Network Management: Contract out the Upkeep

Of late, Indian corporates have exhibited keenness in the adoption of WAN,

recognizing it as an efficient company-wide communication platform. Also, with

the realization that the Internet offers a cost-effective network communications

solution, they have significantly increased their Web presence. ERP networks too

have been set up.

With this has emerged the need to keep the network running ‘at all costs’.

This is the basis for organizations opting for outsourced network management,

which assures commitment levels through service level agreements (SLAs).

Network Management

Today, many businesses must operate their networks in a multi-technology,

multi-vendor environment that is increasingly costly and complex to run and

manage. As the core business functions rely increasingly on networks for

communications and delivery of critical data, network management strategy is

driven by the need to minimize network failure, improve service quality, reduce

operating costs, and enable new business opportunities.

Keeping the network running efficiently at all times, especially at the time

of a rapid expansion, requires putting together a team of network professionals

with necessary technical skills, establish processes and polices to control the

activity, and provide skillful management of the entire operation.

Managers responsible for network operations must consider the following:

• The most formidable challenge for organizations is to hire, train and
  
  retain a cadre of highly skilled network professionals who can make sense of
  
  the many-faceted elements of a modern enterprise network. A focus on these
  
  goals may be more important to success than just a good technology
• Processes and procedures that can maximize the value of the network
  
  management technologies deployed, demand careful attention. As the
  
  capabilities of network operations centers (NOCs) grow, adaptation of
  
  staffing requirements and organizational adjustments are to be made, keeping
  
  the future requirements in view
• Outsourcing offers relief from staffing and skills dilemma, allowing
  
  organizations to attain instant network expertise for maximizing network
  
  performance. It also helps with critical functions, such as security

NSP Perspective

A few NSPs like Satyam Infoway and Hughes Telecom have been

maintaining network management centers (NMCs), which have also deployed

monitoring services for clients. While these have been restricted to

notifications about issues such as link downtimes and traffic observations, NSPs

see emerging benefits in taking up larger responsibilities of managing client

networks. Also, given the all-encompassing nature of the Internet, it will not

be a shock to read about network managers who are not located in the same

country.

A recent worldwide network industry survey of NOCs across the

globe by Lucent brought out the fact that managed service providers (MSPs) are

looking at highly integrated solutions, which cater to the complete needs of the

corporate world, right from remote desktop management to information security

management.

The delivery of managed network services usually requires the

creation of a NOC, where a core set of tools can be used to enable a relatively

small number of experts to efficiently perform remote monitoring and management.

A key factor in profit equation for a managed network service is the NOC’s

operational efficiency–the number of customers and services that each NOC

engineer can support simultaneously. The more the tools and related training can

be utilized across multiple customers, products, and services, the more cost

efficient the NOC operation becomes. This is partly due to reduced software

acquisition and maintenance costs, but even more due to the ability to assign

NOC personnel to tasks across customers and services as needed rather than

having narrowly trained specialist groups.

Types of Outsourcing

The type of outsourcing that a company can go for depends on

the criticality of systems, the amount of interference it is willing to allow

with its network, the amount of expertise available in-house, and the kind of

manpower that can be put to use on more profitable projects.

The following levels of outsourcing are prevalent:

Level I: Monitoring and alerting

At this level, the NSP is responsible for monitoring all

critical points or terminals of the network. Any fault detected is immediately

reported to the customer. In such an arrangement, the NSP corresponds with the

support staff on the client’s premises. The client doesn’t have to invest in

expensive monitoring software. The NSP does that and distributes the cost over

other similar projects. The client is required to maintain an IT support staff

that can act on alerts.

Level II: Monitoring and remote repairing

In this case too, the NSP monitors the network status of the

client. In addition, the service provider is also able to remotely rectify any

faults detected. The support staff at the client’s premises is required to

rectify faults when the service provider is not able to do the same.

Level III: Remote repairing and on-site service on call

The NSP commits to remote or on-site support. It remotely

monitors different client networks and also provides a support team, which

visits the client if remote repair is not enough. The client need not maintain

separate staff for monitoring network faults and can concentrate on more

advantageous tasks.

Level IV: On-campus presence as well as remote monitoring

This signifies the highest level of SLA. The NSP performs

remote monitoring and also has a person staying at the client’s premises. Such

arrangements have been observed in offshore network monitoring arrangements.

Pay as You Use

Tool-based infrastructure management entails heavy

investments in systems and tools, in addition to ongoing costs incurred on

manning the control center. By far the most alluring value proposition of an NSP

is the pay-as-you-use model, which obviates the need for organizations to cough

up huge upfront investments in management infrastructure. One way of looking at

an NSP service has often been an ASP type of service, which offers the

functionalities, delivered by the capital-intensive combination of tools and

platform on a rental basis.

Upward-bound costs of infrastructure management are largely

on account of the requirement of highly skilled manpower that is perennially in

short supply. Management of this skilled manpower in terms of retention and

maintenance is also proving to be a costly and troublesome task, which is best,

outsourced.

Table 1 presents a summary of costs, both under the capital

as well as the operational head, which go into establishing and operating a

management infrastructure.

As can clearly be seen from the above tables and charts, a

substantial portion of costs incurred for in-house management of the network is

taken up by the investment in core tools required to run the network management

operations. Typically, an NSP is able to derive scale economies on this

investment, the absolute cost of which is fairly independent of the scale.

Economies also arise on hardware costs as the cost to power ratio for hardware

is non-linear. This essentially means that if larger hardware equipment can be

justified for the load, it is more economical on a per task basis.

In case of operational costs, manpower costs form more than

50% of the recurring costs. However this benefit is not as significant, on a

cost basis, as the benefits from investment cost reduction. This is primarily

because manpower costs are predominantly variable in nature. An NSP however is

able to offer a better value proposition here because he is in a position to

utilize this manpower more efficiently with lesser idle times. Over and above,

this is the release from the efforts and costs involved in locating and training

this manpower and retraining costs if they quit.

Benefits of Outsourcing

NSPs having the expertise in the network management field can help corporates

extract the relevant information from a host of data collection computers, such

as network management appliances driving SNMP traffic, making them into useful

data. Such equipment is located at major points on the Internet backbone.

Depending on the resources available with the NSP, many such monitoring points

may be maintained in different countries. The devices, simulating real

end-users, can send http requests to various Web servers periodically, and

measure the turnaround Internet response time. The NSP through its network

resource center (NRC) can analyze the collected data and present it in a

user-friendly Web-based report. Such reports are available in real-time and

users can also look at historical information of the Internet response time.

NSPs’ unique advantage in server and systems monitoring allows customers to

monitor their mission-critical servers’ status, irrespective of which Internet

data center (IDC) they are located in, from major Internet backbones around the

world. While the IDC’s monitoring service does measure the server’s health,

it is limited to merely isolating server-related bottlenecks. Other important

measurements, such as end-user response time, which falls outside the IDC’s

measurement parameters, are not included.

The benefits of an NSP service go beyond 24x7 availability and protecting the

mission-critical e-business site with round-the-clock monitoring. They include

proactively solving site performance issues before users find them. Other

benefits, which the outsourcing firm can look forward to, are:

End-to-end Performance Measurement

NSPs measure the server performance through two different mechanisms:

Internal server monitoring within the IDC, and end-user response time

measurement through network management appliances located at major Internet

backbones. NSPs therefore can identify the root cause of any performance

problems more efficiently.

Without having to invest in additional hardware, software or human resources,

an NSP allows the outsourcing firm to focus on its core business and leave the

task of performance management to the experts.

Problems Pinpointed

The NSP can pinpoint the root cause of a performance-related issue. By

following a systematic tracking process and correlating to performance metrics,

one can isolate performance problems to specifics, allowing the customer to

quickly zoom in on the issue for effective resolution.

Initially, it is logical to expect large corporates to reap the benefits of

strategic outsourcing and NSPs can expect projects for managing reasonably sized

WANs. But as NSPs mature and more awareness is created about the possibilities

in outsourced management, more firms, regardless of their size, will be found

outsourcing their critical operations.

Prof. B Sridhar is associate professor; Anand R, Kamalakkannan E, Koka

Dinesh Dutt, John Ben P, and Preeti Krishnan are students at IIM Lucknow