Business Technology Leader Maturity Framework

As 2009 comes to a close, a recent editorial in CIO magazine sums-up a nagging issue -- "Despite the emergence of improved IT management tools over the past decade, CIOs continue to grapple with the same IT challenges they dealt with five and even 10 years ago. Which can make a CEO wonder: when are we going to get there?"

Forrester Research believes that CIOs have typically run "the tech factory" for their firms -- responding to business needs with solutions and operations from both internal and external sources. These IT leaders have pursued operational maturity to optimize solution delivery.

Forrester says that CIOs won't ever get away from delivering on operational maturity. But as technology becomes pervasive -- more stable, standardized, and available as a business-centric service -- it's inevitable that business executives will take greater direct control over technology investment decisions.

Forrester calls this evolutionary transition the shift from Information Technology (IT) to Business Technology (BT). Let's review the key drivers of this transition once more. It's the essential "there" destination that many CEOs eagerly anticipate for their organization.

Greater Response to Business Demand
Traditional IT establishes prioritization criteria and IT governance processes. Weighed down by growing legacy maintenance, typically a third of IT spending is reserved for new projects. IT therefore creates conflict among business organizations -- who must lobby for those limited IT resources.

Broader Focus on Business Value
IT should help deliver business results, yet it's often consumed by technical issues -- re-educating staff, deciding what to re-architect, and debating whether to build or out-task. Meanwhile, new capabilities are increasingly available through managed cloud services -- and purchased directly by business groups via software-as-a-service.

Significantly Faster Pace of Change
The rate of business change continues to accelerate, forcing CIOs to be reactive -- while attempting to increase agility. The CIO's dilemma: either their business organizations will move ahead without internal IT, or, their business executives will fail to take full advantage of new technologies in time to use them effectively.

Framework for the Required Transformation
To help CIOs understand best practices, Forrester has developed a BT Leadership Maturity framework in the form of a self-assessment. This tool is designed to provide a candid benchmark of how well they are performing -- highlighting specific areas where additional work needs to be done.

Forrester concludes that CIOs who fail to move quickly will find their firm falling behind more agile competition. Those who assess and improve their organization's BT leadership maturity are responding to changing market realities -- as well as reducing the likely chaos that would result from allowing the business to move forward on its own with BT, without the CIO's close involvement.

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.

In-the-Cloud Approach to Cyber Security

Security breaches or other unexpected interruptions can happen anytime to anyone -- whether you are a large enterprise or a small business. Fully maintaining communication network security is a demanding responsibility -- and typically not the best use of your limited IT resources, that would be better applied to delivering incremental new business technology benefits to your organization.

Fortunately, there are alternatives to a do-it-yourself comprehensive security solution. Skilled managed service providers continue to enhance their network security offerings.

AT&T announced the availability of Security Event and Threat Analysis and Security Device Management, two new managed security services available for businesses of all sizes.

Customized to Your Unique Business Needs
The services enable you to engage AT&T security professionals selectively and simply to provide customized security support. Services range from security event analysis and threat management analysis to targeted security device management including firewalls, intrusion detection sensors and VPN servers.

These new services use AT&T’s expertise in security analysis to evaluate, correlate, and report on information from multiple devices and device types, both on your premises and embedded in the AT&T network.

AT&T Managed Service Benefits Include:

• Prioritizing security events based on threat and risk management methodologies using AT&T and customer-defined standards.
• Rapid notification when security events are detected and identified as critical by the AT&T Security Network Operations Center.
• Event mitigation and security analyst counseling during critical security incidents.
• Global Security Operation Centers and 24X7 T1-T4 Analyst Coverage with portal access through AT&T’s BusinessDirect Portal.
  

With Security Device Management, AT&T provides complete, customizable monitoring and management of your security hardware and software, with a range of services including managing your organization’s current security capabilities up to assessing, designing and implementing a custom security infrastructure.

Full Suite of Professional Services
These new services are a natural complement to AT&T’s existing Security Consulting services, which include independent assessments of vulnerabilities inherent in customers’ networks, as well as the policy and procedures surrounding them. Security Consulting services include Log Management, Security Policy Management, Vulnerability Analysis, Application Security, Trusted Advisor services and Payment Card Industry Solutions.

AT&T delivers a suite of security and business continuity services to help assess vulnerabilities, protect infrastructure, detect attacks, and respond to suspicious activities and events. The upcoming AT&T Cyber Security Conference is an annual day-long conference offered by the AT&T Chief Security Office.

Managed IT Enhances JetBlue Business Model

New York-based JetBlue Airways created an airline focused on value, service and style. They've proven to be a trailblazer in the U.S. airline industry. They're also a communication technology early-adopter. JetBlue introduced complimentary in-flight e-mail and instant messaging services on their aircraft -- a first among U.S. domestic airlines.

However, their core competency is centered upon air travel. They out-task the rest to service providers, wherever possible.

JetBlue signed a new, six-year strategic agreement with Verizon Business to manage the airline's information technology ( IT) data center and communications network needs, as well as provide security and IT consulting services.

Built on an IP Network Foundation
Verizon Business will design and manage the transition of JetBlue's existing systems to a new global IT network infrastructure. The newly built Internet-protocol-based (IP) voice and data network will support state-of-the-art airport kiosks, wireless Internet access and an advanced reservation system.

"JetBlue has built a reputation of consistently providing excellent customer service," said JetBlue CIO Joe Eng. "The agreement with Verizon Business to strengthen our IT capabilities is further proof that we are taking the steps necessary to evolve our business to meet our customers' changing needs. With this enhanced IT infrastructure, JetBlue will be even better positioned for the future."

The new converged voice and data network will help support JetBlue's vision to deliver enhanced customer service and better collaborative tools for its employee crewmembers.

Verizon Business will connect JetBlue crewmembers, customers and partners to each other and the Internet. The infrastructure will serve as the foundation to deliver new customer and collaboration services -- including audio, net and video conferencing and enhanced contact center applications that will enable JetBlue's reservations agents to better serve customers.

Securing and Protecting Critical Data
Verizon Business will also manage the transition of JetBlue's data centers to Verizon's redundant managed service centers. In addition, they will manage the critical infrastructure components of JetBlue's internal systems including its data centers, voice and data networks and internal service desk -- ensuring continuous availability and improved resiliency and reliability.

Through its managed security practice, Verizon Business will help safeguard critical company data as well as ensure JetBlue meets strict industry requirements for secure credit card transactions online, over the phone and at the airport.

JetBlue currently serves 58 cities with 650 daily flights. In 2009, the carrier ranked "Highest in Customer Satisfaction Among Low-Cost Carriers in North America" by J.D. Power and Associates.

Verizon Cloud-Based Computing as a Service

Verizon Business introduced an on-demand, cloud-based Computing as a Service (CaaS) solution -- designed to meet the stringent security and performance requirements of their enterprise customers.

This new offering helps businesses take advantage of cloud (IP-based) computing to more efficiently and securely manage IT computing resources -- server, network and storage -- to meet day-to-day business demands.

This CaaS solution, which leverages Verizon's global IP infrastructure and data centers, enables companies to use a Web-based portal to employ computing resources in the quantities and duration dictated by their own business needs.

As a result, businesses pay for the resources used and avoid having to build out for peak capacity requirements by buying new equipment and adding IT or networking staff.

Designed for mid-to-large-sized businesses, CaaS is ideal for new development projects, major events and migrations so that organization can easily and quickly shift IT resources as required.

Just-in-Time Computing Resources
It is also well suited for businesses with seasonal demands such as retailers, companies holding annual benefit enrollments or sales promotions that drive incremental traffic to Web sites. The service is immediately available in the U.S. and Europe, and then will be introduced to the Asia-Pacific region in August.

Verizon's Mike Marcellin explains in a video commentary some of the key features and benefits.

Melanie Posey, research director, hosting & telecom services at IDC said "Verizon has incorporated a number of key elements that make this solution a stand-out in the marketplace. The CaaS combination of flexibility, security, performance and resiliency is well positioned to serve certain enterprise requirements in a nimble, next-generation fashion."

Clearly, we can anticipate that the forward-looking managed and hosted service providers will continue to launch innovative new managed cloud service offerings that meet the selective IT out-tasking needs of their customers.

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.

Eight Options for Managed Security Services

In the online network connected business environment, security is more critical -- and also more complex. Today, network security requires constant monitoring and management. All businesses now experience vulnerability on an infrastructure that often extends to many locations.

Managed service providers can create a comprehensive security offering that enables you to maintain the level of protection and control you require. They can manage some or all of your network security functions -- giving you access to their dedicated manpower, 24-hour safeguarding, as well as routine maintenance and management of disaster recovery.

Finding the right security solution for your organization begins with establishing your priorities and becoming informed about alternatives. The following describes typical managed security service offerings, and how you can apply them.

Managed Firewall
Firewalls protect internal and external networks by restricting the types of network protocols and traffic allowed on your network. Firewall appliances, which the service provider manages remotely, include dedicated hardware and software platforms located on your premises.

Managed Distributed Denial-of-Service Protection
This service involves protecting the network infrastructure and network-based resources from distributed denial-of-service (DDoS) attacks -- so that your business can operate without interruption. It also helps prevent worm propagation that can cause DDoS attacks. DDoS mitigation provides protection against emerging threats.

Managed Intrusion Prevention Systems
Intrusion prevention systems (IPSs) identify and stop inappropriate attempts to access your network, systems, services, applications, or data. Intrusion detection services (IDSs) rely on network-based or host-based monitors, and often match monitored traffic or activity against profiles of known attacks.

Managed Antivirus Protection
This service most often involves checking for viruses at the gateway or firewall as well as in your e-mail messages, attachments, and file transfers. The service often includes automatic updates to antivirus definition files.

Managed Endpoint Protection
This service detects and stops unusual behavior on your endpoint devices, such as desktops and servers. In this way, you can prevent damage from Day-Zero security threats whose signature has not yet been identified.

Managed Authentication
Authentication refers to a group of processes and technologies used to verify the identity of a user attempting to gain access to your systems or applications.

Managed Content Filtering
Filtering is used to isolate and block content deemed inappropriate according to your internal policies or regulatory policies.

Vulnerability Assessment
The service includes security risk assessments, network scanning, and probing to reveal vulnerabilities in your network, operating system, or applications that can be accessed from the public Internet.

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

Managed Security with a Strategic Twist

Managed services provider Verizon Business has added an interesting twist to its security toolbox. Traditionally, managed security services are tactical: they monitor a network for potential attacks, using virus signatures and other definitions.

Earlier this month, Verizon upgraded its customers' security capabilities with what it calls its "Risk-Correlation Service," designed to add strategic insight to security.

The RCS works with vulnerability scans -- either those it does for customers or those from vendors such as McAfee, Qualys, and others -- to determine where potential vulnerabilities exist. The service also documents your system to create a map of devices and the business processes that run on them. "It marries threat information with vulnerability information," says Jonathan Nguyen-Duy, Director of Product Management for Verizon.

Calculating Risks
The result is a Web-based scorecard that shows Verizon customers not only where potential problems exist, but rank the level of relative importance of those devices. "We can tell you the likelihood of an event on a particular device, but also the business process associated with that device," says Nguyen-Duy. "Using the information from the vulnerability scan, we can tell you about the impact on availability. Is the device running real-time transactions, or is it a database server that might have less sensitive information?"

Strategically, companies can use the information presented in the online scorecard to get a sense of where to improve their online protection. Not all information is created equal, and not every database server requires the same level of protection.

The scorecard is designed to help companies prioritize their security budgets and their business continuity programs. "With limited resources, it's important to understand the relative risk of each vulnerability," he says.

Protection from Attacks
The online scorecard also works when attacks are underway. In those instances, it helps customers work with Verizon to identify where remediation is most important. "Sometimes you have to work in real-time to figure out where attacks are happening," Nguyen-Duy says. "Your ability to respond is improved when you have better information on the threat and what business process might be affected."

Being proactive about security is like flossing your teeth; you know you should do it more often, but it doesn't always happen. Applying a methodology that combines both strategic and tactical security needs is very wise. Clearly, when it comes to security, it's easier to be reactive when you've already been proactive.

Besides, the complexity of providing comprehensive network security protection, and keeping it fully up to date, is something best left to the experts. That's why managed security is one of the most utilized managed service offerings.

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.

Progressive Business Technology Adoption Trends

Business leaders are still upbeat about the benefits of technology adoption. It's key to their market penetration, central to competitive differentiation, and vital to their supply chain and distribution strategies.

However, according to Forrester Research, they are less than satisfied with their own IT organization's contributions. In fact, reducing the cost of operations is believed to be one of the few attributes where expectations are aligned.

Members of the Forrester Leadership Boards (FLB) CIO Group recently discussed this challenge. Forrester presented results from their business technology survey of 600 executive leaders.

The study uncovered the following significant gaps:

IT teams rarely are aligned around key business priorities. When asked to rank business drivers by their importance to the firm's technology strategies, business executives identified customers, productivity, and costs as the most important themes.

But, when asked to rate their IT organization effectiveness, there was a wide gap between critical business drivers and the perception of IT's focus -- even in the key areas of cost reduction and workforce productivity.

Business executives consider several sourcing alternatives to fulfill the IT requirements of their enterprise. When asked to rate sources of technology solutions, leaders continue to rank their IT organization as a primary source.

However, they also referred to a wide range of other viable sources -- from their own staff, consulting firms, as well as out-tasked subscription-based managed service offerings.

Proven Strategies for Success
CIO Group members noted that these survey results accurately reflect the overall situation for IT organizations today -- an unfortunate scenario where many CIOs typically spend considerable effort.

These CIO Group members have adopted best practices for IT-business alignment ahead of the general population. Almost all have dedicated relationship managers, as opposed to only 37 percent of surveyed IT organization. All have a PMO dedicated to IT governance, whereas only 47 percent of the typical firms do.

Proven strategies to integrate business and IT include: formalizing IT's role in the overall planning process; formalize, embed, and expand the role of relationship managers; embed IT skills within business organizations; create centers of excellence for business change skills; and, separate business enablement functions from IT delivery and operations.

End of the Do-it-Yourself Era
Forrester concludes, the era where IT said "we can do it all for you" is no longer viable. Business executives see IT inflexibility as a detriment to their agility. They're aware that internal IT is but one of many options.

Therefore, CIOs who insist that their role is the "sole source for technology solutions" will be marginalized. The savvy IT managers have embraced a coexistence scenario, where selective out-tasking is a welcomed addition to their solution portfolio.

The More Things Change, The More They Stay the Same

I received an email the other day congratulating me on a column I wrote for NetworkWorld nearly three years ago entitled, "Why Managed Services Fail."

The 'shelf-life' of web content always amazes me, but it is gratifying to have people stumble across my past writings and still find them timely.

What struck me as I revisited this 2005 column was how many of my points were still true,

• "...Almost every supplier and service provider I talk to admits that selling managed services has been harder than expected."
• "The first problem these managed service providers face is packaging."
• "The second issue is pricing."
• "The third challenge is positioning these services properly."
• "But the biggest obstacle to selling managed services is poor sales skills."

Sound familiar?
Although industry research clearly shows that customers are becoming more receptive towards managed services and the economy is even driving an increasing number of customers to actively pursue managed service alternatives, many MSPs are still suffering from poor sales and marketing skills to respond to these opportunities.

They are still thinking in terms of selling products rather than services. They are still promoting the 'speeds and feeds' of their technical capabilities rather than the business value of their service capabilities.

As a consequence, many MSPs end up selling their services to IT managers who are only interested in continuing to buy systems and software rather than selling solutions to higher level decision makers who are interested in the business impact of their services.

Worthy of Your Business?
So, if you are an IT or business decision-maker who is seeking to acquire managed services, don't be surprised if your potential MSPs are talking to you in the wrong terms and trying to sell you the wrong value propositions.

Exploring Managed Services - Key Performance Indicators

All business has become global. Companies of any size can now market products and services worldwide over the Internet. At the same time, competition has intensified because customers can investigate global competitors with ease.

To compete effectively in the global networked economy, companies need new capabilities:

• Global procurement and sales 24 hours a day.
• Integrated internal and external business processes.
• Up-to-the-minute access to sales, order processing, production, and other business critical information required for informed decision making.
• Flexible processes that can adapt dynamically to changes in the business climate.
  

The application of Business Technology is now a primary enabler of strategic advantage. However, chief executives have become impatient, as their companies have failed to keep pace with these advances. There are alternatives, for those who choose to act. The managed services model can be applied to accelerate this much needed change.

Review the following common business needs to decide if managed services can provide benefits to your business. If you answer yes to these key performance indicators, then perhaps there are areas where out-tasking could help drive change.

Are you a candidate for managed services? Consider these scenarios.

Our business is facing challenges:

• Staffing IT professionals.
• Staying up-to-date with evolving technologies and IT skill sets.
• Managing and maintaining current infrastructure, hardware, and software.
• Securing data, transactions, and communications.
• Responding quickly to time-to-market demands.
• Remaining flexible enough to maintain competitive position.
• Reducing network overhead costs.
• Operating in real time in order to meet 24-hour demand.
• Delivering services to branch offices and remote workers.
  

Our business is in transition:

• We need to upgrade, refurbish, move, or relocate existing infrastructure.
• The scope or scale of current business operations is changing.
• A merger, partnership, or acquisition is altering operations.
• We need to increase the range and level of service.
• Our growth targets depend on implementing new technologies.
• We are expanding into new markets.
  

Our business must increase profitability:

• We prefer to dedicate resources to our core competencies and mission critical processes rather than network support activities.
• We view managed services as a good strategy for gaining efficiencies and reducing costs.
• We need to implement a global network service but lack internal global resources.
• We are concerned with our ability to keep up with the latest security threats and to meet privacy or security regulations.
• We are experiencing dynamic business growth while undergoing downsizing and hiring freezes.
  

Initiate a dialog with a managed service provider, and you can begin to explore the possibilities of how to effectively adopt Business Technology as a Service.

Sizing Up the IT Management SaaS Market

Our prior commentary on SaaS and Managed Services: Big Service Providers Plug In does a good job pointing out how various service providers are attempting to deliver a widening array of Software-as-a-Service (SaaS) solutions and managed services.

This trend is being driven by two major forces. First, the commodization of traditional transport services. Second, the shift in customer attitudes regarding IT management.

Service providers can no longer differentiate themselves based on the quality of their transport services. As a consequence, service pricing, customer loyalty and profitability of this mainstay business continue to decline.

To compensate for this erosion of their traditional transport business, service providers are seeking to deliver a new generation of value-added services which can give them greater 'stickiness' with their customers.

It's a Win-Win Scenario
At the same time, customers are seeking to offload, or out-task, a broader assortment of IT management responsibilities so they can improve the reliability of their systems and software, reduce their operating costs, and focus their limited resources on more strategic and/or innovative corporate initiatives.

THINKstrategies uncovered the growing level of interest and adoption of IT management SaaS solutions among IT professionals in 2007 as a key finding of annual survey with Cutter Consortium (download a complimentary copy of "SaaS Penetrates the IT Department").

Forrester recently published a report entitled -- "How Big is SaaS in IT Management Software?" -- which suggests that SaaS solutions only represent 1 percent of total IT management software sales today, but will grow to 10 percent by 2013.

Given that 25 percent of IT professionals who responded to THINKstrategies and Cutter Consortium's survey a year ago said they were already using SaaS solutions to address their IT management requirements, Forrester's forecast is probably low.

Multitude of SaaS Solutions
Smart vendors, service providers and VARs are recognizing this trend and seeking to win a share of this rapidly growing market. The good news for IT professionals is that they will have plenty of SaaS solutions and suppliers to chose from.

As always, the best choice will be selecting the supplier that you trust the most to meet your particular business needs and requirements.

Redefining Vendor/Customer Relationships

My colleague, Joe Panettieri, reports that Dell has won its largest managed services agreement ever with the state of Georgia.

This contract illustrates how Dell, and other technology vendors, are shifting their go-to-market strategies to respond to customers' changing IT management needs.

Anyone who follows the technology industry knows that Dell has been struggling to keep pace with HP when it comes to computer sales. What few casual observers have recognized is how Dell has amassed a new set of remote management capabilities via a series of acquistions over the past year and a half.

Why Managed Services Matter
During that time, Dell has acquired SilverBack Technologies, Everdream, EqualLogic and MessageOne to serve as the foundation for a new portfolio of Software-as-a-Service (SaaS) and managed service capabilities.

Dell understands that it will have a difficult time outpacing HP and other technology vendors on the strength of its products alone as laptops, desktops and servers become more commoditized.

Instead, Dell and other vendors must differentiate themselves on their ability to help customers generate the greatest value from their systems. This means redefining their services to help customers, and their channel partners, better manage these assets to optimize their performance.

Redefining the Meaning of Support
The most cost-effective way for vendors to monitor these devices and proactively administer them is via managed services. The best way for them to offer these capabilities to their channel partners or customers is via SaaS solutions.

These 'on-demand' services redefine the nature of vendor/customer relationships. Customers no longer have to assume the responsibility for managing their systems and software, and wait for their vendors to respond to their problems when something goes wrong.

Now, they can shift the burden on their vendor to ensure the uptime and performance of their systems and software. By the same token, vendors can no longer boast about their customer support response times. Instead, they must demonstrate their willingness to take on this greater responsibility.

Managed Service Scenarios: Choosing the Best-Fit Solution

Are you puzzled about how to choose the best-fit managed service solution for your particular business needs? As a basic guide, the following are three typical high-level scenarios for deploying managed network services.

Scenario 1: Customer Owns Network and Shares Management Responsibility

Companies that already have an internal IP network can continue to manage it while out-tasking the management of onsite equipment -- usually known as customer-premises equipment (CPE), used for the managed service (see Figure 1).


The Roles and Responsibilities are as follows:
Managed service provider -- Sets up, maintains, and administers the equipment needed for the managed service, including company-owned equipment such as servers.

Company -- Managed service customer maintains and administers its internal network.

Scenario 2: Service Provider Owns the CPE; Customer Can Share Equipment Management with Service Provider

Some companies do not own a LAN, either because the location is new or the company already out-tasks its LAN services. In this situation, the service provider can manage the equipment needed for the corporate network as well as the managed service.

Many large enterprises like this arrangement because they can maintain physical control of the equipment while relying on the service provider for 24-hour network operational support (see Figure 2).


The Roles and Responsibilities are as follows:
Managed service provider -- Sets up, maintains, and administers the equipment for the managed services as well as the corporate network.

Company -- Monitors its corporate network through a Web interface provided by the service provider, receives regular reports on the network status and managed services, and is notified in case of a defined emergency.

Scenario 3: Service Provider Owns Equipment in its Own Facility; Customer Monitors Service Provider's Management of the Equipment

The difference between this scenario and the previous one is that most of the equipment is physically located in the service provider's "hosting" facility instead of on the customer premises.

The Roles and Responsibilities are as follows:
Managed service provider -- Sets up, maintains, and administers the corporate network and related managed services; most of the network equipment is physically located in the provider's computing center; the exceptions are the equipment for the LAN and network connections, as well as gateways for computers and IP telephony.

Company -- Monitors performance of its systems through a Web interface provided by the service provider, receives regular reports on the network status, and is notified in case of a defined emergency.

Summary: each of the three basic scenarios can be customized to meet your particular requirements. In upcoming posts, we'll identify some more specific application examples.

Managing Enterprise IT Operations, from Afar

According to a recent McKinsey & Company report, their research results demonstrated that the potential for managing servers and other IT resources remotely is essentially underutilized.

However, changes in the current business environment will increase the adoption of this approach. Plato, a wise Greek philosopher, wrote about how "necessity is the mother of invention." Certainly, that perspective is equally valid today.

The motivation for utilizing the resources of a service provider can be considerable. A case in point: Fortune 50 companies, with budgets of $2 billion, can save as much as $500 million of their IT infrastructure budgets.

How, you may ask? Apparently, it's mostly from reducing fully-loaded labor costs.

Evaluation of IT Assets and Liabilities
McKinsey surveyed 141 CIOs at multinational corporations, and 34 percent of them said that they anticipate utilizing some infrastructure management services over the next three years -- which is an increase from 19 percent of respondents in a similar survey performed during the prior year.

Economic justification is the basis for the expected growth. As hardware costs fall, labor has become the focal point. They estimate that costs for non-labor IT components -- the hardware, software, maintenance, and facilities -- declined by almost 44 percent between 2000 and 2008 as prices have dropped.

McKinsey also estimates that total costs will fall by nearly half from 2000 to 2010, however the labor component will more than double -- to 62 percent, from 30 percent.

Apparently, the attraction of a managed service solution is due to changes in the deployment of infrastructure. Many organizations have simplified their IT and network architecture, making it easier to decouple components, and utilize service providers.

Selectively Out-tasking the Drudgery
Besides, standardization has made some management tasks ready for automation. As a result, it is now easier to manage some complex IT tasks, like network security monitoring, from a remote location.

Furthermore, organizations can selectively out-task parts of their IT infrastructure management. Some companies will choose to only out-task network monitoring, while others seek assistance with the total management of their data center needs. Clearly, it's a flexible model that can adapt to shifting business requirements.

In summary, McKinsey believes that the greater speed and security of data networking has made interactions between the service user and their provider more stable. This progress has therefore increased acceptance of the managed service delivery model.

By the way, before you rush to reduce your Business Technology deployment plans, you may also want to reflect upon McKinsey's guidance on IT spending cuts: they believe that "IT investments deliver more value to a company's top and bottom lines -- by creating new efficiencies and increasing revenues -- than any savings gained from traditional IT cost cutting."

Top Ten Business Technology Trends

Gartner analysts recently identified the top ten key technologies -- and related trends -- that they believe will be strategic for mainstream organizations. The analysts presented their findings during Gartner's Symposium and ITxpo.

Gartner defines a strategic technology as having the potential for significant impact on the enterprise -- within the next three years. Factors for significant impact include a high potential for disruption to IT or the business, the need for a major financial investment, or the risk of being late to adopt.

The technologies were chosen because they could affect an organization's long-term plans, programs and initiatives. They are deemed strategic because they’ve matured to broad market use, or because they enable strategic advantage from early adoption.

Gartner's top 10 strategic technologies for 2009 include:
Virtualization; Cloud Computing; Servers (beyond blades); Web-Oriented Architectures; Enterprise Mash-ups; Specialized Systems; Social Software and Social Networking; Unified Communications; Business Intelligence and Green IT.

As you consider each of these technologies in turn, and the associated applications within your own business environment, it would be wise to reconsider the notion that embracing a new technology always must equate to a financial investment in infrastructure.

In this context, is the purchase of an on-demand managed service an investment, or is it more accurate to characterize it as an expense? Let's consider the Gartner description of Cloud Computing, as an example.

"Cloud computing is a style of computing that characterizes a model in which providers deliver a variety of IT-enabled capabilities to consumers. The key characteristics of cloud computing are 1) delivery of capabilities 'as a service,' 2) delivery of services in a highly scalable and elastic fashion, 3) using Internet technologies and techniques to develop and deliver the services, and 4) designing for delivery to external customers.

Although cost is a potential benefit for small companies, the biggest benefits are the built-in elasticity and scalability, which not only reduce barriers to entry, but also enable these companies to grow quickly. As certain IT functions are industrializing and becoming less customized, there are more possibilities for larger organizations to benefit from cloud computing."

According to Carl Claunch, vice president and distinguished analyst at Gartner, "Companies should evaluate these technologies and adjust based on their industry need, unique business needs, technology adoption model and other factors."

Lowering the Barriers to Progress
Perhaps one of those other factors would be an candid assessment of what advantages are being gained by competitors who have already chosen to take action. Meaning, can you make a determination of the direct and indirect cost of your potential inaction?

Moreover, by utilizing a selective out-tasking model, it's now possible to minimize the financial impact on new technology pilots and full deployments, while at the same time creating the environment to maximize the strategic impact.

The perceived barriers that may inhibit you from taking action have essentially been lowered.

Online Security in a Global Networked Economy

Because of the expanding growth and complexity of communication networking, and the risks presented by a new breed of skillful hackers, serious security threats are an unfortunate certainty within the highly interconnected office environment of today.

These threats are very real and the results are costly to those businesses that have been affected. Apparently, the victims aren't entirely at random, which is often assumed to be the case.

According to the 2007 CSI Computer Crime and Security Survey, almost one-fifth (18 percent) of those respondents who suffered one or more kinds of security incident further said they had suffered a "targeted attack" -- defined as a malware attack aimed exclusively at their organization or at organizations within a small subset of the general population.

Beyond the Virus Threat
Moreover, financial fraud overtook virus attacks as the source of the greatest financial losses. Virus losses, which had been the leading cause of loss for seven straight years, fell to second place.

In today's global marketplace, every business needs to be vigilant in pro-actively protecting its corporate assets. Gone are the days of simply scanning for viruses. Today a comprehensive, layered approach is required to secure the network and company resources from multiple types of threats.

Small and medium-sized businesses (SMBs) are particularly vulnerable because they typically do not have expert resources on staff to ensure the network is secure, that regulatory compliance issues are being properly addressed, and that network monitoring and updates are effectively maintained 24 hours a day.

Alternative to the In-House Solution
Managed service providers can help SMBs secure their network by deploying a layered approach that uses various advanced technologies and solutions, protecting the network, and anticipating multiple types of potential security breaches -- from Trojan horse attacks and spyware, to data tampering and information theft.

Managed security services create a resilient multilayer defense:

• Prevention -- proactively keeps the intrusions out
• Detection -- identifies when an intrusion is occurring or has occurred
• Response -- takes action to defeat a potential intrusion once detected
  

The advantage of working with a managed security provider is that services can be scaled to meet an organization's exact security requirements. This flexibility allows companies to minimize service outages and operational expenses, thereby reducing the overall financial impact.

The Challenge to Stay Current
Frankly, a large enterprise IT team can also benefit from an out-tasked network security solution, as the demands to ensure that in-house staff is staying current increases exponentially over time.

Ask a managed service provider to help you assess your security needs and design the best solution for your business. A comprehensive security audit is often the first step in this process.

By all means, be prepared for the unexpected, and keep your business safe. However, this is a complex task that's best left to the experts, while you free-up time to focus on your core business objectives.

Globalization and the Small Business Teleworker

The trend of globalization, and the need to connect remote employees, now touches nearly every segment of American business -- regardless of organization size or industry. Here’s a case in point.

Founded in January 2001, Illinois-based Kirix began as a data analysis specialist for the recovery audit industry. They've done a lot of data analysis and software development work in that time and have had a particular specialty in identifying duplicate payments and other overpayment errors in large corporate accounting systems.

More recently, by generalizing their tool set and incorporating Web connectivity into their software, they apply that analytical firepower to all kinds of data -- regardless of where it is located -- even data that's on the Web.

The Borderless Communication Challenge
Benjamin Williams, one of the company founders, had been planning to relocate to Germany. As a valuable asset to their corporation, Kirix wanted to retain his services, but wasn't sure how the international transition might work -- particularly with the potential latency of connecting a Voice over IP (VoIP) phone halfway around the world.

Kirix turned to Geckotech to provide a fully hosted communication solution to enable their corporation to utilize Ben's services overseas, without compromising the quality of their voice and data network.

In this scenario, one feature has proven to be very beneficial -- four-digit extension dialing. This enables simple "internal" calls by dialing the last four digits of a direct-dial number -- even if that employee works in a different country, in another continent.

Unified Communications for the Teleworker
By using Geckotech's outsourced IP phone system, Kirix has been able to retain a key employee while conducting business overseas. The corporation's staff has been pleasantly surprised by the actual quality and reliability of their voice and data network.

"Four-digit dialing to my co-workers from Germany is obviously tremendous, but the quality of service is unbelievable," marvels Mr. Williams. "All that was required was a DSL broadband connection and my Cisco phone and I was making perfectly clear calls to my U.S. office as if I was in the next room over."

As more companies entertain the idea of employing the best talent that's available globally, the demand for the out-tasking of multinational IT and networking services will escalate. It's efficient, it's effective and infinitely more flexible to adapt to the changing communication and collaboration needs of a geographically diverse organization.

Questions to Ask a Managed Service Provider - Part 2

With more and more managed service providers (MSPs) entering the market, your choices are expanding. If you choose the wrong one, however, you might wind up with more challenges than benefits.

How do you know? According to Matt Cowall at Appia Communications, it’s often as simple as asking.

In part one of this post, we covered three of the top five questions to ask a managed service provider: How long has an MSP been in business? What kind of support does the MSP offer? And what kind of redundancy does the MSP offer?

Today we’ll cover the remaining two questions that Matt recommends you ask, and they’re arguably the two most important:

What quality of service does the MSP provide?
This is probably the most important question, of course. You’ll learn quite a bit about an MSP’s service quality when you check its references. Be sure to ask what happens when there are issues. Does the MSP respond quickly and take ownership of the problem?

Another key indicator is the MSP’s service level assurances. A service level agreement (SLA) is a document describing the minimum performance standards an MSP promises to meet. It should also clearly describe remedies — and even penalties — if the MSP ever fails to meet the minimum standards. An SLA is an essential part of a contract between you and an MSP.

Does the MSP have formal SLAs? Do the assurances cover what you’re buying? And do the assurances have ramifications? The willingness of an MSP to offer SLAs with significant penalties for service interruption is a sure sign that the MSP is a high-quality provider. No MSP can remain in business if it has strong SLAs and can’t deliver on its promises.

How willing is the MSP to meet your specific requirements?
Your company or organization is unique; it’s often that very uniqueness that has resulted in your success. Unless an MSP is willing and able to tailor its services to meet your specific requirements, you may find yourself bending your operations to suit the MSP — instead of the other way around.

You can tell a lot about an MSP’s flexibility during the procurement process. Do they ask a few questions and then send you a quote, or do they take the time to listen to your specific needs and develop a custom proposal? And since no MSP can meet every requirement, are they forthcoming about what they are able — and not able — to do, so you can make a fact-based determination of how well their offerings fit your needs?

Lastly, ask about a roadmap for their products or services. Your needs will evolve over time, sometimes quickly. Therefore, your MSP should have a plan that aligns with your future business needs.