Where Customer Is King And Service Is Key

With managed services getting redefined and becoming more customer centric, service level agreements (SLAs) today work better as unified rather than break-fix modes. While an ideal SLA must include the complete monitoring and management of the customer IT infrastructure, customized SLAs are also becoming the order of the day

From the days when
managed services meant
network and infra-structure management, to the time where it involves the management of the entire enterprise IT, the concept of managed services has undergone a sea change. Earlier, managed services were in the form of contracts, but
post 2002, service providers
have devised infrastructure management based on SLAs rather than contract deliverables. Evolving technology, especially high bandwidth available at low cost and easy access to the Internet has led to an improvement in the 'service' concept. Service providers are now able to give cost-effective, secure services and use industry standards like ITIL and six Sigma to address global requirements. In essence, managed services have evolved from just monitoring services to value-added proactive services.

With the concept of managed services changing, SLAs have also been redefined. Over the last year or so, IT infrastructure management services (IMS) have become more proactive. Proper monitoring and analytics
of crucial system performance data has resulted in the proactiveness. Due to the availability of system performance data, better SLAs can be defined. Service vendors have begun to adapt to IT infrastructure library (ITIL) guidelines and processes which force better definition of the services through the use of proper scope of work (SOW) leading to well defined SLAs. With customers demanding
24/7 service and support, organizations are going into strict and watertight SLAs to ensure maximum uptime of IT infrastructure. Managed services are moving to total outsourcing, which is purely SLA-based. There is a movement from time-based SLAs to qualitative ones with emphasis on tools used.

Challenges

With the changing concepts, service providers are up against new challenges while trying to deliver on customer needs. According to Alton Veigas, MD, Vitage Technologies, Bangalore, the change in the approach to services has forced service providers to look at understanding customer businesses, impact of IT, skill sets, cost of delivery, pricing of services, data security and process role-out more carefully. There is a need to mitigate risks in these areas, invest in training (technical and soft skills), build domain knowledge, acquire certifications for processes and build better business models. Agreeing with him Manoj Rathi, Director, Diamond Infotech, Kolkata, who said, “We face challenges in terms of meeting customer requirements, but have an edge over MNC service providers since we have a good rapport with customers at a local level. The challenge is to constantly upgrade ourselves to the kind of services that MNCs provide.” According to Jaydeep Chakraborty, Director, Netwings Communication, Kolkata, “The huge business opportunity in the managed services sector has resulted in a 'gold rush' like situation where system integrators are taking the plunge to address growing customer needs. With the demand being more than the supply, enough trained manpower is not available. Trying to manage client infrastructure with half-cooked engineers/technicians results in disasters as far as deliverables and client satisfactions are concerned. With global managed services players setting shop in India, local players are facing competition from the more experienced international players who are walking away with the crème accounts.”

With many Indian business houses doing business with the US and countries with inverse time zones, services are required at odd hours. International clients often impose heavy penalties for loss of production hours. Some of these SLAs also come with heavy performance guarantees and downtime penalties.

The biggest challenge for service providers, according to Indranil
Bhosale, EVP and Chief Services Officer, Apara Enterprise Solutions, Bangalore, is to become truly vendor/technology agnostic and build a comprehensive multi-vendor service (MVS) and provide
SLA-based services. “Support and management of the infrastructure is an uphill task. The best way to address this challenge is to build product capability in-house of technology and for other areas partner with providers who have the competencies for your area.”

SLA: Changes in time

Given the said, SLAs have begun to move from being just hardware uptime-driven to being a business service availability. According to Tavera Bose, COO, Celerity Networks, New Delhi, “From being more or less pre-defined, SLAs can be customized based on client needs. This is thanks to sophistication of IT management tools in the market. Organizations are increasing focus on IT functioning and budgets. Thus, more robust and stringent SLAs with strict timelines are evolving and have become more of a unified model.”

“Response time has increased manifold today,” said Sanjiv Bhavnani, CEO and MD, Visesh Infotecnics, New Delhi, while adding, “Cost-effective technology and higher bandwidth has led to this phenomena. This means SLAs are moving from being activity-based to more result-oriented. The up-time requirements have gone up and the deliverables included in the SLAs are increasing from monitoring and management to value-added services like trend analysis and budget forecasting.”

SLA: Best fit models

With SLAs having changed from break fix models to unified ones, service providers have
in place a clearly defined engagement methodology which involves time tested plan, deploy, check and act (PDCA) cycles. The plan stage involves detailed discussion with the customer and outlining of key service level parameters. The different attributes are identified and the threshold is mutually agreed upon. In some cases SLAs get re-written based on the deliverables demanded by customers. With the implementation of ITIL guidelines and processes, service providers are looking to improve the process of IT services delivery to customers.

“We have not designed a particular SLA for ourselves,” said Ranjan Chopra, MD and CEO, Team Computers, New Delhi, “It depends on the line of work, service needed by the customer and nature of their business.” The nature of customer business and availability of resources are two things that Bhavnani keeps in mind while implementing an SLA. “As far as SLAs are concerned, I feel service providers cannot follow a fixed model. With clients from different sectors, we have to define our agreements according to their business needs,” he said.

From being more or less pre-defined, SLAs today can be customized. With availability of more sophisticated IT management tools in the market, robust and stringent SLAs with strict timelines are evolving Tavera Bose, COO, Celerity Networks, New Delhi

Ideal unified SLA

While defining an SLA, managed service providers need to include the monitoring and management of the business application and its performance along with the IT infrastructure. The SLA must be relevant to the business need of the customer. Service providers must check for increasing profit and decreasing cost. From an outsourcing perspective, an SLA should indicate what the provider is promising, how the provider will deliver on those promises, who will measure delivery and how, the incentives for conformance and penalties for non-conformance and how the SLA will change over time. SLAs should be based on a measurable set of metrics, which include volume of work effort, responsiveness, quality, cost and efficiency. The metrics used to measure and manage performance in relation to SLA commitments are the heart of a successful agreement and are a critical long-term success factor for any outsourcing partnership.

In essence, a unified SLA must include the scope of work (monitoring, management and support); performance and capacity planning (service level metrics); problem and change management; vendor management and security; intellectual property rights and confidential information and legal compliance and resolution of disputes. It should be simple and must follow the people, process and tools (PPT) model. It should guarantee end-to-end service availability, per event time to repair across product lines covered, and total customer satisfaction measurement.

The road ahead

Currently 90 percent of the IMS business lies with 10 to 15 large service providers. Experts believe that managed service will see maximum growth in the next two to three years. Globally, managed services are being moved to India and will see big growth in the outsourced sector. The current addressable market of managed services globally is around five billion. More than
80 percent of this market is still not addressed and that is the opportunity. With telco’s entering into this area, existing players must evolve to deliver on customer requirements. The new breed of MSPs need to have very clear differentiators to enter and thrive in the growing market. They must render intelligent services to their customers through best of breed products and skilled manpower to manage them. The need of the hour is for SPs to understand changing technology and adapt themselves to the customer needs. Investments need to be made in skills, processes and tools to meet the growing demand. How efficiently the services are going to be delivered will make all the difference.

Currently, availability of reliable support players in tier two and three cities is limited. If these numbers improve, MSPs could consolidate in tier two and three cities. The key for an MSP is the infrastructure (network, power and support) and availability of technical talent for services they offer. If these two are taken care of, there should be no cause for concern.

Subbalakshmi BM

(With inputs from Piyali Guha in Kolkata, Amrita Tejasvi and Syeda Beenish Khalid in New Delhi)