourcing your network and systems management to such a company:

  • Your organization can focus on its core competency. With no need for a dedicated NOC or IT staff, the overhead associated with retention and training of network analysts and engineers is eliminated.
  • Your infrastructure software and hardware costs are reduced, and the MSP handles such tasks as routine system maintenance, backups, new versions and upgrades.
  • Your infrastructure management costs are predictable. In contrast, in-house network management typically consists of numerous and often costly unknowns. For example, the costs to replace a network analyst lost through attrition could be significant, especially when recruitment and training costs are included.

Services Offered By MSPs
If you take a closer look at MSPs, one thing is certain: all offer different types of services, which makes it difficult to compare them. However, a cross-section of MSPs reveals that many perform one or more of the following functions as part of their service offering:

Availability and performance management

  • LAN/WAN networks and equipment such as routers and switches 
  • Key servers and the applications running on them 
  • Routine systems management such as monitoring of disk, CPU, memory utilizations, log file and error exceptions 
  • Firewall and load balancing services
  • Capacity and bandwidth management

Security management

  • Passive monitoring and reporting 
  • Intruder detection 
  • Access control management

Database management

  • Database administration
  • Database and application performance tuning
  • Database backups

Extranet management (Web sites)

  • URL availability
  • Web site performance management
  • Transaction tracking and monitoring
  • Load and stress testing.

Other functions such as storage management, applications management, desktop management, change control management, asset management and help desk support may also be included.

In addition, some MSPs manage public networks, not only handling the implementation of those data and voice networks, but also managing the fault and performance of those networks on a day-to-day basis.

As with all critical business decisions, support and validation for your choice comes from thorough research. In the absence of accepted industry tools or templates, following are the critical points to address as you consider outsourcing to an MSP.

Define what needs to be managed. This should be the first responsibility of the CIO or IT manager. It's relatively easy if you already have an in-house staff managing your current environment; however, if you don't manage your network, or your organization is a start-up, you must inventory the items to be managed such as network equipment (routers, switches, hubs) and servers, databases, applications and desktops.

Determine the outsourcing model. Do you want to outsource all or some of your network infrastructure management functions? You could either offload your entire network and systems management to a NOC-for-hire MSP, or you could outsource to a NOC-in-a-box MSP where your operational costs are reduced without surrendering control of managing your network. In either case, the MSP can be considered a virtual extension of your IT department. Decide which model suits your organization best.

Service level agreements (SLAs). Whichever model you choose, you must first get answers to some important questions to clearly understand an MSP's SLA guarantees. What level of high availability and/or redundancy is offered by the MSP? What backup plans exist in case of leased line network failures? How does the MSP back up their SLA guarantees? Can the MSP provide SLA violation notifications and reports? What kinds of availability and turnaround time agreements exist with software vendors for bug fixes?

Migration support. Explore the migration support that an MSP offers and examine its migration plan. In addition, specifically look for any potential loss of functionality. For example, if you're currently using a tool from Vendor A and are considering an MSP whose platform is based on Vendor B, will you lose functionality by migrating to the new environment? Will the new tool be able to manage the same resources? Will you get the reports you need?

Speed of deployment. How soon can the MSP start managing your infrastructure? For example, if you select the NOC-in-a-box model, how long will it take to learn a new tool? Obviously, you'll want to avoid sending your operators to a six-week training program. Also, determine the depth and breadth of the MSP's implementation team -- how long will it take to fully deploy the management infrastructure?

Contracts and pricing. Since the services offered vary widely and because the market is so new, a long-term contract (five or more years) may not be your best choice. Will the MSP work with a short-term contract? Does the MSP charge upfront fees? Are fees charged when you migrate to a new version of the MSP's tool? What are the incremental fees for adding additional nodes to be managed such as devices and Web servers?

Customer references. IT managers should request an MSP's customer references -- those with an architecture similar to yours, and discuss the MSP's service offering with the references before you sign a contract.

Technical capabilities. With so many service providers quickly appearing and disappearing, you should make sure the MSP you chose will be around for the long term. Key indicators of an MSP's longevity include knowledge of the tools used or offered; knowledge of and experience in managing networks, systems and applications; proof of the software's reliability to manage large networks and systems; and the experience and expertise of the staff, e.g., have they managed large networks or corporate Extranets previously?

It's also important to ask MSPs about their software vendor relationships. But more important, you should research the financial backing, profitability, organizational structure and management of any potential MSP.

Although the MSP market provides a compelling value and many opportunities, choosing the right MSP with whom you'll have a long-term relationship may be challenging, since many are private start-ups and some skew the definition of MSP to their advantage as they fight for market share. In the long run, it's best to ignore all acronyms and focus on service offerings instead.

As in any outsourcing arrangement, considerable upfront planning that includes a clear understanding of the roles and responsibilities of both the customer and the MSP, with clearly defined and communicated escalation procedures, is essential for a successful partnership.

As global marketing manager with Agilent Technologies, Gopan Madathil champions the eChannel (xSP) market strategy. He is currently chairperson for the ASP Industry Consortium's ASPire 2001 Awards team and leads the MSP Association's Awareness subcommittee.

[ Return To The October 2001 Table Of Contents ]

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