Infrastructure management moves offshore

Infrastructure management moves offshore
By Linda Tucci, Senior News Writer
12 Apr 2006 | SearchCIO.com

"Clients are starting to ask, 'If my Indian vendors can take care of our applications, can they take care of my infrastructure as well?"
Rich Matlus,
analyst, Gartner Inc.

Companies that rely on India for applications development and maintenance are now looking to ship out another chunk of their IT tasks to the Asian powerhouse: the care and feeding of their infrastructure


"Clients are starting to ask, 'If my Indian vendors can take care of our applications, can they take care of my infrastructure as well?'" said Gartner Inc. analyst Rich Matlus at the recent Gartner conference on outsourcing in Orlando, Fla.

The area is a hot topic in outsourcing circles, and why not? The potential economic upside is huge for client and provider, according to industry experts.

Merrill Lynch & Co. pegs the market for managing infrastructure services from remote locations at $55 billion globally. Companies, in turn, could save as much as 40% by offshoring infrastructure management services.

Merrill Lynch defines infrastructure management services as monitoring and managing a company's IT backbone. Tasks include IT infrastructure assessment, technical help desk support, data center management (including sever, mail and database management), network management and security management.

According to a recent report by Cambridge, Mass.-based Forrester Research Inc., interest from businesses wanting to send infrastructure support to India is rising. The technical hurdles Indian providers have overcome to become the vendors of choice for inexpensive application development work have paved the way for this new market.

A few years ago, the Indian vendors' lack of experience in this field made it a high-risk proposition. A number of factors, including the maturity of management technologies such as CarbonCopy and Windows NetMeeting, are making outsourcing infrastructure tasks to low-cost locations a "much safer and more realistic activity," Forrester reported.

Another factor in its growing appeal is the dramatic decrease in the cost of bandwidth and the increase in bandwidth reliability.

"As more and more work started going offshore, infrastructure management became important in India," said Atul Vashistha, principal of neoIT, a San Ramon, Calif.-based consulting firm specializing in global outsourcing. Indeed the seeds of India's growing expertise in infrastructure tasks were sown by local companies. "With a company like Wipro reaching 15,000 to 20,000 people, you have a lot of people with desktops who need desktop support services. That was what got it started."

Vashistha predicts the demand from U.S. companies will be strong for certain tasks.

"Help desk support is probably the least valued function in the IT group in the United States. In an offshore location, you can put more people on for less money, and because of broadband networks you can do things like virus protection and updating software remotely," he said. Network operating centers, which monitor the network for usage and capacity, can also be located offshore.

On the other hand, "you're not going to see Bank of America put the data center in India," said Vashistha, nor does he advise companies to do that. "If you're doing infrastructure offshoring, first start with the service aspect. And whoever you go with, make sure they can demonstrate deep capability; this should not be an experiment for the vendor." Among his firm's top picks for infrastructure services management are HCL Comnet Ltd., SIFY Ltd., Tata Consulting Services Ltd. and Wipro Ltd.

Matlus, of Stamford, Conn.-based Gartner, agrees that companies can reap real costs savings from going offshore but cautions the risk is also greater.

"Using Indians for application support is another matter from using them to monitor the network. If their network goes down and you get an application at 8:30 a.m. instead of 8 a.m. it's no big deal. But if their network goes down while they're monitoring your network, that half-hour could spell disaster," Matlus said.

He said he is also hearing "mixed reports" on going offshore for help desk services, with clients complaining about problems with accents and resolution rates of 40% and 50%, compared with the 70% now common in the U.S.

SELLING YOUR CEO ON BPM

NASHVILLE, Tenn. -- Slow and steady wins the race -- at least when it comes to implementing IT disciplines such as business process management (BPM). At least, that's the advice of some BPM experts.

Start small and get results first if you expect to win management's support for broader implementation.

"Don't try to solve world hunger," said David Cappuccio, managing vice president at Stamford, Conn.-based Gartner Inc.

Business process management is software that automates and monitors business processes within a business. A relatively new trend, BPM still needs to prove itself in most companies. At this week's Gartner Business Process Management Summit, Cappuccio said a BPM project team must demonstrate small successes and build a case for further implementation. A BPM team must reduce risk and avoid the more complex business processes at the beginning.

"To get proof of success you start with low risk," he said. "When you succeed at doing the quick project, then you get funding for the second one with more complexity. Some companies start with high complexity and high risk [processes] and they end up in project hell."

To continue building support for BPM in a company, the CIO and his team should avoid other pitfalls, as well.

First, BPM must be business-driven, not IT-driven. Although BPM has the potential to link a company's IT organization to the rest of the business, CIOs must realize that BPM is a business-driven project. It should serve a business's needs. If the project is driven by IT, the return on investment will suffer.

"BPM is not an IT project, but it is implemented by IT," Cappuccio said. "It enables BPM, but it doesn't drive it." Projects that are IT-driven run the risk of having no ties to business strategies, goals and objectives.

A BPM project must also be shepherded by an executive with "governance authority," Cappuccio said. "The lack of an owner with governance authority will lead to some groups taking over and adding more complexity, which brings rising costs."

Saul Brand, a business relationship manager at The Walt Disney Co. in Burbank, Calif., agreed that a BPM project needs strong leadership from the top to protect against "scope creep." Brand just joined Disney after spending two years implementing BPM solutions for El Segundo, Calif.-based Mattel Inc.

"Scope creep becomes a big problem," Brand said. "During organizational change, we experienced a tremendous challenge. Each new division head had his own ideas about the project's scope.

"The key to all this is having executives and senior management getting behind the project," said Brand, who will be involved in implementing BPM at Disney. "It has to be pushed from the top down, not bottom up."

Companies set business process management priorities

NASHVILLE, Tenn. – Starting a business process management (BPM) project can be daunting for some companies. Firms need to decide not only where to begin, but who will lead a project.

At New Addison, Ill.-based distributor NAL Worldwide, a mainframe migration project has driven IT and business managers together to examine the company's business processes.

Robert Black, IT director at NAL Worldwide, said that the business and IT sides of the company are holding hands while transferring critical applications off the mainframe and enabling a service-oriented architecture (SOA). Black said that examining business processes to improve efficiencies was a natural part of the project.

"Clearly we've recognized that the processes define the best success of the business," said Black, who this week attended the Gartner Business Process Management Summit. "But on the IT side we need to define the metadata that helps bridge IT and systems that drive our business."

NAL is moving a variety of homegrown supply chain and warehouse management systems off the mainframe to HP-Unix servers and, in the process, service enabling its applications, Black said.

Many BPM projects begin with customer service improvements in mind, according to Stamford, Conn.-based Gartner Inc.

A customer relationship management project that began in 2004 drove executives at the Software Engineering Institute -- a federal research institute based out of Carnegie Mellon University in Pittsburgh, Pa. -- to examine their business processes. The center wanted to improve customer service and respond faster to a growing number of clients, said Vijay Sai, manager of financial and business systems.

"We had a need to become more efficient and not throw bodies at our growing business demands," Sai said.

The institute asked its employees what they do and documented their business processes in Excel spreadsheets. Visual models were developed before the institute decided to choose Vienna, Virginia-based Appian Corp.'s BPM suite to improve processes.

"Our end users began to discover the role each one played in the overall organization," Sai said. "It was an eye-opening experience."

Still, SOA projects are also driving companies to examine business processes, according to Gartner.

BPM projects put a business face on SOA initiatives, said Janelle Hill, vice president of research at Gartner. In SOA and composite application development, the emphasis is still on the developer, but with BPM, business people are learning the skills necessary to change system behavior themselves.

Once process modeling takes place to identify how work gets done at a company, tasks and dependencies are mapped to application logic and data sources. Then, user access points are defined to determine where user interfaces are needed. The business manager should be able to see the modeling environment clearly and test any changes to understand the impact of the change.

But IT won't be giving up all control of a company's systems, Hill said.

"The business manager must step up and take ownership for the consequences of their changes," Hill said.

Process modeling technologies are more and more oriented toward casual business users, according to Toby Bell, a research director at Gartner.

"It's really all about the metadata," Bell said. "It's about taking your existing pools and moving them out of isolated states, setting policies and managing them effectively."

And companies are finding ROI success in initial BPM projects, Bell said. A 2004 Gartner survey of 154 completed BPM projects found that 77% had a return greater than $100,000 per project. Also, 56% said they had returns in the $100,000 to $500,000 range.

SAP, Oracle playing catch-up with BPM technologies

NASHVILLE, Tenn. -- SAP, Oracle, IBM and other large software vendors are racing to address gaps in their business process management (BPM) portfolios as more businesses are examining processes as part of service-oriented architecture projects.

SAP, which has an established relationship with Germany-based IDS Scheer to address process modeling, is embedding IDS Scheer's ARIS technology into its NetWeaver platform. Still, SAP's BPM workflow tools are too complicated, have too few rules management features, and lack human-to-human task support, according to Jim Sinur, vice president and distinguished analyst at Stamford, Conn.-based Gartner Research Inc.

Sinur researches business modeling, BPM technologies, and rules-based systems for Gartner. He addressed participants at the Gartner Business Process Management Summit, held here this week.

"SAP has a mindset to do something in this area," Sinur said. "There are no clear leaders among the power vendors yet, but it's very early and we're still generating a report card."

Sinur ranks SAP, IBM, Fujitsu, Microsoft, and Oracle among the "power vendors" that have been addressing the issue of BPM over the last year or two. Meanwhile, he said, pure-play vendors such as Pegasystems Inc., Global 360 Inc., Lombardi Software Inc., Metastorm Inc., Savvion Inc., and Appian Corp. have launched BPM suites that integrate with company systems and go far beyond process modeling.

"Modeling has become a commodity. All power vendors have solved the modeling problem," Sinur said. "The power vendors need to demonstrate credibility, and that will only come as the market matures."

SAP and Oracle each had a presence at the conference, highlighting the business activity management tools within their products. SAP's BAM technology resides in the SAP Solution Manager, which is the main portal used for servicing SAP software, said Harald G. Nehring, director of product marketing for SAP NetWeaver.

"SAP customers have the ability to directly model, manage and analyze business processes using NetWeaver," Nehring said.

Features within SAP Web Application Server enable business rules integration to control and monitor processes within an application, he said. SAP Exchange Infrastructure can be used to extend BPM to third-party applications.

Meanwhile, Oracle scores high marks with integration and business activity monitoring, located within its Fusion middleware stack. The company has strong human task support, but relies on partners for simulation and lacks solid modeling tools, according to Sinur, who said that the company plans to make a move to bolster modeling this year.

Microsoft holds the title for having the most disjointed offering, Sinur believes. The company has BPM technology within its Office 12 and SharePoint portal software and its BizTalk server. Sinur called Microsoft's human task support and modeling tools "anemic," but the interface within BizTalk is a winner and has good integration, he said.

"Microsoft uses partners to increase its ability in the area of modeling and human-to-human capabilities."

IBM is building and acquiring technology to bolster its BPM offering, Sinur said. Big Blue scored high with integration, using its WebSphere Process Server product. It has a very strong modeling tool that leads customers to IBM's models, Sinur said, and it has high content and collaboration capabilities. Still, he believes that the company has work to do in the area of human task support and rules management features.

Sinur gives Fujitsu Ltd. high marks for human tasks and system integration. The company's product has built-in simulation that is improving. It relies heavily on partners for process modeling, content management, and rules management features, he said.

While all the "power vendors" are still playing catch-up, it is still not a bad move to invest in a suite from one of the pure-play vendors, according to Sinur. There is no need to wait for market consolidation to take place, he said.

"Pure-play vendors will be able to compete because they know what's coming. Some will also thrive in niche markets," Sinur said. "Risk avoidance depends on the culture, but every organization will end up with multiple BPM engines."