Outsourcing To Managed Services

Published Date: 02 Nov 2017

Internal IT infrastructure and support

Outsourcing to managed services

Cloud computing solutions

Therefore, the cloud computing competes against the two others that have been quoted instantly.

If a firm owns the equipments, then it has a managed IT infrastructure in-house, even if they are installed in a rack in another data center that belongs to someone else. Internal IT infrastructure and support is a model in which a firm owns the equipment and pay people, whether employees or contract staffs, to maintain these boxes. When a box is faulty, the organization incurs this cost, and it very likely does not have a replacement excepting perhaps basics such as a cold spare disk for some critical servers.

Managed services outsourcing has similar advantages to those of the cloud in that the firm pays a fixed price for someone else to own their equipments and make sure they remain up and running. If a box fails, it is the managed services company who has to replace it immediately, or within the conditions that have been defined in a service level agreement. The managed services company provides the expertise to ensure that the boxes are secured and maintained up to date, and also to manage the network infrastructure in which servers are running.

When a company plans to migrate all or part of their IT infrastructure to the cloud, it is wise to understand the key elements that differentiate the three models that are internal IT, outsourcing to managed services, and cloud.

It is necessary for setting up "the scene" of this second part to proceed with a comparative analysis between the three options, which highlights the fundamental key elements to appreciate judiciously each of them. The Table comparison of options for an IT infrastructure delivers a comparison between the three options with respect to some dimensions of IT infrastructure.

The dimensions analysed and briefly discussed are the five followings: capital investment, ongoing costs, provisioning time, flexibility, staff expertise requirements, reliability.

 

Internal IT

Managed services

Cloud Computing

Capital investment

Significant

Moderate

Negligible

Here the question is: how much money does an organization or enterprise has to invest to set up his infrastructure or to bring changes to it?

With internal IT, it will have to pay for its IT infrastructure software and hardware before it even need and use it.

Under outsourcing to managed services, the organizations or enterprises are generally required to pay a moderate installation and setup fee.

In the cloud, they usually have no up-front costs, and thus they are not committed with some kind of obligations somehow.

Ongoing costs

Moderate

Significant

Based on usage

For internal IT, the enterprises’ ongoing costs are the cost of staff, plus some contract resources to manage the infrastructure, as well as real estate and utilities costs (square meters for their data center, HVAC systems, electricity, etc.), or alternatively space at their hosting provider. The variances in the ongoing costs can be significant, especially with contract resources, as when emergencies occur and other kind of issues happen.

With managed services, although they are often quite expensive, organizations usually know quite precisely what they are going to pay at the end of the month. And the price rarely varies.

On the other hand, the cloud can be either pricey or cheap. It all depends on the needs. Nevertheless, the enterprises pay for exactly what they use - it is clearly a key advantage. Finally, the enterprises’ staff costs are likely to be greater than with a managed services provider, but most probably lesser compared with an internal IT model approach.

Provisioning time

Significant

Moderate

None

Here the question is: how long does it take to enterprises to provision a new component into their infrastructure?

With both the internal IT and the outsourcing managed services models, they are required to plan ahead of time. It usually takes time as organizations have to first place and order, then wait on the shipping of the component, and finally integrate and set it up in the data center. Although, this waiting time is significantly shorter usually with a managed service, since the providers make purchases ahead of time in bulk.

With the cloud, enterprises can request access to additional storage capacity or have a new server instance provisioned and operational within minutes.

Flexibility

Limited

Moderate

Flexible

How easily can an organization’s infrastructure adapt to unexpected changes in resource demands such as computing power, storage capacity, bandwidth or whatever? For instance, what are the consequences for the business if an organization suddenly reaches or approaches storage capacity limit?

Under the internal IT, organizations typically have a fixed capacity. As a consequence, they usually are restricted to answer to increased resource demands through further capital investment.

With outsourcing managed services, generally the provider is able to offer access to temporary capacity by unlocking their bandwidth capacity, or delivering them short-term access to alternative storage facilities, and so on.

With the cloud, the beauty of it is that it can be set up to automatically handle their capacity requirements. And this not only when an enterprise or organization needs further more capacity, but also when its infrastructure does not need it anymore - then the cloud lets go off that capacity which is no longer used and required to the organization.

Staff expertise requirements

Significant

Limited

Moderate

What is the level of expertise enterprises need in-house to support their IT infrastructure environment, and into which specific areas?

Under the internal IT model, they obviously need resources who know the ins and outs of their environment. These resources might be staff or contractors, or both. Those resources must have skills covering typically many different technological areas.

With the managed services infrastructure, the benefit is that it enables them to be largely ignorant, if not of all, of IT things.

With the cloud, the staff expertise requirement may vary. It depends strongly on how organizations use the cloud. They might need very little or a lot of skill. Many cloud providers offer the possibility to contract for a cloud infrastructure manager to manage your cloud infrastructure; nevertheless enterprises still must have internal expertise for provisioning their virtual machine images for instance.

Reliability

Varies

High

Moderate to high

To what extend are organizations certain that their services will be up and running 24/7?

With internal IT, their ability to guarantee a high-availability infrastructure relies on the expertise level of their IT staff and the amount of money cough up in their infrastructure.

An outsourcing managed service is most probably the safest, most proven and reliable alternative.

Under the cloud, there are significant locational redundancies possibilities available, but enterprises may still have some concerns towards a lack of proven track record of stability.

Table comparison of options for an IT infrastructure

Out of this analysis derives an obvious fact which any IT decision-maker should have in mind. Undertake the construction of an IT infrastructure from scratch makes no sense for a company today. The only companies that are expected to have internal IT are the ones with a significant already existing IT infrastructure in which they have invested significantly, or organizations faced with regulatory requirements that prevent them strictly from storing data in third-party environments.

Arguments in favor of a reduction of the infrastructure to a minimum are numerous. Modern information technology is constantly evolving. To stay updated, enterprises must constantly adapt entire platform – hardware, operating systems or applications, for example. A study by Forrester Research has recently shown that many managers are reluctant to update the ICT applications, because the costs of upgrading and operation are difficult to assess. Only 5-10% of them use the latest version. ICTs can hardly meet the dynamic requirements of the market, because the structures are expensive to purchase and maintain. Choosing a rental model allows companies to avoid capital-intensive investments. For sure, the cloud provider faces the same challenges. This is certainly true, but they can control them better. On one hand, highly standardized infrastructure allows obtaining economies of scale. On the other hand, it has industrialized process for the acquisition and installation of hardware, migration to new platforms, performing backups and version control, applying bug fixes, managing licenses, and to address the compliance and security requirements increasingly stringent. Unlike corporate enterprises, it is its core business. It manages the entire technology lifecycle.

It can be said that all companies or organizations should use to date managed services provider solutions or services in the cloud. The agility and flexibility of the cloud computing technology is altering significantly the dynamics of outsourcing agreements. The speeds at which services can be provisioned within clouds are going to foster CIOs to consider them increasingly. In parallel, because of this, they will also have to examine to what extent their internal IT organization is capable to act as a cloud service broker. Typically, understanding how the cloud computing ecosystem develops will be a fundamental component of sourcing IT services, and crucial to IT strategies.