A Whitepaper for Corporate Decision-Makers

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1 Whitepaper 2014 A Whitepaper for Corporate Decision-Makers Five Essential Factors for Selecting the Right Hosted Application Management Provider Making the Right Choice to Ensure Scalable & Reliable Application Services An Independent Analysis Published on Behalf of NaviSite. THINKstrategies, Inc., 2014

2 Inside Cover - DO NOT PRINT

3 Executive Summary Enterprise migration from traditional on-premise software products to a new generation of more flexible, versatile and cost-effective hosted applications solutions is accelerating, according to nearly every industry survey and research forecast. The advent of more powerful, flexible and economical Cloud-based services is helping to fuel this migration process by giving enterprises another application management alternative. Although a growing number of enterprises are adopting Software-as-a-Service (SaaS) solutions to meet their changing needs, many corporate decision-makers are more interested in moving their existing enterprise applications that are already satisfying their operating requirements to a third-party managed hosting provider which can assume responsibility for their day-to-day application management functions. This is especially true for mission-critical, enterprise applications such as Oracle ERP. These corporate decision-makers are seeking a hosted application management (HAM) provider that can ensure the availability and performance of their enterprise applications, perform ongoing maintenance and monitoring tasks, and provide expert advice regarding how to economically scale their applications to meet their evolving needs. The ability of the HAM provider to deliver reliable and secure application services are critical considerations in the selection process, but there are other factors which also influence enterprise decisions. HAM provider to handle your mission-critical, enterprise application needs. The whitepaper will also show how some enterprises are capitalizing on NaviSite s NaviCloud Cloud-based HAM capabilities to satisfy their mission-critical application requirements. Table of Contents Leveraging Hosted Application 2 Management Services to Keep Pace with Escalating Enterprise Requirements loud ROI Picking the Right HAM Provider 3 Critical for Business Success Application Delivery CSP Selection Criteria #1: 4 Reliability & Performance HAM Selection Criteria #2: 5 Expert Support Services HAM Selection Criteria #3: 6 Flexible Service Options HAM Selection Criteria #4: 6 Billing & Pricing Models HAM Selection Criteria #5: 7 Customer Engagement Model Summary and Conclusions 8 This whitepaper will identify the five most important criteria for selecting the right THINKstrategies, Inc., White Paper 1

4 Leveraging Hosted Application Management Services to Keep Pace with Escalating Enterprise Requirements Corporate executives are no longer interested in allocating a significant proportion of their operating budgets to tasks which, too often, fail to support their business objectives 1 IDC Hosted Application Management Services: 2014 U.S. Customer Strategies Hosted application management (HAM) services are proving to be perfectly suited to respond to the escalating challenges facing organizations of all sizes across nearly every industry in today s increasingly uncertain business environment. Faced with a diversely competitive market in which customer satisfaction can be fleeting, businesses must be more agile to keep pace with their customers changing demands. Businesses must also supply their employees with more flexible and user-friendly applications to meet their day-to-day job requirements. If the business can t satisfy their end-users needs, they can expect the end-users to find their own apps that will enable them to do their jobs faster and easier. In response to these pressures, a growing number of corporate executives are looking to offload the chores of day-today application management to proven service providers that can perform this function more cost-effectively; they are no longer interested in allocating a significant proportion of their operating budgets to tasks which, too often, fail to support their business objectives, or which compromise their security and scalability requirements or their ability to cater their applications to meet their unique operational needs. HAM service providers deliver automated provisioning, virtualization, management, monitoring, and maintenance across multiple customer environments in a manner that creates economies of scale that can reduce costs and improve the quality of application performance. Recent IDC research has found nearly 50% of organizations currently use hosted application management (HAM) services, and another 30% that are not currently using these services intend to do so within the next 24 months. 1 As a result, IDC predicts the worldwide HAM services market will grow from $10.6 billion in 2013 to $15.4 billion by Although logic would suggest that smalland mid-sized businesses (SMBs) would be more inclined to adopt HAM services to augment their limited internal IT resources, IDC s survey research shows current use of HAM services is largest for enterprises with 50,000-99,999 and 100,000+ employees, at 67% and 65% respectively. IDC s survey research also shows that reasonable price (44%), uninterrupted application service levels (43%), and industry leading data security and application environment (41%) are the highest ranking best-in-class HAM attributes driving the customer selection process. In turn, THINKstrategies believes these same attributes are critical for SaaS companies selecting a Cloud Service Provider (CSP) to satisfy their service delivery needs. Growing demand for HAM services has also attracted a widening array of players seeking to win a share of the market, including a growing number of CSPs. The CSPs primary value-proposition is their commodity pricing which appeals to some businesses facing severe market pressures. However, most corporate decision-makers recognize they can t compromise on the quality of their application services. White Paper 2 THINKstrategies, Inc., 2014

5 Picking the Right HAM Provider Critical for Business Success Escalating competition has created a buyer s market. Although corporate executives have plenty of HAM alternatives to choose from, it is essential to pick the right service provider in order to ensure the availability, security and performance of their mission-critical enterprise applications. Given the tremendous dependency of more organizations on their enterprise applications, especially their ERP systems, it is essential for corporate executives to carefully consider how they select their HAM providers. THINKstrategies believes there are five (5) important criteria enterprise decision-makers should use to select their CSPs. THINKstrategies, Inc., White Paper 3

6 CSP Selection Criteria #1: Reliability & Performance One of the most common reasons why corporate executives and end-users lose faith in their in-house enterprise application support teams is that they fail to provide reliable, high quality service availability. Although HAM services are generally reliable, service outages still occur that can significantly disrupt a business s operations. Even common performance issues can derail everyday business processes. According to many industry surveys, service latency and slow response times are the primary cause of customer dissatisfaction. For instance, 40% of people abandon a webpage that takes more than 3 seconds to load, according to data collected from Gomez.com and Akamai by KISSmetrics. 2 The following chart from Aberdeen Group shows how webpage conversion rates decline as response time rises. 3 Conversion Rate by Page Load Time Conversion Rate Session Average Page Load Time in Seconds 2 How LoadingTime Affects Your Bottom Line, KISSmetrics, 3 Aberdeen Group, "Reaching the Top of the Web Performance Mountain" (May 2013) Given the tremendous investment which businesses make in their enterprise applications, they can t afford to have their corporate end-users and executives fail to take full advantage of the applications because they re frustrated with their lack of availability or response times. Therefore, selecting a HAM provider that can design a hosted infrastructure to ensure optimal application reliability and performance should be the corporate decision-maker s top priority. NaviSite s Managed Application service responds to these requirements by offering custom infrastructure design, continuous application availability (99.8% or higher), performance guarantees and response time guarantees. White Paper 4 THINKstrategies, Inc., 2014

7 HAM Selection Criteria #2: Expert Support Services Enterprises are finding it more difficult to justify hiring and maintaining a team of top-flight IT professionals to create custom applications. In today s increasingly challenging business environment, many enterprises are finding it more difficult to justify hiring and maintaining a team of top-flight software developers and IT professionals to create custom applications and administer their data center operations. Too often this staff must dedicate the bulk of its time keeping the software and systems up and running rather than providing morestrategic support for the organization s key initiatives. Rather than make the capital investments and incur the ongoing expense of building their own facilities, hiring their own staff and administering their own software, enterprises are turning to third-party service providers to handle their software and systems needs. Hosted Application support means more than simply responding quickly to a problem when it arises and providing a friendly response to service issues. It means having seasoned experts who can not only resolve problems quickly, but who can also prescribe remedies that mitigate the risk of the same issues occurring again. Additionally, SaaS companies often forget that the Service that differentiates them as much as the Software in their SaaS solutions. It may seem intuitive for a CSP to provide reliable customer support services, yet in the highly competitive Cloud services marketplace, many CSPs attempt to compete on price rather than on support. As a result, many CSPs do not possess the skills necessary to properly support their customers enterprise applications service requirements. NaviSite s Managed Application service addresses these requirements by offering resolution guarantees, change management guarantees and disaster recovery guarantees. Quality support services also depends on leveraging the right monitoring and management tools that give the customer equal visibility into their application availability and performance. NaviSite s NaviView Customer Portal is designed to meet this requirement. THINKstrategies, Inc., White Paper 5

8 HAM Selection Criteria #3: Flexible Service Options Corporate executives are seeking a strategic source that can supply them with the right mix of Cloud, hosted infrastructure and other HAM services. As the demand for Hosted Application services grows, it is becoming increasingly clear that most organizations are going to rely on a combination of Cloud and onpremise resources to support their day-today operations. In many cases, enterprises will also employ a variety of public or private Cloud and hosted infrastructure services to meet their business needs. Rather than become dependent on a potpourri of best-of-breed service providers and facing a myriad of issues trying to manage them while maintaining their own in-house data center operations, smart corporate executives are seeking a strategic source that can supply them with the right mix of Cloud, hosted infrastructure and other HAM services to satisfy their specific requirements. Provisioning services from a strategic partner enables enterprises to assemble the best combination of software and service delivery capabilities to properly support its business operations. To illustrate, NaviSite can manage Oracle E-Business Suite, PeopleSoft Enterprise, Hyperion/EPM, Oracle Business Intelligence Foundation and Siebel, as well as Microsoft Dynamics. HAM Selection Criteria #4: Billing & Pricing Models 4 Application Outsourcing Trends How to Win Next- Generation AO Deals, IDC #247173, March 2014). An IDC analysis found that over the past five years Hosted Application Management deals were shrinking in total contract value (TCV) and were also shortening in average contract length. 4 Buyers want greater flexibility in their contractual term lengths, as well as additional value-added services as part of their HAM relationships. As a result, HAM providers must bundle complementary services into their contracts to fully meet their needs and to remain competitive. Such interests have forced HAM providers to be more nimble, flexible, and creative in the way they structure and price their services; this so enterprises can obtain more flexible contracts that more-closely align with their business operations. Some common trends include: Pricing models based on usage Price discounts based on contract length Contracts that include development hours or testing stipends Integrated Disaster Recovery Contract terms that remain flexible (less than 5 years) White Paper 6 THINKstrategies, Inc., 2014

9 HAM Selection Criteria #5: Customer Engagement Model Overlaying all the previous considerations, which we ve outlined above, is the strategic approach the HAM provider adopts to engage with its customers that are reliant on its services. As we indicated earlier, we firmly believe in partnering with a HAM provider that can serve as a strategic source of a mix of Cloud and hosted services which reduces the costs and complexities of managing variety of best-of-breed providers. This means the HAM provider must have the right set of services in their portfolio to address the customer s application lifecycle needs. Therefore, the best HAM providers offer an end-to-end set of professional services that include upfront consulting services and backend managed services. At the front-end, the HAM provider should have seasoned consultants to help the enterprise properly assess, plan and design their application delivery architecture requirements. They should have experienced project management staff to ensure the successful deployment of the application services. And, they should have skilled staff that can augment the enterprise software development and IT management team to monitor and administer the HAM services they ve provisioned. Noted in the figure below, Navisite has developed a Cloud Services and Application Management Lifecycle portfolio that seeks to address these requirements. NaviCloud Infrastructure Services includes consulting, onboarding and managed services. Burstable, high performance computing platform Integrated physical N+1 Oracle RAC database cluster Specially designed for applications Highly available at all tiers Spans multiple data centers NaviCloud Enabled infrastructure On-boarding Services Application specific auto-provisioning Executed with production operations, manageability and on-going support in mind Proven methodology Fully managed and supported on-boardng process The best HAM providers offer an endto-end set of professional services that include upfront consulting services and backend managed services. All application and technology upgrades included Patch and customization management Maximizes application investment Lifecycle Mangement Services Application Management Services Application focused customer care model End-to-end functional help desk and technical support Deliverys a superior customer experience THINKstrategies, Inc., White Paper 7

10 Summary and Conclusion This independent analysis was published on behalf of NaviSite. Rising customer expectations and intensifying competition make it critical that enterprises focus on their core competencies and adopt partnering strategies with HAM providers that ensure they can leverage their mission-critical enterprise applications in a reliable and optimal fashion to satisfy their evolving needs. This means enterprises must team with HAM providers that can keep pace with their escalating requirements in a cost-effective manner. In THINKstrategies view, it also means enterprises should select HAM providers that can provide them the right set of Cloud and hosted service delivery and support capabilities to meet five key criteria for selection: Reliability & Performance Expert Support Services Flexible Service Options Billing & Pricing Models Customer Engagement Model About NaviSite NaviSite, Inc., A Time Warner Cable Company, is a leading worldwide provider of enterprise-class, cloud-enabled hosting, managed applications and services. NaviSite provides a full suite of reliable and scalable managed services, including Application Services, industry-leading Enterprise Hosting, and Managed Cloud Services for organizations looking to outsource IT infrastructures and lower their capital and operational costs. Enterprise customers depend on NaviSite for customized solutions, delivered through a global footprint of stateof-the-art data centers. For more information about NaviSite s services, please visit About THINKstrategies, Inc. THINKstrategies is the only strategic consulting services company formed specifically to help our clients better understand and capitalize on the business implications of the transformation of the technology industry from a product-centric to a services-driven business model. The company s mission is to help our clients re- THINK their corporate strategies, and refocus their limited resources to achieve their business objectives. THINKstrategies has also founded the Cloud Computing Showplace (www. cloudshowplace.com), an easy-to-use, online directory and resource center of SaaS, PaaS and IaaS solutions worldwide, organized into over 90 Application, Industry, Service and Enabling Technology categories. The showplace also includes information and insights regarding industry best practices. THINKstrategies also hosts the Cloud Innovators Summits (www.cloudsummits.com), executive forums focused on key business opportunities and challenges created by the Cloud, including the Cloud Channel Summit, Cloud Analytics Summit and Connected Cloud Summit. For more information regarding our unique services, visit or contact us at White Paper 8 THINKstrategies, Inc., 2014

11 Inside Cover - DO NOT PRINT

12 THINKstrategies, Inc., NaviSite, Inc., A Time Warner Cable Company 2012, 2014 Time Warner Cable Enterprises LLC. All rights reserved. Time Warner Cable Business Class is a trademark of Time Warner Inc. used under license Time Warner Cable Enterprises LLC. All rights reserved.

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