Rose Business Technologies

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1 Data Center Outsourcing Services The Data Center is an environment that provides the centralized support of computer equipment in a secure facility, the underlying network infrastructure, and the processes and organization that support this environment. This generally includes the following items: System operations. Tape operations. Print operations. Second-level data center support. Production control. Backup and recovery processes. Technical support (operating systems, subsystems). Performance analysis/capacity planning. Storage management. System security/contingency planning. Asset procurement and third-party management. Data Center Outsourcing Data Center Outsourcing (DCO) is a segment of IT Outsourcing (ITO), which always includes an IT management service and is segmented into data center, desktop, network and enterprise application outsourcing. ITO can include a portfolio of product support and professional services that external service providers bring together to provide IT infrastructure, enterprise application services, or both to ensure the success of the service recipient's mission. Infrastructure Utility Services Infrastructure Utility Services ( IUS) may be defined as outsourced, industrialized, asset-based IT infrastructure managed services (below the functional business application layer). Service

2 outcomes, technical options and interfaces define IUS, which organizations pay for based on resource usage, allocation or the number of users served. Remote-Infrastructure-Management-Based Service Delivery Remote-Infrastructure-Management-Based Service Delivery (RIM) is a delivery model that providers often embed in DCO. This is an acceptable approach in DCO relationships that are based on a client or third-party-owned data center, and when a single service provider delivers RIM. In this case, the client signs a single service contract with one service provider for the whole set of DCO services. In this type of contract, the main provider is responsible for end-to-end service delivery, including the management and control of the hosting subprovider. Vendor Overview Acxiom Acxiom is a well established provider of data center services in North America. It has a solid base of midtier deals that make Acxiom a solid choice for many organizations seeking a straightforward data center outsourcing services provider with a proven ability to execute. Acxiom provides these services under its Acxiom Infrastructure Management (AIM) division. Acxiom's scale in managing mainframe environments enables the company to provide competitive pricing and a bench of skilled resources and tools for managing mainframes. Clients expressed satisfaction with Acxiom's approach to relationship management and the ease with which they can gain access to upper management. Acxiom is tightly focused on serving midtier clients in the U.S. and their related growth in Europe. Client organizations that have large and disbursed global data center processing needs and expect a vendor to take over assets to become their global provider over time would need to perform due diligence when evaluating Acxiom's ability to meet their needs. Some of Acxiom's IUS target deal parameters are not as aggressive at driving client adoption as the large multinational providers because Acxiom specializes in midtier customers. As the market shifts to cloud delivery methods, clients should understand that Acxiom will need to catch up by changing its sales focus.

3 Clients indicated that Acxiom does not spend enough time on its strategy, which they perceive to be a weakness. Acxiom does not develop and deliver leading technology solutions until many other vendors have already done so. Acxiom then follows their lead. Client organizations that need to adopt emerging technologies early should carefully evaluate Acxiom's ability to meet their requirements in a timely fashion. ACS, A Xerox Company ACS, A Xerox Company has accelerated its adoption of standards and processes through the ACS Management Platform (AMP) tool, which provides a strong foundation for providing quality service delivery. ACS has expanded its account and staffing model to leverage an ACS CTO with selected clients. This will enable ACS to compete more effectively for larger deals in the near future. Clients indicated that ACS is highly flexible to work with when they require the provider to make changes in the delivery of the solution. This flexibility increases customer satisfaction even when ACS may not be following its own processes. ACS is looking to remain competitive with other providers by refreshing its portfolio and investing in industrialized/cloud-based offerings. However, these investments are late and depart from the traditional ACS delivery model, which could hamper its success in the market. Clients should carefully evaluate ACS's overall road map for these services and the market's readiness for these offerings relative to offerings from ACS's competitors. ACS has expanded its ability to address clients with requirements outside the U.S., but the company is still not yet of the scale to meet the needs of multinational organizations. As ACS has a smaller global presence than Xerox, clients with complex multinational requirements should carefully evaluate ACS's ability to serve as a single provider (given that it is going to provide services for Xerox clients where there is currently no capability). Although ACS is implementing a plan to improve its innovation processes, clients indicated that they are concerned about ACS's ability to drive innovation due to the availability of sufficiently qualified project resources. Clients should ensure that they attach innovation plans, including measurement for innovation, in their outsourcing contracts with ACS. Capgemini

4 Capgemini is a suitable option for small to midsize clients seeking a DCO provider that can utilize a stronger vision of global capabilities. Capgemini, which mostly sells DCO to the midtier and/or selective sourcing market, has virtualized more than half of its account base, which demonstrates its sound ability to drive the benefits of virtualization for clients. Clients noted Capgemini's ability to leverage other capabilities, such as development/integration and process consulting skills, within Capgemini when delivering SAP-hosted solutions. Capgemini tends to operate locally rather than globally when managing DCO. Clients seeking global delivery, including North America, need to exercise appropriate due diligence to ensure that Capgemini's North American DCO business possesses the scale and resources required. Capgemini's cloud and IU services, while mature in Europe, are not yet mature in North America. Organizations seeking an experienced infrastructure utility provider should carry out customer reference checks in North America focusing on the cloud and IUS offerings. Clients indicated that Capgemini could improve its capacity planning. Clients should include performance metrics in the contract to drive capacity planning, especially as Capgemini's operations (facilities, staffing and account base) in North America are smaller than in Europe. CGI CGI's years of experience and variety of deals have given it the ability to address a broad range of deal sizes. As a result, CGI participates in RFPs from small, midsize and large businesses, which gives it more flexibility, particularly in the Canadian market where flexibility is needed. CGI is a solid provider in both the U.S. and Canada and has a high percentage of virtualized servers. This indicates that CGI would be a good choice for many organizations seeking a provider that understands how the IUS market works and that delivers services built on the underlying technologies of the cloud. Clients indicated that CGI consistently delivered deal requirements, which resulted in the company frequently meeting its SLAs. Clients also stated that CGI had a strong ability to consistently deliver its service and remained flexible when client organizations needed to change requirements.

5 CGI does not have a presence or a plan for DCO or IUS services in Latin America. Its relatively light data center capacity in the U.S. has also limited its efforts to penetrate the North American market. Clients in the U.S. that want a provider to deliver economies of scale through multitenancy data centers offering offshore, low-cost remote capabilities should evaluate and determine if CGI's capabilities and pricing are competitive. CGI prefers not to include benchmarking in its contracts. This limits its ability to win deals in the U.S., where organizations generally embrace benchmarking to drive performance. Clients should ensure that their contracts include the right to benchmark and specify the provider's responsibilities during any future transition to a new provider. Clients indicated that CGI has not been proactive enough in ongoing efforts to reduce cost, and that it tends to focus more on reactive activities instead of striving to continuously improve and deliver innovation. This has led to reduced customer satisfaction. Clients should always include in their contract a continuous improvement measurement with incentives and penalties where appropriate. CompuCom CompuCom supports and embraces best-practice approaches, such as benchmarking in contracts, which is one of the reasons why it has a reliable track record in the renewal of sole source deals. This indicates that organizations find it easy to do business with CompuCom. CompuCom's workforce, including offshore resources, is frequently noted for its technical expertise in multiple technologies and for its understanding of client environments, which enables the provider to effectively resolve data center problems. Clients reported that CompuCom is willing to take on work that is not necessarily related to the contract. They also praised CompuCom for prioritizing the resolution of the client's problem. Clients felt that this highlighted CompuCom's focus on customer satisfaction over and above financial outcomes. CompuCom relies on partners to develop and execute utility service offerings. Clients should ensure the contract enables the appropriate level of transparency and accountability for the management of add-on services. CompuCom primarily focuses on providing managed services to client-owned facilities and

6 assets. Clients considering multiple data center outsourcing solution options should be aware that CompuCom's model will only deliver a managed services solution. It does not provide options, such as a hosted solution. Therefore, CompuCom would engage hosting partners as part of the overall service for clients desiring a hosted solution. Clients indicated that the standard CompuCom service offering is not oriented toward creating state-of-the-art data centers. Clients trying to build such a data center should ensure that CompuCom has the proof of concept to deliver their required solution. CSC CSC has a comprehensive DCO and IUS strategy including a well thought out cloud-based delivery model in the form of BizCloud. CSC's heritage serving U.S. federal government clients with complex data security requirements provides the company with a strong information security layer. Clients praised CSC for its robust and reliable data center services, the global reach of its bench, and its ability to manage transitions and deliver outsourcing services with skilled resources and proven processes. Clients who are excited by CSC's early mover status in IUS and cloud services should carefully monitor CSC's commitment to sustaining this momentum given that it is not accustomed to establishing and maintaining this position. CSC relies more on growing through sales to existing clients than on winning new clients. This limits CSC's ability to address new sales opportunities in the market. Prospective CSC clients should expect it to focus intently on qualifying early sales decisions, as the company needs to selectively apply its relatively thin sales force. CSC has a reputation among its clients of being risk averse, and this creates some agility concerns for clients. Clients should include a request in their contract that the provider present the latest market solution information in the contract structure to enable them to evaluate and adopt the latest solutions at the client's pace and not CSC's. Dell

7 Dell has earned a reputation as a solid provider in the midtier market, which includes organizations that employ between 1,000 and 10,000 personnel. Dell's announcement of plans to invest $1 billion in DCO and cloud capabilities further supports its road map for product development that is required to succeed in this market. Dell's solutions are built on a flexible foundation to accommodate all levels of client. These solutions include services that range from globalized RIM staffed with competitive offshore resources, to solutions that reduce downtime through predictive outage and successfully consolidate data centers to reduce costs. Clients were impressed that Dell's sales force does not continue to push hardware sales as part of a services solution. Dell's IUS vision and strategy are a bit behind the competition. For example, Dell has a lower percentage of virtualized servers compared to the other vendors participating in this Magic Quadrant. This indicates that Dell started rolling out its virtualization strategy late (or did so slowly) and still needs to catch up with some of the larger providers in the market. In addition, Dell remains focused on the product side of its business, which could get in the way of the services business if Dell does not carefully manage this issue. Clients should anticipate new offerings from Dell during 2011 and are encouraged to closely compare the overall market readiness of these offerings against those of the competition. While Dell sells products globally, it still needs to demonstrate its ability to deliver a truly global service for North American clients. Although Dell has put together consortiums of high-quality providers and is building data center capabilities in Western Europe, its international sales and delivery capabilities noticeably trail behind the global capabilities that many of its competitors in the data center outsourcing market have achieved. Clients with complex multinational requirements should weight their ability to manage a multiprovider model, because they may need this capability should they choose Dell as their North American DCO/IUS service provider. Clients expressed a need for more seamless, end-to-end integration of towers within Dell's services portfolio to drive more innovation and deliver leading-edge capabilities. Fujitsu Although relatively small in North America, Fujitsu has started to demonstrate evidence of leveraging its DCO innovations. Such innovations include data center power efficiency and IUS with a focus on passing on cost savings to clients in Fujitsu's "low cost producer" approach.

8 Fujitsu has developed and is able to implement a consistent user experience that includes a client interface with a single look and feel, using standardized tools. Clients praised Fujitsu for building strong account relationships and attentively solving client business needs, such as accelerating transitions when requested. Fujitsu has yet to produce sufficient evidence in North America that it can effectively deliver results from leveraging its vision and capabilities. Clients should closely examine the capabilities that Fujitsu has in their geographical area and determine how ready they are for delivery. Fujitsu has failed to demonstrate a strong commitment to the North American market. With limited investments and visibility in North America, Fujitsu's organic growth may not be enough to quickly reach critical mass. Clients should seek to understand the provider's North American investment plans and growth objectives to ensure a delivery fit. Clients expressed dissatisfaction with Fujitsu not being proactive and its apparent tendency to avoid taking ownership of continuous improvement processes. Clients should ensure that the contract documents a formal continuous improvement process with penalties and/or incentives at the right level to drive Fujitsu's operational decision making. HCL Technologies HCL's transition results, including difficult transitions from incumbent providers, have proven to be very effective and reflect a solid transition methodology, which is one of the key capabilities that a leading DCO or IUS service provider requires. Albeit from a smaller base than other Leaders, HCL is growing in the data center outsourcing space, while many of its competitors are holding ground or even shrinking. For HCL, this includes strategically acquiring data center assets and transitioning staff from selected clients. In contrast, many other providers are more focused on consolidating centers and are often encumbered by a diverse installed base of accounts that may be averse to adopting newer industrialized service models. While this may not be an issue for HCL today, it is certainly likely to face this in future if it sustains current growth. Clients expressed their satisfaction with HCL's pricing and contracting approaches. Along with evolving its SLA approach to use business-based KPI metrics, HCL also embraces and uses benchmarking, by including a benchmarking clause in all contracts. This indicates HCL's confidence in its solutions' ability to stand up to the competition from a technical functionality and price perspective. As a result, 80% of HCL's renewals are sole sourcing arrangements, though

9 this is of a small base. Therefore, continuing this pace will be excellent for HCL, but it will face many challenges in future to maintain this pace. Although HCL has conveyed an IUS vision and some utility-based offerings, these offerings are still relatively immature in the IUS and cloud solution space compared with the offerings from other market leaders. Clients are encouraged to press HCL for details about its product road map for IUS and cloud services. As HCL has often relied on acquiring client resources to support its growth, it has not yet been substantially challenged to prove its strength. Gartner recommends that organizations carefully check and confirm that HCL has the necessary strength in the DCO/IUS services space to support their needs. Clients expressed concern about communications between the account team and operationallevel staff, especially those operating offshore. Clients contemplating using HCL should use appropriate due diligence to ensure that HCL communicates effectively between all layers involved in the delivery of contracted services. HP HP is investing $1 billion into its services business, which includes consolidating and standardizing its offerings within DCO and IUS in order to build solutions to serve its current and future customers. HP has restructured, aligning its resources to provide its North American client base with low-cost offshore resources. This has enabled HP to compete against offshore-centric service providers offering low-cost services. Multinational clients in North America praised HP for the depth and breadth of its global data center delivery capabilities. HP has been driving clients to adopt lower-cost IUS offerings supported by automation that reduces staffing requirements. Depending on the adoption rate this could also constrain HP's revenue growth, both in North America and globally. HP will need to carefully manage this transition to new delivery models to ensure that it achieves high-quality performance and meets its service-level commitments.

10 HP's leadership changes and assimilation of EDS has challenged HP's execution in the market. Although HP has worked to rebuild customer loyalty in the past year, the improvements have not been uniform across clients. HP clients should work with HP to ensure their needs and concerns are not overlooked due to internal organizational changes that could consume some of HP's executive attention in the near term. Clients indicated that HP's focus on product pull-through has hampered it from getting the most from the EDS acquisition to focus the company on delivering complete solutions that include products and services. Clients should, therefore, ensure that HP's sales team focuses on a total "services led" solution before engaging the provider. IBM IBM continues to be a market leader with considerable global scale, reach, breadth and depth of its data center services portfolio. It can also support the largest and most complex clients. IBM's transformation approach draws on the broader IBM portfolio of services which helps the company, like no other global services organization, to provide the required resources with access to its broader services portfolio. That, in turn, helps to drive successful transformational outsourcing deals. IBM can apply its data center outsourcing services, enterprise cloud solutions, business and consulting resources, hosted virtual desktop services solution, and help desk solution to deliver a bundled solution for the client. Clients praised IBM for rigorously deploying standardized methodologies and processes. When this rigor leads to cost control, clients consider it even more relevant. IBM's ability to execute its vision could be affected by inconsistent service delivery. Clients should, therefore, actively solicit responses from IBM references, ideally including a sample of both satisfied and dissatisfied accounts, as to its ability to properly deliver solutions around standardization, automation and cloud. A key pillar of IBM's industrialization and cloud services strategy involves building customized solutions and services on industrialized components. IBM does not appear to be actively promoting these industrialized offerings to existing clients. This makes it difficult for clients to unbundle services, take advantage of multisourcing, and access utility services from other providers. Clients should develop contracts that allow integration of cloud and industrialized services over the life of the engagement. Clients indicated that IBM's escalation process inhibits the responsiveness of its account

11 management. In addition, some clients indicated that IBM's ability to meet transition plans was sub-optimal. This could be due to many reasons, including the engagement scope and complexity or a lack of required resources at the appropriate time. Clients should have contracts with clearly defined scope, timeliness, and penalties as well as an appropriate contract governance model which drives their senior management to meet regularly with IBM. This can build a relationship with IBM's executive management to resolve problems in a timely manner and foster a constructive dialogue. Maintech Maintech is a small player with limited DCO offerings, ideally suited for small deals looking for a domestic supplier with access to broad coverage of on-site service delivery capabilities with remote infrastructure services and monitoring as part of those capabilities. Maintech continues to demonstrate operational excellence, satisfy its customers and score highly on internal customer satisfaction surveys. For organizations that need a provider to come in and take over the running of their data centers, Maintech is a candidate worth investigating. Clients expressed satisfaction with Maintech's flexibility in contracting approaches and depth of talent for such a small service provider. Maintech does not offer a complete global delivery model. Instead, it offers delivery capabilities in select markets in Asia/Pacific and Europe, including primary financial centers such as London and Sydney. While Maintech meets on-site timeliness commitments, this selective market approach cannot leverage pooled resources across clients and geographies to the same extent as the complete global delivery approaches of leading providers. Clients requiring a global delivery provider with reach into secondary global markets are, therefore, likely to look elsewhere. Maintech focuses exclusively on managing client data centers; it does not provide cloudbased solutions, is asset light, has little to no investment strategy, and doesn't want to manage mainframes. Maintech also does not offer vendor-provided data centers. Although the provider is rock solid in what it does do, its narrow focus will limit the scope of services that it can provide and the number of customers that are ideally suited to its strategy. This is a caution for clients looking for a vendor to supply a number of services, including hosting. Clients indicated concern over Maintech's ability to provide data center services beyond standard, core operations, such as hardware set up, removal and break-fix support. Maintech is unlikely to expand its service offerings in the near future.

12 Northrop Grumman Northrop Grumman has substantial expertise in supporting the contracting requirements of all segments of state and federal government. Such requirements include unique qualifications to address government security and clearance requirements. Northrop Grumman's knowledge about operating technology is strong. In addition, the provider's connectivity to broader data center strategies, including portable, dispersed capabilities for clients, are indispensable when providing services to the federal government and, in particular, to the armed forces. Clients report that Northrop Grumman provides great service when delivering IT infrastructure. The provider's effective and predictable approach works well in the government market, which typically has overly detailed contract requirements. Due to Northrop Grumman's sole focus on the government market, its data center outsourcing capabilities are largely private cloud integration tailored to the unique needs of each client. The provider leverages certain underlying capabilities such as R&D across government clients but has only very limited presence in commercial verticals. Clients outside the government sector should confirm if Northrop Grumman is planning to focus on other verticals or if they have unique needs in cybersecurity before they engage the provider for commercial data center outsourcing. Northrop Grumman favors a managed services model and is not expecting significant growth from DCO delivery through partners. It seeks to act primarily as a system integrator particularly for infrastructure utility and private cloud capabilities. Clients should evaluate the value that Northrop Grumman can add as a system integrator and how this fits in with their IUS strategies in contrast to contracting IUS providers directly. Northrop Grumman's clients are generally unable to discuss the details of their relationship with the vendor due to the nature of government contracting. Clients should expect a certain degree of secrecy when reference checking Northrop Grumman's clients, but must understand that this is not a reflection on Northrop Grumman's ability to deliver. Siemens IT Solutions and Services Siemens IT Solutions and Services has significantly picked up the pace in incorporating virtualization into its solutions in North America. Such solutions include cloud-based solutions

13 and IUS services, among others. Siemens IT Solutions and Services has a focused deal strategy for North America and is, therefore, selective in its business pursuits, including investments in support of new business that complements Siemens IT Solutions and Services' vision, scale, scope of services and business units such as Healthcare. Clients expressed satisfaction with Siemens IT Solutions and Services' agility and flexibility in contracting and relationship models. Siemens IT Solutions and Services has a limited market share in North America compared to its strong European base and pursues smaller deal sizes in North America. Clients should ensure that Siemens IT Solutions and Services' capabilities, especially its newer offerings, in North America meet their requirements and ask the company to provide North American-centric references. As with all large-scale M&A activity, clients should exercise additional due diligence when evaluating Siemens IT Solutions and Services' capabilities and long-term vision until the company has been fully integrated into Atos Origin (which is currently acquiring Siemens IT Solutions and Services). Additionally, clients choosing Siemens IT Solutions and Services should include appropriate change of control terms and conditions in their master service agreements. Clients indicated that Siemens IT Solutions and Services may oversell its vision for its service offerings. For this reason, clients should scrutinize the company's ability to deliver these new offerings. Mahindra IT and Business Services Mahindra IT and Business Services is the go-to-market name for the combined entities of Tech Mahindra and Mahindra Satyam. Full legal integration has not been completed at this time, though the organization is reflecting the planned integration in its marketing. For simplicity, we refer to the organization simply as Mahindra. Mahindra's maturing offerings support facets of data center technology, including mainframe, Unix, Windows and Linux, for small, midsize and large organizations. Mahindra invests a significant percentage of revenue in key unified service platforms, such as customer service portals and service automation, to enhance the client experience. Clients noted Mahindra's consistent quality of staffing for remote monitoring services.

14 Mahindra's ongoing acquisition and integration activities related to Satyam remain a distraction for the provider. In May 2011, Mahindra indicated possible delays in its plans to complete the integration before March Clients expecting to receive the benefits associated with the combined entity should include a statement in the contract that grants them the right to terminate the agreement if Mahindra does not complete the integration within their expected and agreed time frame. Adoption of Mahindra's cloud services in North America is low. The provider also depends on third-party suppliers to help deliver hybrid cloud services, which is a significant disadvantage. Mahindra is investing significantly in cloud solutions, though, as it recognizes the potential for growth in this area. However, the question over whether Mahindra can make adequate and appropriate investments to become a significant cloud services player in the North American market remains. In addition, Mahindra's low level of virtualization achieved across its installed base means that clients seeking a provider to help them navigate through a hybrid cloud model over time should critically evaluate Mahindra's overall ability to perform this role. Clients noted attrition-related challenges. Clients considering Mahindra should require that a Mahindra-funded bench of capable resources is available to reduce the disruption of turnover. Unisys Unisys has significantly grown its RIM capabilities for North America, and its use of global resources has enhanced its approach to its DCO/IUS solution overall. In addition, Unisys has demonstrated its global capabilities in deals worth more than $50 million. Unisys depends on supporting distributed systems, which is a high-risk, low-margin business that demonstrates commodity attributes and minimal growth. As it stands, Unisys' service levels for distributed systems focus on non-mission-critical areas with resolution set for the next business day or beyond. Clients stated that in the past 18 months Unisys has made progress in regaining its strength in the day-to-day delivery of solutions in a timely fashion. Clients indicated that Unisys had exhibited vigor, attitude and customer focus that the company was known for in the past.

15 Although Unisys has shown overall year-over-year growth and its stock price continues to improve, its DCO revenue in North America declined in It is likely that Unisys' focus on addressing its financial challenges through 2009 has hindered its ability to deliver its IUS models to the market. As Unisys appears to have turned the corner toward a sound financial position, clients (particularly prospective clients) should pay close attention to Unisys' actual ability and willingness to invest in new technologies and services that they will need at some point in the relationship. Clients identified lingering weaknesses in Unisys's staffing (especially at the project management level) and its process for communicating issues as they arise. Clients should perform due diligence to ensure that Unisys' ability to deliver is a good fit for their required workload. Wipro Wipro has demonstrated a strong retention rate of 94% for DCO and IUS clients. This indicates that Wipro is delivering on its commitments to clients, which is a good sign for organizations seeking a long-term provider of DCO and IUS services. Along with several other participants, Wipro has demonstrated its capabilities to deliver RIMbased solutions that often drive down costs for clients. Clients noted Wipro's flexibility in addressing client issues and challenges, such as implementing programs to deliver quality services through standard methodologies and processes, such as ISO, ITIL and Six Sigma. Wipro's cloud and IU strategy is maturing. This is a reflection of the provider's evolving corporate strategy and a need for an enhanced marketing message. Wipro is working to move away from its image as a low-cost provider and become a valueadded market leader, but the behavioral and consultative skills-based changes needed to realize this goal have not filtered throughout the organization. Clients should ensure that Wipro is not overreaching or committing to work it is not yet ready to deliver. Clients noted some challenges with managing changing resources and related training. Clients should ensure that they identify critical roles and language in their contracts to drive Wipro to minimize potential disruption associated with turnover.

16 Data Center Outsourcing and Infrastructure Utility Services Magic Quadrant 2011

17 Data Center Outsourcing and Infrastructure Utility Services Magic Quadrant 2011 Europe