Sam Schorr, vice president of systems engineering at Homestead.com Inc., has good reason to be leery of systems management outsourcing. His Web-hosting company tried such an arrangement with its ISPs, and suffered serious service degradation and customer dissatisfaction.
"They weren't good at it," Schorr says succinctly. Even so, Homestead.com recently hired management service provider (MSP) SiteRock to provide 24-7 support for its primary Web site. Alerts go first to SiteRock Corp.'s network operations center, where technicians handle low-level problems and escalate everything else to Homestead. com's staff in Menlo Park, Calif. "Before we hired SiteRock, those of us who architect, implement and manage the Web site also had to respond to basic alerts at god-awful hours in the morning every day of the year," Schorr says. "Now we can sleep on weekends."
He notes that by using SiteRock, Homestead.com saved more than half of the $450,000 the MSP estimated it would take to set up the 24-7 support in-house.
Homestead.com is one of a growing number of businesses that find the MSP model attractive. Unlike outsourcing companies that take full responsibility for systems management, MSPs essentially let customers have it their way.
In a typical MSP configuration, the MSP maintains a set of management tools and platforms that monitor the customer's systems, either by gathering data from embedded agents or from simulating transactions and traffic on a Web site. Alerts get routed to the appropriate MSP technician, to the customer's IT worker, or both, and the MSP stores historical data and trouble tickets in a secure database that the client can access.
The customer decides which systems and management tasks to hand over to an MSP and which to keep in-house. MSPs offer a range of services from one-time assistance to full-time management.
In the most common arrangement, "You're getting the advantage of the MSP's expertise, but still controlling your infrastructure and critical resources," says John McConnell, president of McConnell Associates in Boulder, Colo. "It's the advantage of outsourcing without the risks of surrendering everything."
MSPs basically appeared out of nowhere early this year. Key players include @manage Inc., 2ndWave Technologies Inc., InteQ Corp., Luminate Software Corp., ManageIT, SilverBack Technologies Inc., SiteLite Inc., SiteRock and TriActive Inc.. According to Gartner Group Inc. in Stamford, Conn., the MSP market is set to shoot up from $90 million this year to $3.26 billion in 2005.
This is not surprising. As early customers like Homestead.com can attest, MSPs can help stretch a tight systems management budget. Most notably, the subscription model eliminates upfront capital and implementation costs that can add up to hundreds of thousands of dollars.
"Five guys in a garage with a couple of servers can get their hands on the latest systems management technology for a hundred bucks a month because they can buy it by the glass," says Russ Caccamisi, vice president of operations for ProductMarketing.com Inc. in Austin, Texas.
Caccamisi should know. His firm, a small Web-based product marketing application service provider, started renting time on MSP TriActive's systems management platform last February.
That arrangement bore fruit the first day, when TriActive's management platform reported three crucial production servers had used up about 97% of their hard drive capacity.
"We were on the edge of very bad things happening and didn't have the slightest idea," Caccamisi says.
As a beta tester, ProductMarketing.com got a special deal. A TriActive spokesperson says typical monthly charges range from $10 per seat for basic desktop monitoring to $750 for managing a Web site.
MSPs also address the increasingly difficult problem of finding and affording trained technicians to operate systems management platforms. One way they do this is by using the Web to buffer customers from the underlying technology. Several MSPs have integrated leading management platforms such as BMC's Pilot and Tivoli's TME under a single infrastructure, including a common database and reporting back-end and Web-based interface.
"MSPs are trying to greatly simplify the use of software systems by the end user, so you don't have to be an expert in all those element managers; you just use simplified Web screens," says Tim Grieser, a research director at market research firm International Data Corp. in Framingham, Mass. This means that someone with minimal training can perform many routine management tasks, he added.
For the past four months, for instance, ProductMarketing.com's office manager/receptionist has added new users and handled low-level alerts. That frees up the firm's IT manager to do important, nonroutine work, such as selecting and installing the appropriate project management tool, Caccamisi says. TriActive's service also saves him from possibly having to hire another IT technician or two.
Expertise on demand
Some MSPs also help minimize the need for in-house systems management technicians by renting out expertise on a subscription, or as-needed, basis.
In one scenario, "MSPs come in and advise you on what to do about the performance degradation on your network," McConnell says.
For example, SilverBack has a staff of experts on hand to answer its customers' questions about how to use management tools. Moreover, the company's InfoCare service correlates and aggregates management data and boils it down into practical information, says John Igoe, CEO of SilverBack in Billerica, Mass.
Some of this advice comes in the form of a knowledge base SilverBack is developing. For example, if you perform a security scan and discover your Apache Web server has a Common Gateway Interface capability it shouldn't, SilverBack recommends how to fix it, Igoe says.
Moreover, a growing number of MSPs provide direct systems management intervention. MSP technicians may come in periodically to perform a particular task, or help fix a problem. Some also can provide ongoing collaboration with an in-house IT manager.
Then there are the MSP setups that border on full outsourcing. For example, SiteLite not only handles network monitoring, but also proactive maintenance and administration, says Jeff Pierick, president of the Rancho Santa Margarita, Calif., service provider. "Ninety-nine percent of the time we can resolve a customer's problem without having to go back to them. We want people to think of us as a substitute for hiring operational support staff," he says. L90.com, SiteLite's first customer, can attest to the MSP's expertise.
"When one of our database queries was taking 8 or 9 minutes, they got it down to 15 seconds," says Frank Addante, chief technology officer of the Santa Monica, Calif., Web advertising services provider. "When we implemented EMC (Corp.) storage, we brought them in because they had experience on how it performed in other environments."
SiteLite costs around $2,500 per month for an Oracle Corp. server and a few hundred dollars a month per Web server. Is it worth it? Addante thinks so. Using SiteLite has saved L90.com about $500,000 per year, primarily on people costs.
"Unix and Oracle database administration are key to us, and those are two of the hardest areas to find and keep trained people," he says. While L.90.com initially hired SiteLite to manage its databases, the MSP now manages the firm's systems and networks, too.
Internet business is a main driver for the MSP market now, says Corey Ferengul, a program director at Meta Group Inc. in Stamford, Conn. For one thing, IT is under a lot of pressure to set up new Web sites, Ferengul says, and applications at remote sites that can't plug into the corporate support infrastructure. Just ask Ron Pentz, IS director for Molex in Lisle, Ill.
Top management recently gave Pentz's group a month to set up an extranet. "I didn't have the personnel to take on the management of a large 24-7 operation," Pentz recalls. "It wasn't just a budget issue, it was finding the right talent. A month wasn't enough time to recruit," particularly given that Molex, a brick-and-mortar manufacturer of electronic interconnect devices, had little experience with Web-based systems. MSP Nuclio now manages Molex's Internet and extranet infrastructures for about $10,000 per month, or the cost of a couple of midlevel Web managers.
Taking it slow
Despite the potential benefits of MSPs, many early customers have been cautious about how much of the management farm they give away. Molex, for example, has no plans to hand over management of critical internal systems, such as enterprise resource planning, to Nuclio.
"With tools they have, they could do it, but we're still comfortable having our own people do it ¥ people we can see," Pentz says.
Such a cautious attitude is wise, industry analysts say. For one thing, the MSP market is not even a year old. "A lot of companies are still a quarter or two [away] from shipping products," McConnell says. "Small start-ups need to show they have the size, infrastructure, and depth of support and expertise customers need to trust them."
MSP products, too, haven't been around long enough to prove themselves. "I'd be especially cautious about the ones that use proprietary middleware to tie tools together," McConnell says.
The bottom line is do some serious digging and comparison shopping before choosing an MSP.
Furthermore, early adopters say an MSP relationship, like any outsourcing arrangement, needs considerable up-front planning and established policies and procedures in order to work. Here are some tips from the trenches:
- Make sure the MSP knows your business rules. For example, SiteLite always insists that new customers sit down with its analysts to hammer out a managed services agreement that outlines the customer's business and IT procedures.
- Share information. There should be a formal procedure by which in-house IT apprises its MSP counterparts of changes to the environment, from new servers to a new ISP.
- Divide responsibility. IT and MSP technicians should know exactly where one group's responsibilities end and the other's begin, and who receives alerts in what order.
- Check up on the MSP. Monitor its performance on a regular basis. Many MSPs provide access to trouble ticket histories via the Web, but that may not be enough. Molex recently started classifying types of tickets so it can let Nuclio know if there are repeat problems that need fixing, Pentz saysStaying in controlEven with the best safeguards and procedures, MSP executives acknowledge that problems happen. MSP services are particularly vulnerable because the Web is the lifeline that links customer systems to the MSP's network operations center. "We can't guarantee that someone won't put a backhoe through the wire," TriActive President Glyn Meek says.
That's why it's dangerous to become entirely dependent on the MSP and its management tools to keep systems up and running.
Some MSPs install a management server on the customer's site. SilverBack houses a server at the customer's site that performs local management and data storage while sending key data over the Web to the MSP's network operations center. If the link goes down, the server provides a management database, alerting, discovery, reporting, security scanning and performance monitoring at the site for up to seven days, Igoe says.
That's fine if the customer has its own people handling management. What happens, however, if you've turned the whole shebang over to an MSP, and it can no longer access your data? Or what if something comes up that's simply beyond its capabilities?
"Once in awhile, SiteRock has had problems with their Internet connections, so we become the backup for them ourselves," Homestead.com's Schorr says. "In other situations, we've created our own problems on the site, such as changes in code that don't function properly. We've had to call them and say, OStop monitoring, we'll handle it for the day.'"As far as Schorr is concerned, the best MSP relationship is one in which the customer retains overall control of the IT infrastructure.
"Other MSPs have approached us, but I haven't heard a story yet to convince me to give away more of my farm," Schorr says. "The idea scares me to death."
Horwitt is a freelance writer and consultant in Waban, Mass. She can be reached at email@example.com.