Are you getting bogged down with the day-to-day task of managing your company's network? ZDNet Australia takes a look at what you should consider if you're looking at outsourcing.

Andrew Mencinsky is no stranger to network outsourcing, but as for being a happy customer, he says "yes and no". Mencinksy is the CIO of Isis Projects, an interior fitout and design firm. Hired in December 2001, part of his role was to improve network efficiency.

When he arrived he says the company's network wasn't efficient at all, running on a point-to-point 64K ISDN connection. For an international company with offices in every major city, it wasn't working, a solution had to be found.

Mencinsky says the first thing he did was contact service providers and ask for proposals.

Enter Bulletproof Networks, a service provider that offers managed LAN and hosting services. Bulletproof proposed setting up a VPN over DSL at a good price, providing a redundancy system so if the DSL failed it would revert to ISDN, with 24x7 monitoring. For Mencinsky, the real selling factor was Bulletproof's proactive management, which he says the other providers weren't really pushing.

The contract was signed in January and five months down the track there have been teething problems. There are still some improvements to be made, but overall Mencinsky is a happier man, saying it has taken some of the stress off him and other staff members at Isis Projects.

Mencinsky's situation is by no way unique, and no doubt many other IT managers are facing similar situations. According to IDC, based on revenue received by service providers, outsourcing of network management grew by 10 percent during 2000-2001. And IDC predicts this market segment will continue to grow, with an expected increase of 13 percent next year and a compound growth rate of 20 percent over the next five years.

Kathy Benson, an analyst with IDC, says a shift in the approach to outsourcing explains the increase. In the past companies handed over their whole IT department to one provider; the trend now is to choose different providers for different areas, such as network management.

Performing daily backups, monitoring servers, fighting viruses, monitoring bandwidth, ensuring uptime...the tasks of managing a network are time consuming, repetitive, and can be a major headache. It is easy to understand why many companies are opting to use the expertise of service providers.

Of course it sounds good in theory, but entrusting the management of your network in the hands of someone else is not to be taken lightly, and because of this there are probably many sceptical IT managers out there.

Mencinsky has no hesitation in recommending outsourcing. "On balance, I would say go for it, I don't have any reservations about it and I would recommend it to other people," he says. "It has taken stress off me and off other people here."

Paul Wardale, technical manager at Minolta QMS, says opting for outsourcing has made his role a lot easier. For him it became obvious that a service provider was needed when the Sydney office was chosen to be the regional office for the Asia-Pacific.

"We needed to have a permanent high speed connection and [outsourcing] would save us setting up our own system," says Wardale. "I don't worry about the external ISP anymore, now I just get an invoice to sign."

But for all the benefits, any customer will attest it isn't all a bed of roses. Before your network is running smoothly in the hands of somebody else, there are many issues to face along the way. Before you even approach service providers, you will need to answer a few preliminary questions.

Why outsource?

"A lot of companies are realising they can't measure the cost savings, especially if they have contracts that have spanned a few years--how do you measure what you would have been spending if you didn't outsource," says Benson.

According to Benson, the top three reasons to outsource are:

• To gain access to the specialist skills and resources provided

• To allow the company to focus on its core business; and

• For the cost benefit.

From John Grant's experience, companies opt for outsourcing when they are either desperate or dragged to it. Grant is the CEO of IT integrator Data#3 and, similar to Benson, he sees the motivating factors fall into three areas:

"The first one is that they have an unmanageable situation on their hands, such as a loss of resources, they are in trouble and they need some help. The second is they want to cut costs; and the third reason is that it is part of a national or global strategy, so other states fall in line," says Grant.

Whatever your core reason, there are many benefits in outsourcing your network management. For Mencinsky one of the main benefits was the 24x7 management time. "24x7 is a great thing, people here work long hours and strange hours and [now] there is always help on call," he says.

Wardale says cost was a secondary consideration for Minolta QMS, with the total management and the feeling of security being the main benefits.

What to do

Once you have decided to take the plunge into outsourcing your network management, the hard work begins. Now it is time to sort out exactly what you want from your provider, what parts of the business you want to outsource, what to do with your staff, and which provider to go with.

Doug Oates, general manager of managed services provider Pihana Pacific, says before companies approach a provider they should first figure out what they want to outsource--which applications are critical to outsource and which components of the infrastructure they want to farm out. He says deciding this will help choose what company to go with.

"If they want to hand over everything to an outsourcer, then it may be a model for more of an EDS or CSC who will take over everything including staff," says Oates. "That isn't us, they can retain control of their hardware."

Data#3's Grant, says one of the first decisions to make is who is going to take responsibility, the service provider or the company. Sorting these issues out now will save grief later on.

"If [we take control], then we have management responsibility, if we take on their people they have to take on instructions from us as we are responsible for meeting the company's goals," says Grant.

Picking a provider

James says you need to know that whoever you choose is going to deliver on their commitment, as it isn't something you want to change your mind about.

Your company will be investing a lot of time and money into the outsourcing company to get your company's network running smoothly.

It will also most likely be depending on the outsourcer's architecture, which is not something that is easily changed at the end of your contract.

"Look at their service philosophy, and the way they drive their staff. If I was a buyer I would want to understand that before I even consider them as a provider," advises James.

"Ask a few qualifying questions such as what are the business practices that you build your strategy on, and see what the answer is. If the answer is what makes a good managed service then you have started at the right place."

For Mencinsky the first thing he did was call providers to supply proposals. He advises to check up on references to ensure you will get someone who knows what they are doing and can deliver on their promises.

Doug Oates, general manager of service provider Pihana Pacific, says it is important to ensure your vendor can scale with you, for example if your company adds new applications you want your provider to be able to manage them.

"If you want to expand and go to different locations, you would want your provider to be able to work with you in those locations," says Oates.

He also warns to be wary of vendors offering 24x7 service: "A lot of vendors claim to have 24x7 service, but scratch below the surface and you will see that they operate on a pager basis. They work on an on-call basis so they aren't always there. We don't think that is an effective way to manage your business. We have staff on call 24x7, there is always someone at a desk ready to help," says Oates.

After you have taken the plunge and decided on the right service provider for your company you expect to spend between six and 12 weeks for your service provider to have your systems running smoothly...and in that time you can expect some degradation of service and a few hiccups.

What you can expect

Data #3's John Grant says customers can expect it to take three to six months for what he terms "phase one".

"Our preferred basis of engaging with our new customers is that we will work with them over a defined period to understand the issues. Once we know the issues, what we want to achieve, then we enter a term base contract, for one, two or three years," says Grant.

There are always teething problems and the key to getting through it is the relationship that you establish with your provider from the outset.

Mencinsky can certainly relate, saying at Isis Projects they encountered initial problems, mainly with their legacy system.

"We had teething problems in optimising traffic, our legacy application is quite touchy and doesn't operate well on the WAN--any kind of latency and it would just fall over," says Mencinsky.

A few months down the track and the legacy system is still causing issues. And there were other teething problems too, which occurred in the interstate branches. What exacerbated the problem was that Mencinsky's provider, Bulletproof, doesn't have a national presence, which meant they were hiring contractors to service the other branches; contractors who Mencinsky says weren't as technical as the Bulletproof staff.

"Sydney went beautifully, but every other branch had a problem, either with the installation of the DSL, then the incompatibilities with the hardware that was set up, which wouldn't work in other offices. It always involved replacement of modem, or something that took time," says Mencinsky.

And when it comes to problems, and there is bound to be at least one, you will be relying on a high level of service to see your company through with minimum interruption. Both service providers and customers alike speak of proactive service when describing the ideal partnership.

"Proactive" meaning the service provider doesn't just sit back and fix problems when they arise, instead it should be constantly monitoring the network to look for ways to improve efficiency and to fix problems before they occur.

Dimension Data's James says the service provider has to become part of the business and work along with the customer's objectives, otherwise the partnership will fail.

"What is critical in outsourcing network management is not only getting real-time service but also getting a consultative relationship. Make sure they are providing you information on what has happened and what is going to happen. Make sure you are getting a proactive and predictive service," advises James. "You are paying for a specialist, so make sure that you get that as part of the service. Consultation is critical if you want to get that return."

Of course the type of service you receive will depend largely on what is stated in your Service Level Agreement (SLA) with the provider.

Striking an SLA

According to IDC's Benson, the companies that have sat down and worked out what their business goals are usually have a more successful contract.

Ask anyone who has been down this road before and they will be sure to stress the importance of having clear objectives and expectations. When problems occur you will be referring back to your SLA, so it will need to be clear.

Grant says it is important to have quantifiable objectives and realistic expectations. And he notes that the higher the service levels, the more expensive the service is. He says SLAs require a whole negotiation process and at Data #3 SLAs aren't discussed until the provider and the customer both know what they are dealing with.

"The issue with SLAs is a lack of aligned expectations. It could be a lack of completeness or clarification. It is quite important to understand the issues to set realistic SLAs," says Grant. "It becomes a contract."

And like with many other contracts, there can be penalties involved if service levels are missed. Grant says it isn't uncommon to penalise poor performance but he says it is also important to encourage good performance.

"There can be penalties but we are unlikely to take a penalty unless we get a benefit. Where there is downside there has got to be upside."

Profit-sharing capabilities can be a successful tool in SLAs, where a bonus system is used. The provider receives more money for achieving certain levels of service and in turn the customer receives better service, just make sure the agreement is mutually beneficial.

Also make sure the SLA can be renegotiated before the contract is up. Most contracts are for two to three years, but if the current agreement isn't working, you don't want to wait for two to three years before getting the chance to change it. Besides it is in the best interests of both parties to have a good SLA in place.

End results

And if you get all this right, then hopefully you will be a happy customer. For Mencinsky he says while there are marked improvements in Isis Projects' network, there are still some areas that he is not entirely happy with.

"One of my big issues is that [Bulletproof's] systems detect if it is up but not how long it is running. The network could be running like a dog, but according to their systems everything is fine," he says.

For him, instead of just checking if the network is up and running, the provider should also monitor the quality of the network, see if there are lags anywhere, any bandwidth issues, if it is running as fast at it could and should.

"Ours is up 95 percent of the time so we want to know how to improve the quality instead of focussing on the uptime. But Bulletproof are working on it...they have done a good job, they have gone above and beyond their call of duty, and didn't charge me, and it quite impressed me," Mencinsky says.

So, what does Mencinsky think of network outsourcing now?

"There are cost benefits, efficiency has improved, and it is scalable. We obtain leading edge knowledge for a fraction of the cost of permanent training, and we are under what we were paying before. It is definitely the way of the future."

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