Remote Infrastructure Management: Best for Cutting OP EX Costs

March 6, 2011

On occasion we invite guests to write our blogs.  Vishal, head of Byte Technosys has taken his firm to a new level simply by providing the best of breed RIM service.  The blog below is from Vishal Vasu, Director at Byte Technosys, India.

Remote Infrastructure Management (RIM) services will be the next growth engine for the offshore service industry as reported by leading consulting agencies and media. In fact, the global RIM industry has grown at more than 80 per cent CAGR from US$2 billion in 2006 to US$6 billion to US$7 billion in 2008 where India has been a significant beneficiary. A common question that would come to our mind is – with the industry hit by recession in 2009 and with the dark clouds of recession still looming on the horizon of 2010, what potential does the RIM service market hold in the future?

RIM makes more sense not just in terms cutting costs during recessions but more as a business strategy. Today enterprises leverage the power of IT to streamline their key business processes and gain a competitive advantage. Even with the investments already made, the key issues relating to application performance, scalability, security, management and effective utilization are mostly unresolved. Apart from helping to reduce the overall IT Infrastructure Management costs, a well structured and managed RIM relationship can bring significant benefits.

Flexibility of Service
Customers hiring service providers have an advantage here as they can align the business needs with the services provided by the Service Provider. Services can be flexed to meet peak times and loads, mission-critical and non-mission critical or a combination of both. This type of flexible pricing model and service delivery helps in apportioning the infrastructure management costs.

Domain Expertise
In this highly volatile IT industry it is hard to keep up with the latest technology trends and it is almost impossible to have on pay roll a staff that can match the ever demanding and changing face of IT technology across all segments. A RIM service provider can add value here as they have diverse IT staffs which are at a client’s disposal, working 24×7. Moreover, these specialists are constantly updated with the latest technology trends via internal training programs, technical training programs from vendors, etc.

This basically helps companies to gain a competitive advantage as it helps to reduce the time to market. Companies can take the bold steps of adopting and switching to new technologies to gain a competitive advantage. Serious service providers in the RIM industry would normally have alliances in place with leading technology suppliers and as a result clients can also enjoy a single window of service from them with an assurance that the team working on their projects would be capable of handling the technology and related needs.

Visibility and Control
Companies retain full control of its strategic components such as physical IT assets, technology refresh, policy and architecture which provides visibility into the availability, performance and utilization of each component. Many of the established RIM suppliers have embraced the ITIL framework which lends itself to RIM very effectively. Putting the collected data in to this type of best practices framework provides lot of insight and visibility. This visibility further enables companies to take control of the situation, make informed decisions on future investments in IT and improve current service levels.

Reduced Costs
Remote Infrastructure Management not only assists in reducing the manpower cost of managing the infrastructure, but also brings down the costs related to future infrastructure investments. It has been reported and endorsed by agencies like McKinsey and NASSCOM that outsourcing the infrastructure management services can save dramatically reduce the labour related costs by 30% to 40%. On the other hand, companies can also reduce costs associated with future infrastructure investments using expertise of the service provider by way of infrastructure optimization, standardization using industry best practises and consolidation using virtualization technologies.

Proactive Services
Most of the time RIM services engagements are driven and governed by SLA’s (Service Level Agreements). Service providers, in order to maintain the SLA, invest in to software and technology that enable them to gain an insight on failing components in the IT infrastructure, usage patterns, thresholds, etc. These tools enable a service provider to provide 24×7 proactive monitoring and management via a Remote NOC (Network Operations Centre). This helps to resolve issues in a faster and structured manner.

So, in today’s fast paced and ever changing IT world, RIMs makes more business sense and CIOs have to step back and ask themselves what they’re trying to accomplish with infrastructure outsourcing. Cost savings, optimization, transformation or efficiency? CIO’s decisions on outsourcing infrastructure management are going to be driven by more than just cost savings and as a result it is also going to create a challenge for the service providers to tweak their service models to show more benefits and not only cost savings.

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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.