TelePresence Gains Momentum at Retailer Show

The National Retail Federation (NRF) released its 2010 economic forecast, projecting retail industry sales to increase 2.5 percent from last year. In contrast, total industry retail sales for 2009 had actually declined by 2.5 percent.

"As we continue to see signs of improvement throughout the U.S. economy in 2010, overall sentiment will begin to lift, making way for slight increases in consumer spending," said NRF Chief Economist Rosalind Wells.

While this past year certainly has been a challenging one for most retailers, they continue to seek out ways to apply business technology that helps to transform both their in-store communications and the way they interact and collaborate with their primary suppliers.

Earlier this month, the NRF 2010 "Big Show" attendees were able to once again experience Cisco TelePresence systems and AT&T services in action. The above video includes insights from some of the people who shared their perspective about how business video adoption will positively impact their customer experience and operational productivity.

TelePresence Provides Competitive Edge
"Telepresence gives us something up on the competition, by being able to leverage the expertise that we have in one of our stores, and now use it across an entire region" said David Bash, CIO at Nebraska Furniture Mart, after participating in the AT&T Telepresence Solution demonstration.

To thrive in today's economy, you have to be able to collaborate with colleagues, partners, and customers around the globe at a moment's notice. At the same time, you need to conduct your business in such a way that it enhances the quality of your key relationships.

In 2010, we'll likely see more creative applications of visual conferencing technology, as borderless collaboration continues to mainstream across all manufacturing industries and commercial service sectors.

A Managed Service Antidote to Organic IT

The accelerating Organic IT phenomenon is being driven by executive frustration that today's business technology demands are not being fully met by their internal support organization. Some IT teams, however, have taken decisive action to free-up time to become more responsive to their savvy user's requests for new capabilities.

Perhaps that's a key leading indicator why remote managed services have emerged as a rare growth area within this tough economic environment. Clearly, proactively increasing business process agility and cutting operational costs has never been more popular.

As a result, annual spending on remote managed IT services by the North American Small and Medium Business (SMB) sector is expected to increase 3.3 times in the next five years. That represents a compounded annual growth rate of 28 percent, according to the latest market study by AMI-Partners.

Extracting Value from Business Technology
"While SMBs have been steadily increasing their reliance on IT over the last several years, they have always been challenged in managing their growing IT infrastructures. The severe economic conditions of the last one year have forced SMBs to look for more cost effective ways to manage their IT. Remote managed services offered by 3rd parties provide 24/7 availability of critical IT infrastructure -- without increasing the need for internal IT staff," according to Anil Miglani, SVP of IT Infrastructure and Managed Services at AMI.

Apparently, SMBs increasingly use remote IT services to selectively out-task critical areas like security and storage, while others are now extending the use of remote services to manage PCs, servers, networks, communications equipment and various other business technology devices.

Yet, many more businesses could benefit from a managed service solution. "Of the total installed base of 60 million PCs and 8 million servers in North America, only a tiny fraction is currently managed remotely," says Miglani.

Enabled by Cloud-Based Infrastructure
Managed service providers are increasingly offering remote managed services to better serve their customers with fewer resources. While some deliver remote services from their own infrastructures, others have started relying on cloud-based infrastructure solutions.

"By using automated software to remotely monitor and manage their customer's infrastructures, solution providers have increased their productivity while also improving their service levels," according to Melissa Chong, Senior Research Analyst at AMI and chief architect of the study.

The potential growth of this market is also attracting several new types of providers like telecom companies, IT vendors, distributors, retailers and online resellers in the SMB IT services market -- currently dominated by local channel partners.

Given the diverse nature of the SMB market, AMI believes that vendor channel partners will continue to play a critical role, as more IT organizations willingly embrace the out-tasked managed service delivery model now -- rather than react after Shadow IT has taken hold.

Demand for Cloud Infrastructure as a Service

Some market studies continue to identify confusion regarding the true meaning of cloud-based services, and the apparent benefits derived by the early-adopters. One recent example comes from a survey of financial professionals in the UK.

However, there is already growing demand from informed executive business and IT decision makers that are eager to move forward with various forms of cloud service deployments.

In fact, Forrester Research has embarked on a new "Cloud and Virtualization Survey Data" series that offers key insights on where the market demand is developing, and they also debunk several stereotypes.

According to Forrester's assessment, Infrastructure-as-a-service (IaaS) offerings, one of the three types of cloud services, is an area of cloud computing that currently receives the most market attention. It centers on two forms of capability: 1) pay-per-use hosting of virtual servers at an external cloud service provider, and 2) operating an internal cloud, where your IT department offers virtual servers-as-a-service.

Enterprise Will Lead the Momentum
Forrester reviewed their latest survey data and uncovered the following indicators of likely buyer interest in, and adoption of, these two forms of IaaS:

• About 25% of all enterprises plan to adopt IaaS via an external service provider.
• Firms are slightly less interested in internal clouds than they are in external IaaS.
• Large business respondents report more awareness, interest, and adoption of external IaaS than small business -- they also report the same for internal clouds.
  

Forrester defines the three layers of the cloud services stack as follows:

Software-as-a-Service (SaaS) - End user applications, delivered as a service rather than as on-premise software.
Platform-as-a-Service (PaaS) - Application platform or middleware-as-a-service on which developers can build and operate custom applications.
Infrastructure-as-a-Service (IaaS) - Compute-, storage-, or other IT infrastructure-as-a-service, rather than as dedicated capability.

Once again, pay-per-use hosting of virtual servers and internal cloud are part of infrastructure-as-a-service.

Cloud Service Adoption Drivers
Forrester reached an interesting conclusion from their market assessment -- that's contrary to conventional wisdom regarding the initial demand for cloud services. Enterprises are leading the adoption, not small and medium sized businesses (SMBs). Moreover, they have different technology preferences and comfort levels with virtualization.

Forrester also believes that early adopters of IaaS service offerings are driven by the instant provisioning of servers and the pay-per-use pricing model. Furthermore, the enterprise IT operations buyers, unlike developer buyers, may want to integrate their on-premise infrastructure with anything they deploy to a service provider, either temporarily or permanently.

Public, Hosted, and Internal Clouds Defined

Like any new business technology, the early development of cloud services can be a little confusing -- as some descriptions are still open to interpretation. However, the dialog is helpful, because it enables us to focus on the true business value of data center resources.

According to Forrester Research, cloud computing platforms are more than shared multi-tenant infrastructures on the public Internet. There are three infrastructure-as-a-service (IaaS) cloud deployment options available; each has unique characteristics and economics.

Forrester’s three cloud service scenarios follow:

Which cloud service scenario is a best-fit for your business needs? Well, that depends upon a number of related factors -- such as your organizational bias for direct control, sensitivity to risk, and overall usage requirements for a cloud computing platform.

Public Cloud Scenario
Public clouds are easily accessible, multi-tenant virtualized infrastructures that are managed via a self-service portal. They deliver superior economies of scale to customers, as the infrastructure costs are spread among all users, giving each individual client an attractive low-cost, pay-per-use model.

They are managed and supported by the cloud provider and are typically homogeneous, meaning all customers share the same pool of infrastructure with limited configuration, security protections, and availability variances.

Internal Cloud Scenario
Internal clouds have similar characteristics of a public cloud, but hosted within your own data center. They leverage more of your standard processes and protections, but tend to be limited in size and scale. Your IT organization must incur the full capital and operational costs for the physical resources.

They are best for applications where you want complete control and configurability of the infrastructure and security. This most often applies to applications that manage sensitive information that is subject to strict compliance standards.

Hosted Cloud Scenario
Hosted clouds are hybrids -- a multi-tenant cloud atop rented resources, but dedicated to a single client. They help you avoid the capital and operational expense of an internal cloud, growing and shrinking the size of the cloud as needed by simply renting more resources (often added via a pay-per-use model) but providing more custom SLAs.

They give you more flexibility, where you can adjust the security as needed, specify the infrastructure elements to be used, the SLA to be applied, and set other constraints not available on a shared public cloud.

Plus, the cloud is managed by a Service Provider -- rather than your IT team. However, the economics of hosted clouds are more like managed hosting than public clouds -- since the servers that make up the cloud are typically fully dedicated to you.

Evolutionary Pathway to Cloud Services
Forrester concludes that cloud services are infrastructure deployment options that help businesses better match the needs of the application with computing resources. It’s the integration between these infrastructures that delivers the greatest value.

The goal is to speed IT service delivery, while reducing costs. Therefore, consider all options. Ask your service provider to explain their offerings, and if they can provide a pathway to virtual private cloud services -- between your data center and their cloud infrastructure.

Discover the Pathway to Cloud Services

Do you have your head in the clouds? Well, if so, then you're surely not alone. In breaking news, eWeek reports that Cisco Systems is pulling together key pieces of its data center and networking portfolios to create a blueprint for building a cloud computing infrastructure for service providers.

Is this yet another business technology hype-cycle, or is there something truly remarkable occurring that builds upon the escalating widespread adoption of IT managed service and hosting service offerings?

Cisco's Simon Aspinall provides the context for the launch of the Unified Service Delivery solution, as he shares an analogy that explains why innovation sometimes requires starting the design process from a totally different point of view.

The cloud computing phenomenon is generating a lot of interest worldwide because of its potential to offer services on-demand -- at lower cost than current options, and with significantly less complexity, greater scalability, and wider reach.

Motivation for Cloud Services Adoption
A study by the University of California, Berkeley entitled "Above the Clouds: A Berkeley View of Cloud Computing" looked at cloud computing from the end-user perspective. It focused on three features that are major advancements for you, the business and IT decision maker:

• The illusion of infinite computer resources available on demand that eliminate the need for you to plan far ahead for provisioning.
• No need for an up-front commitment by your business, allowing you to start small and increase your use of cloud services as needed.
• The pay-as-you-go model that allows you to buy just what they need, and what you can budget, either on a short-term or ongoing basis.
  

The study also emphasized that companies with large batch-oriented computing tasks can get results more quickly and cost-effectively than ever before when using the broad resources of a managed cloud services provider for a short period of time.

Cloud Service Call to Action
The on-demand nature of cloud computing is also a productivity boon to both the enterprise CEO and the CIO, allowing them to quickly react to changing market conditions and opportunities. Are you ready to out-task your next IT or enterprise networking related project?

If you need to gain a deeper understanding of how this emerging space of new business technology is developing, then consider the "Working in the Cloud" Industry Round-Up Report series from THINKstrategies.

Managed IT Services Buyer's Guide - part 3

Here are the final three questions from our ten-point Q&A that's designed to help guide your procurement process. Part 1 included the first three managed and hosting service buyer's guide questions and Part 2 had the next four questions.

8. What are the type and scope of management capabilities that you routinely offer?

• Request a list of capabilities and associated benefits, relative to your needs.
• Historical reporting is essential, forward-looking insight is valuable.
  

Examples of typical basic management tools include a service desk and management of various activities including assets, configuration, fault, change, release/update, performance, capacity reporting and planning, and trend reporting with recommendations.

9. If required, how will you support existing or acquired IT/networking infrastructure?

• Service providers may have policies that limit the device types they support.
• In addition, some providers only support devices they install and configure.
  

If you are like many managed service users, then you have an environment where a combination of self-managed and out-tasked infrastructure will need to coexist -- at some point in time. Service providers should be able to delineate how their role and responsibilities start and end in a multifaceted scenario. Likewise, they should explain their role in the event that they are asked to operate in a multi-vendor or multi-service provider environment.

10. How do you price and deliver professional services, beyond the scope of the managed service?

• Examples of advice, support, and guidance should be included as standard.
• Ask for non-standard consultation examples, and associated fee structure.
  

There will likely come a time when you will ask your service provider to perform an activity that is beyond the scope of your managed service agreement. You should anticipate this event by asking the service provider what constitutes routine (non-billed) information and guidance, and in contrast what is the fee structure for time and materials work -- or other billable activity.

In Summary
Managed services have a long and successful history of helping businesses like yours to reap the full benefits of IT and networking technology capabilities -- without the drudgery and distraction of the ongoing equipment operation, management, maintenance, and perpetual updates or enhancements.

You can download the complete checklist "How to Select a Best-Fit Managed Service Provider" as a .pdf document.

Also, the "Managed versus In-House Service Comparison Calculator" may help you build an internal business case. This build vs. buy expense comparison tool should only be used for basic estimates. We recommend that you consult a managed service provider to obtain an accurate comparison, based upon your actual requirements.

Collaboration as a Service Gains Momentum

Human talent fuels the business model creativity and process execution that drives today's leading enterprise innovations -- the ones that every executive truly wants to emulate. That's why savvy managers will always choose to hire the best talent -- regardless of where those key people may reside.

The common obstacle, of course, is finding both productive and cost effective ways to regularly bring together a geographically distributed talent pool. Online collaboration is one approach many business leaders will consider.

The growth of globally disbursed teams demands that online collaboration tools are flexible, scalable and easy to deploy. Moreover, project-centric teams often can't predict the "when and where" they’ll need to reunite their subject matter experts for an impromptu task.

IT managers are increasingly being told to move from a rigid just-in-case technology investment model to a much more agile just-in-time methodology. So, what's fueling that new momentum?

More Haste, Less Waste
The current economic realities require business leaders to be able to move to action quickly -- it's all about increased haste, but absolutely no waste. It's a challenging environment, for sure.

Managed or hosted collaboration solutions are proven to be a perfect fit for these types of scenarios. How do you plan to incorporate these new services? Consider adding Collaboration as a Service (CaaS) to your company's internal IT service portfolio.

CaaS is a subscription based service that can provide your organization with reliable and secure on-demand collaboration solutions -- all at a predictable and affordable price.

According to a recent Nemertes Research market study, more enterprises are turning to Managed Services Providers (MSPs) to reduce implementation and operational costs of their collaboration applications.

Demand for Rich-Media Collaboration
Adoption has grown from 27% to 63% of study participants from 2006 to 2008, with management of collaboration applications -- especially rich-media services -- as a key driver for growth. For example, 33% initially utilize VoIP solutions, as demand for real-time, rich-media collaboration applications continues to grow.

New platforms have emerged for managed service providers. Cisco unveiled a new software-as-a-service (SaaS) architecture and enhancements to its SaaS-based collaborative applications.

"Adoption of SaaS and cloud services represent a growing share of finite and expensive WAN bandwidth," said Abner Germanow, director at IDC. "Until recently, SaaS and cloud services were delivered on a best effort basis that will not be good enough to meet the business criticality, performance, and video service demands facing future waves of SaaS and cloud service maturity."

Managed Service Buyer Checklist – part 2

The following are questions four through seven of a ten-point Q&A designed to help guide your managed or hosted service procurement process. Here are the first three buyer questions and service provider answers.

4. What is the depth and breadth of your current managed service portfolio?

• A service migration path provides the means to adapt to your growth needs.
• Service providers that are specialists may offer services through their partners.
  

It helps to have a forward-looking view of your needs when selecting a service provider. Sometimes a specialist is preferable to a multi-service provider. Otherwise, try to anticipate future service requirements, and consider giving preference to a provider with those combined skills.

5. How can I be sure you will apply the best people, processes, and tools? Is your company certified by a leading vendor, and are your offerings delivered using industry-leading technologies to meet the highest quality of service?

• Service providers have data on how they've qualified to meet standards.
• Providers are often required to attain a "qualification level" that is tiered.
  

The good service providers will achieve basic industry-standard technical certifications. The better service providers will comply with the ITIL foundation practices. The best will have passed the stringent qualifications of a service designation process that requires an independent third-party audit of their performance. They must pass rigorous annual assessments of their network operations center. Technical design and operations staff must also complete advanced training.

6. Where are your network management facilities located, and what are the hours of operation? Describe your escalation process, in the event of an outage.

• Service providers typically have both primary and backup facilities.
• Find out whom to contact when your primary support contact is not available.
  

Depending on your needs, service support during regular business hours may be enough. However, some businesses have requirements for 24-hour operation. Help desk coverage, staffing levels, and backup planning are important aspects to consider in this scenario.

7. What are the assurances for levels of availability, serviceability, performance, and operation? What is the process for remedy if and when levels aren't maintained?

• All service providers establish and maintain benchmark measurements.
• Service contracts detail the metrics, and references have results data.
  

It is now common for service providers to offer service-level agreements (SLAs) as an integral part of a service contract, where the "level of service" is formally defined. The SLA can include the common understanding about services, priorities, responsibilities, and guarantees -- sometimes specifying financial remedies as a result of failure to comply with SLAs.

Next step: The remaining Q&A will be featured in part 3. We'll also provide a link to a complete list, and an ROI calculator to help you start to build a business case.

Non-Profit Gains Budget Relief for Telecom Needs

Non-profit organizations share many of the same communication challenges as other businesses. Their budgetary pressures can also create some unique situations, especially when you consider the scale of their ongoing outreach.

The Greater Illinois Chapter is one of over seventy Alzheimer's Association chapters serving communities across the United States. Currently, the Illinois chapter serves over half a million residents affected by the disease.

They're active in more than 60 counties in Illinois. Since 1980, the non-profit organization has provided information and support, as well as family services, for those affected by the disease. Staying connected to their numerous constituents, and the overall community, is essential.

Streamlining Communication Processes
As the chapter grew, they needed big business telecom functionality -- only on a non-profit budget. In the preparation to move into a new facility, the decision was made to replace their phone system. Managing six office sites, they needed a solution that would lessen the work load on their already strained small technical staff.

After evaluating several options for a voice and data network, the Alzheimer's Association selected Geckotech's SimpleVoIP phone service for its proven ability to deliver a reliable and highly flexible solution.

By utilizing a fully hosted service, the organization has gained additional functionality and operational efficiencies not available with their prior, and less capable, telephone system.

Communication Simplicity, by Design
By connecting all office locations over a common network, employees can use simplified four-digit dialing between locations. This inherent feature of the hosted solution has greatly reduced operating costs, by eliminating the expense of intra-company toll charges.

Geckotech's VoIP phones can be configured for hoteling (shared use), which is especially beneficial for volunteers who work in the office on a flexible schedule. Other features have enhanced ease of use -- such as an Automated Attendant that directs incoming callers to the correct department, call forwarding to mobile phones, and voicemail notification via email.

Resulting benefits from the changeover include a dedicated number and voicemail for the Special Events group, improved routing of incoming calls, free adds/moves/changes and access to a 24x7 technical support team at Geckotech.

Savvy Budgeting in a Tight Economy
These are trying times for non-profit organizations. However, meaningful budget relief -- and improved operational efficiency -- is possible for those organizations that make informed business technology decisions that are based upon a complete financial analysis of the alternatives.

The Alzheimer’s Association recognized a great return on investment with Geckotech's Hosted VoIP Phone service and their IT department has since enjoyed time spent on more pertinent projects, rather than babysitting the phone system.

IT Survival in the Hunt, Kill, Eat Economy

Business Technology related market research used to be targeted primarily at the CIO or IT manager roles within an organization. How times have changed. Research and Markets has added the "Business Technology Trends & Impacts Advisory Service" subscription to their market study offerings.

The service is designed to help all savvy business decision makers develop and implement an effective IT strategy, plus take advantage of the opportunities -- and face the many challenges -- today's rapidly evolving business technology changes will bring.

Developing a Plan of Attack
Clients will receive the usual forecasts and predictions, as well as the strategic implications of those predictions. Subscribers receive advice on practices they can employ now to help organizations succeed within the turbulent economic environment.

The Cutter Business Technology Council is the source of this insight, which includes a team of IT authorities who use a collaborative forecasting approach to provide clients with monthly Council Opinions and present future scenarios for business technology and its many applications.

Monthly council opinions provide a steady flow of predictions, including commentary from each Council Fellow and the logic behind their concurring or dissenting opinion, as well as the strategic implications of the apparent trend.

TelePresence and Other Innovations
Recent opinions have focused on software delivery versus compliance; removing barriers to collaboration through TelePresence; the new IT governance model; IT in the "hunt, kill, eat" economy; systems acquisition and management; timing IT investments, vernacular computing, and more.

Twice-monthly Executive Updates include statistical results of related market research. Cutter's market research focuses on topics such as IT funding, organizational agility, information security, instant messaging, IT litigation, and more.

Weekly Trends E-Mail Advisor alerts subscribers to new technologies, the latest advancements in technology implementation, and new thinking on technology management -- such as managed and hosted services.

The Data Center Metamorphosis
Significant transformations within the realm of the evolving data center, such as the emergence of Unified Computing models, will be an incremental topic included in our ongoing commentary -- right here on the Business Technology Roundtable.

Many forward-looking organizations are eager to develop next-generation data centers that unleash the full power of virtualization. Unified Computing is an architecture that bridges the silos in the data center into a single unified architecture -- using industry standard technologies.

Transforming Healthcare with Creative IT Solutions

Healthcare is constantly in the spotlight as aging populations, technological advances and high-costs threaten the very fabric of the current system. Healthcare providers and insurers are under constant social, political and shareholder pressure to both improve quality of delivery and lower operational costs.

To proactively evolve, forward-looking insurers and providers need to focus on:

• Access -- ensuring that patients are properly insured and the facilities are available to treat them;
• Affordability -- driving down costs across all parts of the system;
• Quality -- ensuring quality and successful treatment outcome;
• Sustainability -- focus on managing labor force resources and green issues.
  

New Approaches to Technology Driven Transformation
Despite being an industry heavily dependant on the use of the latest in medical technologies, healthcare has traditionally been slow to use information technology and services to improve their business processes. Healthcare has some of the most stringent concerns about privacy and security, and regulatory constraints. It is a highly fragmented industry, with over 70% of healthcare typically dispensed by autonomous professionals.

This unique industry structure has resulted in both a lower uptake of technology and the desire for high-cost in-house IT development and operation. Research by Cisco IBSG (the company's strategic consulting arm) reveals that this is beginning to change.

To-date most of the focus has been on using information technology to address the eHealth, or patient records issue, with mixed results. In contrast, Cisco IBSG believes that implementing next generation managed services, outside of the clinical area, can have a significant transformational impact.

Creative Solutions for Challenging Times
We are now seeing both healthcare providers and insurers exploring the potential benefits of managed services to streamline their operations and to improve the overall customer experience. Insurers are eager to encourage competition amongst providers, to drive down costs.

IBSG research indicates insurers are experimenting with using healthcare-specific telepresence solutions to remotely deliver healthcare, reducing costs and improving the overall customer experience.

For example, United Healthcare recently installed a HealthPresence managed service at Cisco's main San Jose, California campus. This allows employees to conveniently access medical support at their place of work, and enables United Healthcare to deliver it using less expensive medical resources in a more streamline process.

Healthcare providers are using managed services to address the cost and quality impacting issues. A hospital wide wireless RFID solution allows caregivers to quickly locate wheelchairs, trolleys and critical equipment, saving not just time and money, but often someone's life. Similar examples exist with locating doctors, identifying their availability, and across other parts of the medical supply chain.

Healthcare providers need to compete on service quality and loyalty. Providers are turning to next generation managed services as a means to enhance their offerings. For example, hospitals are using telepresence kiosks to create in-house concierge services to aid both patients and visitors to improve their overall hospital experience.

Transforming healthcare is going to require radical change. Managed services outside of the traditional clinical area have great potential. However, service providers must work with both insurers and healthcare organizations -- across all aspects of their business -- to develop unique IT solutions that help them to deliver lasting business advantage, and reduce operational costs.

About the author: Stuart Taylor is a Director in Cisco IBSG. Stuart leads thought leadership and engagements with key Service Providers in managed services. He has over 15 years of experience focused on strategy, corporate development, business unit strategy, M&A and operational improvement with large mobile and wireline operators and high technology clients.

Strategic Perspective Impacts IT Investment

While most business leaders globally are planning on keeping their IT budgets flat and there will be no growth in 2009, a recent market study by analyst firm Datamonitor reveals that in some countries, people are much more confident about their future outlook -- with planned IT budget increases exceeding the decreases.

“It is clear there has been a noticeable decline in enterprise confidence. However, the findings are not as negative as might have been expected”, says Daniel Okubo, technology analyst with Datamonitor.

“Despite the rise in the proportion of IT budgets which are remaining flat, there are still a sizable proportion of enterprises which are planning to increase IT expenditure. Technology vendors should be keenly aware that the economic conditions of a country directly impacts enterprise IT budgets.”

Reacting to the Downside
Datamonitor surveyed 520 IT decision makers towards the end of 2008 to gain a better understanding of how business and IT decision makers are reacting to the global economic crisis, and to gauge their confidence levels.

Across all of the 14 countries surveyed in the second half of 2008, there was a rise in the proportion of planned IT budget decreases compared to a similar survey conducted in first half of 2008.

The percentage of IT decision makers who plan to decrease their IT budget significantly in 2009 has risen to 8 percent from 3 percent, over the last 6 months. Apparently, confidence is lowest in the UK, France and Italy.

In these three countries the proportion of respondents planning to decrease their IT budget outweighs those that are planning to increase their IT budget in 2009. Noticeably, there are also a significant proportion of enterprises in the U.S. and Spain that are planning IT budget decreases.

Unsurprisingly all these economies are projected negative GDP growth in 2009.

Thriving on Strategic Anticipation
However, regardless of the bleak outlook for some countries, enterprises in Benelux, Nordics and Australia appear to be much more confident about their future outlook with planned IT budget increases outstripping IT budget decreases.

These economies are expected to be less affected by the economic downturn, with the exception of Iceland, and this is reflected in Datamonitor’s findings. Moreover, rather than invest in new systems and associated software, more forward-looking companies are now choosing a different -- more strategic -- path to meet their IT needs.

Preparing for the Upside
Business and IT decision makers that are evolving to the managed and hosted services model are typically more interested in raising their efficiency and competitiveness, beyond merely cutting IT and networking costs.

While they share their peer group’s concern with the current economic environment, they also are preparing to pre-position their organizations for the eventual recovery. Rather than totally dwell on the negative, they have the foresight to lay the foundation now – enabling them to quickly act upon the upside opportunities.

Next Generation Managed Services Enable Retailers to Innovate

Online competition and access to price information has been squeezing already thin retailer profit margins for some time now. Combined with the added pressures of the economic crisis, many retailers are being pushed to the edge. Sadly, familiar names, such as Circuit City, have already been pushed over the edge.

To survive this crisis forward-looking retailers need to focus on:

1. Efficiency -- making every part of the business as lean and efficient as possible, especially in the supply chain.
2. Cost Removal -- driving out costs everywhere, especially in labor, their second biggest cost after the goods that they sell.
3. Customer Experience -- seeking ways to differentiate an increasingly homogeneous shopping experience.
   

Salvation in Managed Services
Retailers have traditionally been very closed to the idea of managed services provided by third parties. Razor thin margins have made them very risk adverse. There is a general skepticism of service providers, large IT firms, and their understanding of retail or their ability to adequately serve retailer needs.

Those fears and biases are beginning to fade as the reality of economic pressures for cost reduction and competitive pressures for differentiation bite harder than ever before. Retailers are now exploring how managed services allow them to address these monumental challenges.

Research by Cisco IBSG (the company's strategic consulting arm) reveals that successful providers of managed services must address retailer core buyer values:

• Proven Reliability -- to manage risk and complexity.
• Cost Effective -- pay for performance.
• Tailored Solutions -- specific to the retailing industry.
• Focus on Customer Experience -- enabling competitive differentiation.
• Speed to Market -- deliver benefits immediately.
  

Managed Services Enable In-Store Innovation
Many retailers are aggressively applying managed services to innovate. Digital Signage, or the ability to provide targeted multi-media messaging to customers, is being used by retailers such as WalMart and Eddie Bauer to influence buying decisions at the point-of-sale and to increase store traffic. The complexity involved in the deployment, underlying network and operations means that retailers are increasingly turning to proven, managed end-to-end solutions.

Companies like Best Buy and Home Depot are trialing Telepresence kiosks that allow them to enhance the shopping experience by bringing expertise directly to their customers in their stores -- in a scalable and cost effective manner. Service providers that install and deliver these solutions become valued partners who offer unique value-added solutions specific to the retail industry.

The current economic crisis will re-shape the retail business. Resilient retailers who survive and thrive will be those that proactively embrace next generation managed services as a means to attain competitive differentiation. Inventive managed service providers will deploy unique solutions that help to position retailers for the long term.

About the author: Stuart Taylor is a Director in Cisco IBSG. Stuart leads thought leadership and engagements with key Service Providers in managed services. He has over 15 years of experience focused on strategy, corporate development, business unit strategy, M&A and operational improvement with large mobile and wireline operators and high technology clients.

Demand Fuels AT&T Managed Service Adoption in Private and Public Sectors

In the past few months, AT&T has announced increased demand for managed services on new contracts ranging from just under $5 million to more than $200 million, with companies in the private, public, and non-profit sectors. The range of both the deal size and the diverse applications indicates two key facets of managed services: its advantages truly span multiple business sectors, and organizations can deploy it by selectively out-tasking their networks.

The $4.9 Million Managed Services Contract
For instance, Evansville, Indiana-based Berry Plastics is consolidating a number of legacy networks into a single IP-based platform. You probably have one of the plastic products in your home that Berry Plastics manufactured. The multinational company has 68 manufacturing facilities worldwide and nearly 14,000 employees.

Its $4.9 million contract with AT&T includes the creation of an IP-based virtual private network (VPN) for its 76 domestic locations. Alan Letterman, manager of IMS Engineering and Technology for Berry Plastics, said in a statement that "information technology supports our business momentum and positions us for expansion."

The non-profit Blue Cross and Blue Shield Association extended its managed services relationship with AT&T through two multi-million dollar contracts. AT&T will provide the BCBSA 39 member companies across the U.S. with services ranging from mobility, data, voice, hosting, Internet Protocol (IP) application support, consulting and managed services. BCBSA anticipates greater cost efficiencies and higher reliability for their network services.

The $223 Million Managed Services Contract
The most comprehensive of all the recently announced AT&T deals, though, was the $223 million contract with the County of Los Angeles. It's a five-year contract, renewable to twelve years, that covers all voice and data services for up to 1,000 county locations. The contract means AT&T will be supporting multiple network types, including IP, frame relay, and ATM; remote access; VPNs; local and long distance service; plus Web, video, and audio teleconferencing services.

When you assess each deployment in context, there's a common link connecting them, even though they represent diverse industries and business models. The leaders of each organization clearly faced significant cost pressures, and each proactively redirected their attention to a solution that didn't require significant capital investment.

Their deployments represent the ongoing trend for companies to outsource network infrastructure, choosing instead to focus on their core competency -- while still retaining the flexibility and agility they need to serve employees and customers with state-of-the-art telecommunications capabilities.

Several industry analysts are predicting a continued groundswell and increased momentum towards managed network service deployment. Furthermore, CIOs and IT managers who previously resisted this trend are now ready to join the movement. They recognize that service providers will adapt to their needs and address any lingering concerns that may stand in the way of adopting the solution to their current network operation challenges.

Top Six Motivations for Managed Services

What's motivating you to think about managed network services? Is it cost? If so, you'll be surprised to hear that you're somewhat behind the times. A new report cites six top reasons companies turn to managed services, with cost ranking all the way down the list at number four.

According to Warren H. Williams, Vice President and Senior Program Director of IntelliCom Analytics -- a market research firm focusing on managed services, outsourcing, and other technologies -- cost was a big factor several years ago. Today's list of motivations, however, looks like this:

● Improved overall network performance
● Increased network reliability
● Increased network availability
● Reduced operations cost
● Improved network quality of service
● Reduced business risk

Cost Superseded by Convergence
Cost is still important, certainly, but Williams' research over the last three years reveals a growing shift in priorities. "The corporate network has become a strategic resource; the Internet is a vital part of marketing, investor relations, customer satisfaction, and employee access to information," he writes. "Networking complexity and security requirements have increased exponentially."

This equates to nothing less than a multi-threaded convergence. On the one hand, there's the convergence of communications capabilities, such as data, voice, and video. On the other hand, there's the convergence of the network as the platform for a multitude of business processes.

Combating Complexity
Williams envisions these issues coming together "on a single infrastructure, with the objective ... of facilitating communication between man-to-man, man-to-machine, and machine-to-machine regardless of the endpoint." The end result? A flexible infrastructure that can support changing business conditions. Coupled with this capability, however, he says, is an "ever-increasing complexity, increased performance and reliability expectations, and increased costs for skilled personnel and management platforms."

Thus, the shift in motivation from cost reduction to network performance improvement. When considering managed services, then, you should look at the widest set of advantages possible: not just cost reduction, or the avoidance of high-priced personnel, but the advantage that comes from the ability to bring more flexibility and agility to your business.

Managed Telecom Services Deliver Business Continuity Automatically

You never know when an unexpected turn of events is going to keep you out of your office. You may not live in earthquake country, or a hurricane zone, or a tornado corridor, but that doesn't exempt you. Everything from fires to broken water mains to police actions can unexpectedly mean that you're suddenly not able to do business where you thought you would that day.

Acquirent, an outsourced sales execution firm based in Evanston, Illinois, knows this all too well. When its eleven employees were told to evacuate the premises unexpectedly one day, they had no choice but to pack up and go. But the disruption was surprisingly minimal.

Built-In Business Continuity
Because Acquirent offers outsourced sales services, founder and CEO Pete Kadens had a high level of confidence in choosing an outsourced phone system. He had deployed Geckotech's hosted IP phone system, which meant that his telecommunications capabilities weren't even inside the affected location.

"We all just packed up our files, laptops and Cisco phones and went home," says Pete Kadens. "Everyone plugged in their office phones at home to their DSL or cable and the office was back up and running with no disruption of our business. Even during the drive home incoming calls were automatically redirected to our cell phones. Without Geckotech VoIP, I don't know what we would've done."

Managed Services Bring More Flexibility
Managed telecom services provide a great deal of flexibility for companies who don't want to own their own phone system, both in terms of adding people and avoiding capital expenditures. And VoIP systems bring added benefits in terms of integrated electronic in-boxes and easier collaboration between colleagues.

But they also bring an added measure of protection in the event of a disaster. If you have a small or midsized business, take a moment to think about how you would continue to communicate among colleagues and clients if you were unable to work from your office, and consider the value of managed telecom services in that situation.

Perhaps you've already considered a managed network services solution to reduce your operational costs, or free-up your valuable time to reinvest in your core business. Now you can add one more benefit to the list – have a game plan for the unexpected interruption to your business communication capabilities.

Managed Service Enables Secure Delivery of Intellectual Property

In a global economy, professional services firms must differentiate themselves from their competition in increasingly creative ways. Rockwell Technology Group, a Grand Rapids, Mich.-based software development firm, serves customers across the U.S. Midwest and Canada, including manufacturers, insurance companies, and management services.

Because its customers are widespread, it needed to come up with a way to quickly and securely deliver software updates and patches for systems it had developed. As a way to save both time and money, it uses WebEx Workspace, a hosted extranet service, to post the results of its work for download by customers.

The alternative would be to burn the software onto a CD or DVD and either have it delivered by hand or shipped overnight. But by using WebEx Workspace, Rockwell garners several advantages.

Saving Time, Increasing Security
One advantage is that the software updates, which may be necessary to make a business process more efficient, are immediately available to customers. "As soon as our developers have new custom software ready for delivery, I can call the customer and say, 'download it and you're good to go,'" says Mark Laws, Rockwell Technology Group's chief operating officer. Rockwell doesn't have to send someone to the customer to install the software.

Rockwell's customers also appreciate the increased security. WebEx Workspace uses the Secure Sockets Layer (SSL) protocol to ensure protection during transmission, and Rockwell posts software updates in a password-protected folder accessible only to that customer.

Hosted Collaboration Brings Internal Advantages
Rockwell also uses the collaborative workspace internally as well, which helps the company update team members about customer projects.

It stores project-related documents in the hosted Document Manager; it uses the Discussion Forums to carry on impromptu online chats, which are then maintained for later access by other team members; and it maintains schedules and to-do lists using other Workspace capabilities.

Even though Rockwell could just as easily deploy collaborative software internally, it prefers to use WebEx Workspace because of its capacity and convenience. "We have millions of gigabytes stored on the WebEx Workspace," says Laws. "If one of our computers crashes, we don't have to worry about losing any data. We just go to another computer."

If you need to share sensitive information securely, and don't want to worry about maintaining an extensive infrastructure, asking a managed services provider to set up a collaborative workspace can help you focus on serving your customers more productively.

Six Options for Managed IP Communications

Many traditional businesses maintain separate networks for data and voice communication. With a converged voice-and-data network, companies can often reduce costs and gain significant productivity benefits.

However, the cost of implementing and managing the solution internally can be prohibitive. A more affordable option is to out-task IP communications to a managed services provider. This arrangement avoids initial CapEx and provides economies of scale -- because the service provider already owns the required infrastructure.

You can choose from several options for managed IP communications services. The following describes typical managed IP communications service offerings, and how you can apply them.

Business IP Telephony Services
This includes both subscriber and group calling services. Companies that need sophisticated PBX features can use a managed IP telephony service. Many small businesses can also receive the functionality that they require with a managed IP telephony solution.

Site-to-Site Voice
This service is really useful for companies with several branch offices that communicate regularly. A site-to-site voice service enables you to call from one site to another using the service provider's voice-over-IP (VoIP) infrastructure, avoiding long-distance toll costs. You can maintain a private dial plan, including support for simple 4-digit dialing.

Public Switched Telephone Network Access
Access to the traditional public switched telephone network (PSTN) can be enabled centrally over the service provider's network. Central PSTN access provides economies of scale, which, in turn, help reduce your costs.

Unified Messaging
These capabilities enable you to retrieve and respond to voice, fax, and e-mail messages from any phone or PC within your organization. Your team can check any type of message from the same inbox -- either the voicemail box, accessed from a phone, or the e-mail inbox, accessed from a computer. Rules-based call routing and speech recognition can further enhance usage for you, and your callers.

Voice over VPN
This service can reduce toll charges for your telecommuters and mobile team members. Using an IP phone from home, or SoftPhone software on your laptop during travel, you can easily make voice calls over the same, secure Virtual Private Network connection that's used to access data network applications.

Other Enhanced Services
You can also increase productivity by delivering new applications and information directly to your team's IP phones. As part of a managed IP telephony service, providers can provide customized Extensible Markup Language (XML) applications -- for example, to access team calendar information or read news stories relevant to your business.

Contact a managed service provider, to learn more about these IP communication capabilities, and the associated cost savings or productivity benefits. Most providers will have customer case studies for your consideration.

Can Managed Services Rescue Financial Services?

Turmoil and struggles in the financial services sector are splashed daily on the front page of newspapers around the world. The industry faces a number of monumental challenges that are threatening and shaping its future. To remain competitive, forward-looking firms need to:

• Reduce costs
• Improve cross-sell and up-sell results from existing customers
• Shift capital expenditures to operational expenditures through variable costing and on-demand capabilities
  

Progressive companies in the financial services sector are aggressively using managed services technology to address some of these current challenges.

Serving Market Growth
The financial services sector currently spends more than 2.5 times more on technology than other industries. The way they can attack challenge number one is to shift the management of desktops, data centers, and call centers to a managed services model. Companies are using this option not just to reduce costs, but as a way to reallocate investment into growth initiatives.

One regional U.S. bank came to Cisco ISBG (the company's strategic consulting arm), wanting to quickly enter a new niche market faster than a competitor and increase its market share. Its tactic: deploy an end-to-end managed service, including both technology and business processes.

The economics of managed services lower the barriers of entry to niche markets that might not have been economical before; it also helps them determine success or failure more quickly, and act accordingly.

Managed Services Increase Customer Ties
In developing markets, companies are looking to use managed services to target customers who might not have used banks at all previously. A managed service that offers the underlying network infrastructure, including phones, provides them with an on-demand and scalable service that they can roll-out ahead of competitors.

To increase the amount of business conducted with customers, financial services firms are looking beyond the traditional world of financial transactions and services. One large bank we're working with wants to expand its relationship with its small and mid-size customers by providing them with essential services as payroll, procurement, and human resources.

Because the bank wants to roll out these services quickly, they will be created, delivered and managed by another entity through a managed services model.

Next generation managed services offer a real opportunity to transform the financial services sector. But success will require creative thinking, as well as both the development of strategic partnerships with managed services providers and proper governance models.

About the author: Stuart Taylor is a Director in Cisco IBSG. Stuart leads thought leadership and engagements with key Service Providers in managed services. He has over 15 years of experience focused on strategy, corporate development, business unit strategy, M&A and operational improvement with large mobile and wireline operators and high technology clients.

Managed Services Enabled Strategic Focus of IT Resources, Part II

As noted in Part I, global sensor manufacturer Measurement Specialties Inc. (MSI) faced multiple challenges with its managed network services provider. It suffered from excessive downtime, and the team of IS/IT director Bob Andreini spent too much time solving problems that were the responsibilities of their provider.

Andreini brought in Virtela, a Greenwood Village, Colo.-based managed network services provider that works with multiple vendors of networking equipment, including Cisco. It devised a mesh network using Multi-Protocol Label Switching (MPLS) technology that eliminated the point-to-point problems that plagued MSI previously.

He describes it as a seamless network with multiple subnetworks, "almost like a black box. Someone in Fremont, Calif., can send something to our site in Shenzen, China via the most logical route over the network."

Automatic Backup
At the same time, MSI's downtime has disappeared. Virtela set up a back-up DSL circuit at each of MSI's sites, so that if anything does go wrong, the back-ups kick in automatically. "We can't even tell when it happens," says Andreini. "Usually we only find out after we get notification from Virtela's operations center." The cost of the DSL lines is only a couple hundred dollars a month, and he estimates that MSI now enjoys more than 99% reliability.

Even with his difficult experience, Andreini was still sold on outsourcing his network services. "I didn't want to beef up on network engineers internally, because that technology is so complex. Having a partner that could take care of that was very attractive."

Dramatic Time Savings
Having a managed network services provider also gives Andreini "dramatic time savings. When every event took two days of firefighting, we were unproductive in other projects. It was very disruptive, and took the equivalent of at least two full-time people. Having a managed network services provider means I can have my staff focus on the strategic IT needs of the business, not running the infrastructure."

The moral of the story is that it's important to look closely at your managed services provider. Don't look just at their services, but at their business model and their telecom relationships. Determine how their plans suit your company, and your plans for your company's growth. As MSI found, it was able to shift from an unsatisfactory provider to a satisfactory one and reap the benefit of reliability.