The need to comply, escalating TCO and dwindling skill-sets are all going to help the managed IT services market sizzle in 2012-13. By Jasmine Desai
According to Nasscom, by 2015 India’s Remote Infrastructure Management (RIM) market expected to reach $12.5 billion, a 23% CAGR since 2011. Infrastructure management is a non-discretionary mission-critical activity and key growth drivers for this segment include a compelling cost advantage, evolution of technologies, availability of a skilled talent pool and increased maturity of Indian vendors offering end-to-end infrastructure services. RIM is also of the fastest growing sectors within data center services and is also one of the most significant value drivers in the services outsourcing market.
The Infrastructure Management Services (IMS) segment is increasingly shifting towards remote delivery models where services will be provided by vendors through low-priced sites. According to Avinash Pitale, Co-founder & JMD, Omnitech, “Remote Infrastructure Management Services (RIMS) is expected to evolve as a potential opportunity and is publicized as a big market for Indian IT companies.”
Enterprises today face considerable challenges to effectively utilize and manage their IT infrastructure to deliver ever-improving service level requirements. Businesses need a reliable and scalable infrastructure that meets and exceeds the expectations of business-users without compromising on quality, security and cost. The high cost of providing the services using traditional models, CAPEX involved in procuring tools, building skills and then retaining the skills of using these tools, difficulty to provide follow-the-sun model in a cost-effective manner are some of the key challenges faced by the organizations around the globe.
Businesses today face a considerable challenge to effectively optimize their infrastructure and related operations and deliver ever-improving service levels to meet and exceed the expectations of their business-users without compromising on quality and security. Aniket Patange, Director – Professional Services, APC by Schneider Electric, said, “In the increased globalization era, enterprises are looking at innovative methods to service users 24×7 across the globe at reduced cost while increasing efficiency and effectiveness of their physical infrastructure. More and more companies are turning towards RIM as the answer to this need.”
The RIM segment is also driving non-linear growth of the industry. Between FY2006 and FY2010, RIM exports grew 5x to reach $4.3 billion; while RIM workforce grew 4x to about 90,000. The RIM segment is dominated by Indian and MNC third- party providers who account for over 90% of export revenues. The top five players (Indian integrated players) account for about 45% share in RIM exports. RIM represents the highest growth opportunity in IT services and is expected to account for 20-25% of the incremental growth in the global addressable market. By 2015, India’s RIM market is expected to reach $12.5 billion, a 23% CAGR since 2011. India has one of the best practices for RIM as right from large organizations like TCS or Wipro to small ones are experienced in handling RIM for clients in Europe and US.
According to Biswajeet Mahapatra, Research Director, Gartner, “It had not penetrated that much in Indian organizations and the prime reason was that it is cost-effective to run operations manually. In the last two years, however, the workforce has gone up, real estate cost has gone up and inflation has gone up. Cost of operations in India itself has gone up which is proving to be a catalyst for adoption of RIM.”
Shifting sands
Way back in 2006 according to a Gartner, Market Overview: Global Remote Infrastructure Services delivery, 2006, “By 2012, 50% of the labor hours for global IT Infrastructure Services delivery for commercial clients will shift from no-site support to remote delivery.”
2011 was the year of the cloud, with increasing adoption across the market, in 2012 will see this technology’s adoption grow. Cloud infrastructure, by nature, is fluid and dynamic, requiring management and analysis tools that are geared for rapidly changing infrastructure. The combination of new converged infrastructure management, learning curves and fast growth rates of virtual machines can consume lot of the IT administrators’ time. Compared to physical server provisioning, virtual machines are relatively easy to create and deploy. Uncontrolled growth of virtual machines not only stresses IT management’s efforts to keep up with the provisioning process, they also make it impossible to provide for ongoing maintenance and eventual decommissioning. It can result in increased security risk, management overhead and cost.
According to Shailendra Ravi, Sr. Director for Business Strategy and Operations, EMC, “To address this, the industry will begin to adopt a cloud orchestration approach. Cloud orchestration requires the deployment of tools and processes which can operate across the multiple methods of provision and possibly providers, in a typical hybrid environment.” At the heart of an orchestration approach is an automated service, which can affect the actions required in Cloud management. For example, monitoring usage, scaling and provisioning; managing events and triggering actions such as approval processes. To be an effective orchestrator, the service needs to be able to operate in a consistent manner and manage services consistently across the myriad of cloud and physical environments.
It’s not enough to be a server expert, or a network or a storage expert, there is a need to understand the technology from the Cloud orchestration approach viz., key design principles from a slew of different new technologies, and articulate how they might fit together. According to the Everest Study on Global Sourcing, customers are looking for an increased geographic and services scope, sophisticated delivery requirements, and a more thoughtful approach towards a global sourcing portfolio centered around value maximization and risk management.
There is growth in economies and scale in emerging countries as against globally. Along with this growth and scale, there is cost involved which forces customers to look at industrialization of infrastructure services and that delivers the economies of scale that they are looking for. Therefore, demand for RIM is growing in economies that are growing. According to Neeladri Bose, Vice President Sales, Architecture Services, Cisco Services, India & SAARC, “Developing countries are looking at cost savings and leveraging the economies of scale that are emerging in the developed countries.”
While ITIL based services delivery and Business Service Management ( BSM ) is taking step ahead for guaranteeing uptime at business function level, remote virtualization management support and remote data backup are few such technologies that are changing the landscape of RIM offerings. According to Pitale of Omnitech, “Cloud computing shall change the way RIM / IMS are delivered and in the next couple of years it will impact and may change business scenarios. Hence, service vendors may have to get into Cloud Computing services and extend RIM services.”
The key enablers for RIM to be successful in Indian markets would be decline in hardware prices, virtualization, leveraging and simplifying the management tools, process excellence by adapting to industry standards viz., ITIL, consolidation of data centers, with increased productivity of telecom network infrastructure and decoupling of infrastructure from users. This is leading to the value creation for customers through flexibility of infrastructure architecture, devices and people productivity.
Prakash MS, Vice President, Best Shore ITO India, HP, said, “Over the next decade, Infrastructure Management Service (IMS) that manages an enterprise’s core IT systems (hardware, software, connectivity and people), will become important from varied perspectives.” Presently, the RIM market is dominated by lot of MNC third party service providers and Indian service providers. The services market in India is an extremely mature market and availability of resources is fairly high for customers to manage and do RIM of their own equipment. However, SMBs do not have skillset of their own so they would really prefer to go for RIM as they find more value in it.
There will be no real differentiation in adoption of RIM between large and SMB organization as it is being gradually realized that maintaining infrastructure in-house is not cost-effective anymore. According to Mahapatra of Gartner, “RIM is not a specialized area, it is very commoditized. As more players come to the market, it will get price competitive and very affordable for SMBs. However, SMBs will look for a one stop shop. Mostly, they will be looking at tier 2 or 3 infrastructure vendors.”
Large organizations will be in a better position to differentiate different kinds of services and utilize different vendors for different services. They will have cost, bandwidth and capability of managing multiple vendors. Also they will prefer a RIM vendor who has expertise in their own vertical. On the other hand, the process will need to be faster as SMBs are not in a position to spend so much time in coaching a provider about their needs and in crafting SLAs for their partners. However, overall, organizations are more confident about existing transitions and working with vendors in different geographies. This has enabled enterprises to work with a larger portfolio of vendors offering independent slivers of services.
Patange of APC by Schneider Electric said, “RIM will provide proactive management to prevent or correct problems before they reach a critical state that can jeopardize the performance of critical space, assets and equipment. RIM is accommodating the increasing business needs by allowing OPEX-based business models.”
RIM attached with advance analytics based proactive expert analysis advisory services would be implemented as support to predict, track, and remediate in real time site problems in a timely an efficient manner. This service will interpret events and activate the proper response mechanism with user defined notification rules, including e-mail, phone, tablets etc.
There has been constant evolution in core technologies and IT architecture. Infrastructure architecture are being increasingly centralized and standardized with assets physically decoupled from the support teams that manage them. Prakash of Best Shore ITO, HP commented, “Remote management tools have evolved from point tools for device management, to integrated offerings that support end-to-end management of IT services. As a result, the focus of IT managers has shifted from managing infrastructure to managing business outcomes.”
Along with the IT architecture there has been a change in customer behavior and demand. Customer capabilities have matured, particularly around governance mechanisms and vendor management. Pricing models are also evolving with so many vendors having RIM capabilities in their portfolios. A lot of the business models that are evolving globally are impacting customers in India as well. More customers are looking at asset-like approach to service models. All this contains automation, contingency planning, storage management, security, asset management and third party procurement.
The challenge that remains to deal with in RIM area is to do with SLAs and managing them. Organizations are viewing at adopting new standards from business process standpoint. And alignment of that to monitor and measure SLAs is another trend. As Mahapatra of Gartner mentions, “Organizations should look for a perfect match not only in terms of technology but also expertise that their partners would bring in terms of businesses they have. They need to ask does this vendor have expertise in managing the scale, the kind of business?”
Bose of Cisco Services said, “It is a great time to be in this business. In spite of economic turbulence across the globe, customers are investing more into it.”
Vendor capabilities have grown dramatically, particularly in India. The size and complexity of offerings, tools and delivery techniques to manage them efficiently, and the development of the RIM capable talent all indicate a growing sophistication of the supply side of the equation.
