Remote Infrastructure Management Comes of Age · offshore IT outsourcing certainly is a factor in the globalization of outsourcing. The IT industry is moving toward a remote delivery

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Remote Infrastructure Management Comes of Age ALSBRIDGE, INC.

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Remote Infrastructure Management Comes of Age Introduction to RIM

The Information Technology (IT) infrastructure outsourcing market continues to evolve. As firms scour the landscape for ways to focus on their core competencies and maintain their competitive edge, more and more emphasis is being placed on wringing out costs and adding value to the IT spend. Although sometimes exaggerated, the potential savings through the outsourcing of IT infrastructure may range as high as 20% - 30%. One of the most significant value drivers in IT outsourcing is remote infrastructure management (RIM) - the off-premise, often off-continent, management of IT infrastructure. RIM can include behind the scenes activities such as hardware support and management, or it can include managing user-facing services such as network management or desktop support. The range of IT functions for RIM includes:

Data networks (WAN/LAN)

Desktops/laptops and related peripherals

E-mail systems

Mainframe platforms

Servers

Storage platforms

User support

Voice networks Generally, RIM can be undertaken as a partial service, only permitting the provider to manage or monitor a portion of the IT functions. This provides an opportunity for the client to test the experience. Once the client is satisfied with their limited RIM experience, they can contemplate moving up the sourcing model to full service remote infrastructure management. Full service RIM involves the client retaining their IT assets but handing over the management of their IT infrastructure to a provider or providers. The configuration of the RIM scenario depends on the client’s specific business drivers, internal capabilities, and strategic IT direction.

Well-designed governance structures ensure that a sustainable relationship is managed in a professional environment.

The potential savings through the outsourcing of IT infrastructure may range as high as 20% - 30%



RIM Evolution and Maturity With the continued advancement of telecommunications and wide area network infrastructure in both North America and Europe over the last 15 years, domestic delivery of RIM has been a common operational model in most Fortune 1000 companies. Typically, domestic remote infrastructure management is performed in a “lights out data center” environment. It is lights out in the sense that there is limited or no on-site personnel staffing the data center and literally the data center operates at most times with the light out. Remote operations staff both monitor and manage the infrastructure from a different building or even a different city and state. The remote functionality allows the operational activity to be performed in a separate location from the client or data center, often using highly leveraged or pooled resources to monitor several internal or external sites.



IT organizations are deploying and managing infrastructure services in compliance with the standards of the Information Technology Infrastructure Library (ITIL) and other quality metrics. Quality improvements and process standards are accepted as vital RIM operational practices. Process maturity has facilitated the effective deployment of an offshore delivery model. Work products are clearly defined and can be assigned to train the teams offshore. The rapid evolution in technologies and IT architectures, the economic impact and drive to reduce costs, and the maturity of the offshore market is positioning RIM services as the next wave of opportunity for outsourcers of all types.



State of the RIM Market and Industry The prospect of reaping the cost saving, productivity gains, and business model flexibility derived through taking advantage of offshore IT outsourcing certainly is a factor in the globalization of outsourcing. The IT industry is moving toward a remote delivery model in which services are increasingly delivered by vendors with operations in low-cost locations. The banking, financial services, and insurance industries are leading RIM offshoring growth. These industries, often referred to as the “financial services industry,” have been early adopters – using remote software programming resources – of offshore outsourcing in the area of application development and support. In addition, the financial services industries’ necessity for highly secure, 24/7 availability, highly reliable and stable systems has created opportunities for global RIM providers. RIM service providers have recognized the opportunity to offer follow-the-sun delivery models, highly distributed and flexible monitoring and support models, and in those cases where automation has not replaced labor arbitrage, labor cost savings. The industries that are slow to move toward global RIM are those that have the lowest transaction volumes, such as media and entertainment and professional services. Other industries, such as aerospace and defense and the public sectors, face various degrees of government regulations that inhibit their adoption of global RIM. The healthcare industry has concerns with the data security and integrity being provided in foreign, nondomestic locations. Healthcare also has much more complicated revenue and cost recovery business models, which has some influence on the adoption of global RIM.


The prospect of reaping cost saving, productivity gains, and business model flexibility from taking advantage of offshore IT are strong factors leading to the globalization of outsourcing



The body of our research indicates financial services and insurance firms are under significant pressure to reduce costs and increase efficiency and productivity of the IT investment. As such, they continue to embrace outsourcing, and most recently, RIM services, in a variety of global configurations and locations. RIM Delivery Analysis Target Towers As the result of years of domestic and regional RIM experiences, typically in managing and supporting the operations of data centers, servers, LAN/WAN functionality, and to a lesser extent, end user computing (EUC), many of the tasks performed within the infrastructure management towers can be delivered from an offshore location. This is particularly true for the financial services industry, which has embraced RIM offshoring because they have little need for traditional backup media handling. Instead they are adopting a fully redundant multiple location storage strategy. This is largely due to their disaster recovery restoration timeframe requirements, which require high availability and fast recovery times (minutes not hours). This is now provided by disk-to-disk and media-less backups.



However, some activities remain that must be managed by a provider or by the business’ internal IT staff in the local premise or domestic location. These activities include the physical server provisioning and hardware repairs. Activities requiring quick response times and direct customer service intervention, such as computer break/fix or refresh, may be required to remain at the customer site, retained as a third-party stand-by, or be part of the business’ internal domestic IT staff.

Mature providers continue to expand their flexible RIM offshore delivery model offerings. These mature or full-service providers can operate a full service tower remotely or include local, domestic staff augmentation. The providers can also jointly support a tower with a domestic customer staff or a third party. Delivery Countries India is the leading location for providing RIM services. India appears as the dominant global leader in IT offshoring both from the perspective of being the preferred location to host RIM services, and from the perspective of being the home country of many of the leading RIM providers. India has captured the majority of the global offshore market and is positioned to be the leader in RIM offshoring. India providers have the offshore maturity and experience needed and have created a significant



and rapidly growing customer base. They have also been investing in the offshore tools, processes, and infrastructure necessary to manage the growth of RIM. The investment is being used to position India for major RIM market penetration. China continues to emerge as a potentially major player in IT offshoring. Providers are investing in China as part of their global delivery base. Network operation centers are being established and beginning to support RIM clients. In Europe, the Middle East, and Africa, Eastern European countries are positioned as centers for RIM delivery. Poland and Hungary represent countries that are beginning to advance into the RIM marketplace. They have particularly strong experience in multilingual help desk support. Mexico and Latin America offer a nearshore alternative for RIM services. Mexico has an offering that is maturing and a time-sensitive customer base. Infosys has recently announced plans to develop a network operation center in Monterrey, Mexico. Argentina is also being developed as a RIM service alternative. Certain providers have chosen to offer mainframe and AS400 tower support from countries that have the skill and experience based on legacy use, such as Brazil and Argentina. Depending on the criticality of the business process, providers may opt to provide mainframe and AS400 support from higher cost countries such as the United States and Australia.



Value Proposition in Deploying RIM Cost Savings Even before the arrival of the global economic downturn, senior business leaders were being challenged to increase profitability and efficiency and to drive operational costs down. The allure of outsourcing has always included the prospect of cost reduction through efficiencies and labor arbitrage. Not surprisingly, the increasing interest in RIM services is essentially due to the prospect of reducing operational costs and increasing productivity in one IT function. Offshoring of infrastructure management labor typically realizes a savings of 5 to 20 percent compared with U.S. labor rates. But do not assume these savings are instantaneous. RIM services, as with outsourcing in general, typically provide a gradual saving curve as delivery maturity is attained, usually within the first two years of the engagement. Optimization and Standardization Current network and infrastructure centers in offshore locations provide rigorous standards of full redundancy, high availability, and uncompromising data security. The support is provided across multiple client environments. The deployment of quality standards such as Six Sigma, ITIL, and those of the International Organization for Standardization (IOS) have fostered a common understanding of the work to be performed within a typical IT tower function. RIM services provide an opportunity for selecting the right service mix to be delivered from the right region. The



infrastructure can be managed from multiple locations as a global monitoring and support model is deployed. The follow-the-sun approach can be adapted for a variety of benefits, particularly high availability of the supported systems which, in essence, provides continual uptime. There will continue to be advancements in the products and tools used to manage the infrastructure being supported by RIM. Risk Discussion When considering the risks and benefits of engaging a provider, or providers, to deliver RIM services, the risks can be considered from two perspectives. First, one must consider the organizational risks associated with the internal customer’s satisfaction with RIM services. In general, the major concerns identified by senior business and IT executives with respect to offshoring include security and data privacy, language and accents neutralization, high-level business and industry-specific knowledge, internal political perceptions, and the lack of performance metrics. These concerns can be mitigated through a strong provider management and governance process that assures these issues are addressed well before any service is transitioned to a provider. External issues such as political stability, government regulations, cultural alignment, and productivity associated with remote locations should be addressed by the provider as part of their standard service profile. The benefits of RIM services can be much broader than simply financial. Additionally, choosing a provider with a broad range of locations and a large and diverse skilled labor pool can increase flexibility to respond to the changing needs of its internal business customer’s needs. Ideally, new skills and capabilities can be delivered by a qualified provider by virtue of the provider’s range of services and knowledge developed through RIM service delivery over a large pool of diverse clients. Summary Remote infrastructure management comes of age in the era of the flattening globe. With the virtual elimination of global connectivity and bandwidth issues, business centers in the developed world can connect with service providers in low-cost, emerging markets. RIM global providers are harnessing large, well-educated, and inexpensive labor pools to build global centers from which they can manage almost any aspect of IT infrastructure support. Those businesses engaging these global providers will both enjoy lower costs and potentially greater efficiency and flexibility in the support of their global IT functions. RIM has arrived, and there are a multitude of providers ready and waiting to deliver it.


RIM global providers are harnessing large, well-educated, and inexpensive labor pools to build global centers from which they can manage almost any aspect of IT infrastructure support



About Alsbridge Alsbridge, Inc. is a global advisory company offering unbiased advice and assistance on sourcing and benchmark initiatives, including consulting on site selection for offshore outsourcing. Our proven methodology is reliable and adaptable to your unique industry needs. We support our recommendations through significant investments in proprietary benchmarks and ongoing industry research. Our consultants have extensive vertical industry expertise and the tools to deliver unique accounting and offshore outsourcing solutions for your business.

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Remote Infrastructure Management Comes of Age · offshore IT outsourcing certainly is a factor in the globalization of outsourcing. The IT industry is moving toward a remote delivery