Remote Infrastructure Management
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1 Web Exchange Market Education Series Remote Infrastructure Management Ensure Value, Reduce Risk Presented by: Paul Schmidt Mike Slavin June 29,
2 Session Agenda Introductions and Stage Setting Fundamentals of Remote Infrastructure Management Market Overview Service Provider Landscape Making the Essential Decisions Key Take Aways and Wrap-Up 2
3 Introductions and Stage Setting 3
4 TPI: Thought Leadership, Broad Experience Our impact is amplified by our history in helping the largest, most accomplished companies in the world to face and overcome their greatest sourcing challenges. Credentials Expertise Favorable Outcomes: Clients find the sourcing mix best optimized to their business as a result of our objectivity, informed analysis, practical insights and flexible approach Full Life-cycle Services: We have unmatched skill and experience in strategy design, implementation and sourcing management Real-world Expertise: A deep roster of skilled advisors (350+) gives TPI the human capital necessary to put the right team on every project Speed-to-Results: Having successfully advised many of the world s most complex organizations our solutions are robust, viable and deployable Sustainable Value: Sourcing solutions must return value to shareholders over a continuum; we help our clients evaluate their efficacy over the short, medium and long term Sourcing Management & Governance Contract Initialization & Transitions Sourcing Strategy & Assessment Contract Development & Negotiations Internal & External Sourcing Solutions Service Provider Assessments / Due Diligence 4
5 Paul Schmidt Meet The Experts TPI Partner and Practice Leader, Global Service Delivery Extensive background in BPO, ITO, business strategy development and IT advisory services and technology Deep offshore advisory experience Expertise in M&A activities, partnership and joint venture business structures, profitability and revenue growth Previously, as Founder and CEO of Offshore Development Group: Assisted clients to leverage global resources in strategic and emerging markets Helped clients develop markets through acquisition and partnerships for offshore IT, BPO services and strategic business development activities. Previous clients include United Airlines, International Paper, ING, BP Education: MBA - Wright State University B.S. - Computer Science; U.S. Air Force Academy 5
6 Mike Slavin Meet The Experts TPI Partner and Practice Leader, Global Information Technology Experienced in the management of all aspects of IT sourcing and operations Extensive career includes senior roles in advisory, service provider and client organizations Applies knowledge to advise clients, lead assessments and support full outsourcing transactions Before joining TPI, Mike as a CIO Managed implementation of new systems and technologies Implemented e-business solutions Held key leadership and consulting positions at EDS, Price Waterhouse and other firms TPI clients have included: Siemens, Capital One, PSEG, BellSouth, CIBC, Credit-Suisse, Agilent, Cendant, Wachovia, CA, Mercer HR, and Celestica 6
7 Today s Discussion Roadmap When evaluating remote infrastructure management, corporations need a clear understanding of the way the market is headed, the range of options available, and some of the potential risks to overcome. Remote Infrastructure Management 101 Market Overview Service Provider Landscape Essential Decisions and Risks 7
8 Fundamentals of Remote Infrastructure Management 8
9 What is Remote Infrastructure Management? Service delivery from distant locations with the goal of reducing costs, improving processes and enhancing service levels. Day-to-day management of IT infrastructure from a remote location Any IT function that can be successfully executed off-site is a candidate for remote infrastructure management Per IDC estimates, 85% of data center support functions can be performed remotely Offerings differ from one service provider to another, based on expertise, skill sets and client requirements Services include the following: Monitoring services Help-desk services Server management Data-center management Storage management management Network management Asset management Selected IT-security services 9
10 Alternative Business Models Each remote infrastructure management solution is unique to the company s needs. There are a variety of ways in which an optimal solution may be tailored. Internally-delivered (captive) remote infrastructure management Joint ventures / hybrid models Outsourced provision of remote infrastructure management Infrastructure management outsourcing is divided into two types: total outsourcing and out-tasking Total outsourcing typically involves outsourcing of all major service towers along with management responsibility and risk. May also include asset takeover Out-tasking involves outsourcing of targeted, limited services 10
11 Remote Infrastructure Management Market Overview 11
12 Remote infrastructure management has become possible through the convergence of enabling capabilities. Low-cost countries and robust services infrastructure High-speed telecommunications interconnectivity Security technologies Applications / Systems Management Business Continuity services Drivers accelerating the market: What s New? Increased competitive pressure on service providers to further reduce cost of service Increasing awareness of the remote infrastructure management market Need to support global footprints of multinational clients Increased infrastructure and labor resiliency reduction of risk 12
13 Past versus Present Greater automation and use of offshore resources provides significant cost benefits for managing infrastructure systems and assets. Service provider business drivers differ between multinationals (MNCs) and India pure-plays: MNCs require offshore delivery of services to remain competitive for a large influx of re-competes and fully outsourced solutions. They also: Develop internal remote infrastructure management capabilities to drive down internal costs; now deliver those capabilities to clients Interest in increasing net margins Bundle remote infrastructure management into overall infrastructure deals with often little transparency Prefer to remain mostly under the radar India-based pure-plays are naturally extending their original software customer base and adding new markets to fuel continued growth. They also: Make a strong play with existing customers as a service extension Target carve-out (out-tasking) opportunities rather than total outsourcing Take advantage of clients re-competing/renewing infrastructure deals and trend towards multi-sourcing Market aggressively to develop the market and their competitive positioning 13
14 Market Trends in Infrastructure Services Delivery Remote Infrastructure Management is becoming an important technology sourcing component. India-based service providers are aggressively investing to compete with MNCs For infrastructure management, India is the offshore location-of-choice Clients seek 24x7 follow the sun coverage and global footprint Service provider focus is shifting from technology to business optimization Supporting client transformational objectives Variable pricing, SLA provisions, and more flexible contract models are prevalent Well established with MNCs, while Indian pure-plays are more risk averse and accustomed to FTE pricing; however, this is changing Competition and changing technology landscape will benefit customers with flexible pricing and operating platforms Small players offering remote services for niche markets Scale and investment issues Very fragmented market longer-term viability issues 14
15 Global Demand for Remote Infrastructure Services is Rising Company adoption of global service delivery increases Desk Topboth in depth and breadth 32% 75% after ADM the (Total) three-year inflection point. Support 41% Analysis Design Coding Testing Deployment Infrastructure (Total) Help Desk Remote Server Remote Network Source: TPI State of Global Service Delivery Study % 31% DB Admin 39% 42% 53% Remote 24% Mainframe 29% 44% Security 23% 63% Monitoring 33% 66% Electronic 22% 85% SW 30% Application 49% 60% Maint 67% 81% R&D 14% 37% 19% 53% BPO - 13% CRM 18% 56% 12% 68% BPO - HR 16% Emerging 47% BPO - F&A 11% 60% 18% BPO - 10% 34% Other 15% 47% Others 4% 33% 4% Current41% Current 3+ years Current experience 3+ years experience 0% 25% 50% > % people 100% 0% 25% 50% 75% 100% Source: TPI State of Global Service Delivery, 2005 Initially 3+ Years 15
16 Outsourcing Satisfaction is Relative Satisfaction with global sourcing has room for improvement. However, the level of satisfaction equals that of in-house staff and traditional IT consultants. Satisfaction Offshore resources Onsite Internal staff Offshore resources 3.4 Onshore Consultants Source: TPI State of Global Service Delivery Study No significant difference in satisfaction between any of the alternatives. 16
17 IT Services Offshore Market Maturity Offshore Market Maturity Future Emerging Mature HW Maint. Asset Procure Data Ctr Mgt Desktop Mgt Main- Frame Admin Prod Control Capacity Mgt Perf. Mgt ERP Admin Change Mgt NW Monitor NW Mgt Storage Admin Security Admin Mgt Voice Mgt Server Admin Asset Mgt SW. Mgt Help Desk Charge- Back Admin DB Admin Offshore Leveragability 90%+ of Delivery Effort 60%+ of Delivery Effort < 60% of Delivery Effort Offshore services are primarily remote Limited Moderate Extensive Source: TPI Research Offshore Resource Depth 17
18 Who Is Using Remote Infrastructure Management? Global leaders in a variety of industries set the pace for service acquisition. Hitachi Network mgmt., server admin., storage mgmt., DB admin. Microsoft Shell Help desk, server admin, DB admin., DR, backup admin. Help desk, server admin., security admin., messaging, problem coordination Financial services major Server admin., network mgmt., desktop, DB admin. Unum Provident and a major energy corporation also signed contracts with significant global service delivery components for remote infrastructure management. Many of the major deals are not transparent. Remote Infrastructure Management is being performed as part of a larger outsourcing deal with MNCs in low-cost subsidiaries. 18
19 Service Provider Landscape 19
20 Global Portfolio Emergence Service providers are establishing capabilities in an average of 4.2 countries. Service Providers' Offshore Capabilities South America Asia Pac (non-india) Location Eastern Europe Ireland Mexico China Canada India 0% 20% 40% 60% 80% Percent 20
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