The Benefits of Remote Infrastructure Management for SMBs

August 15, 2009

Frameworks such as ITIL have developed guidelines for strategizing, designing, implementing and managing IT Infrastructure that provides best value to businesses.  While the guidelines were designed for Tier-1 firms, they are also applicable for Small to Mid-Sized Businesses.  Ignoring the Fortune 1000, there are 17000+ companies who have between 500 and 10,000 employees.  Let us call these companies Tier-2 companies.  There are probably 200,000+ companies who have more than 100 employees but less than 500.  Let us call these Tier-3 companies.  A challenge Tier-3 companies, and to some extent the Tier-2 enterprises, face is the lack of economies of scale.  If they do not have a outsourced environment, they require systems administration expertise, network management, helpdesk, maintaining the server farms, and maintaining the user devices (PCs, laptops, PDAs, etc.).   One easy way to gain economies of scale is to outsource, particularly off-shoring to leverage the lower costs. 

According to Stephanie Overby (CIO Magazine: Outsourcing: The Pros and Cons of Offshore Remote Infrastructure Management dated: March 18, 2008), the services that can be off-shored are:

Service                % that can be off-shored

Network Services                80%
Internal Help Desk              75%
Servers                              70%
Maintenance                       60%
Administration                    35%
End-user Devices               15%

While the degree of off-shoring can vary for each enterprise, Stephanie’s insightful article points out the need for a blended model – a combination of on-site expertise backed by Remote Infrastructure Management (RIM) services.  Cost savings are a result of three factors:  1)  labor arbitrage, 2) shared services including SaaS, cloud computing, and, 3) shared expertise.  The best example of labor arbitrage is off-shoring.  Large outsourcers such as IBM, Infosys, and Wipro have provided these cost benefits to Tier-1 companies.  In the past five years, many Tier-2 and Tier-3 outsourcers have provided niche RIM services.   Cloud computing has helped reduce infrastructure costs.  SaaS (Software as a Service) has gained momentum helping companies pay for services actually consumed.  Shared expertise is another strong benefit as outsourcers provide a multitude of expertise that would be very costly to in-source.

Savings can be significant.  Typical savings for e-mail hosting and support can amount to over 100% , over 200% for remote server monitoring, and over 50% for applications monitoring and support. 

In addition to cost savings, RIM offers a much higher level of service.  For example, outsourcers can provide 24-7 support far more economically than in-sourcing.  Another significant benefit of using outsourcers is the ability to provide higher availability of services on demand.  RIM is a proven model for managing IT Infrastructure.  In the past these benefits were limited to Tier-1 firms managing large data centers.  Recently, the growth of highly qualified and credentialed Tier-2 RIM providers makes it easy for Tier-3 enterprises to take advantage of off-shore partners.

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Outsourcing Small Projects

August 6, 2009

One challenge confronting CIOs is tracking and managing small projects.  Most CIOs have a very sound governance process for managing mission critical applications, IT infrastructure projects, and other large strategic IT initiatives.  All of their attention inevitably gets focused on these strategic and mission critical projects.  Small projects that are “quick-wins” for the business can get lost in the prioritization shuffle, and some of these projects may suddenly turn into unanticipated crises. 

The challenge with small projects, from a CIO perspective, is threefold:

  • Bandwidth issues – IT is busy putting out fires, focused on big, mission critical and/or strategic applications.
  • Even though the projects are small, procurement logistics are still time-consuming and complex.
  • Lack of visibility of the status of small projects – they can easily “slip off the radar”.

Procurement also faces challenges since their preferred Tier-1 vendors cannot deliver small projects efficiently, and their needs to be complete transparency in the vendor selection process. 

Having a single consolidator that manages the numerous vendors provides an efficient mechanism to implement small projects. Good consolidators perform due-diligence on the service provider network, match project needs to providers, and provide a dashboard to review the status of the small project portfolio.  The benefits of having a single consolidator include improving the procurement efficiency by providing a set of reliable, credentialed service providers, a one-stop procurement channel, competition between service providers and complete transparency in sourcing.  CIOs benefit by getting Tier-2 pricing together with a single point of control and total visibility on the projects.