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The key to business transformation: Future-proofing your Consumption based IT services strategy A strategic whitepaper for enterprise decision makers

Co-authored By Dechacca Ponnappa Industry Analyst ICT MENASA, Frost & Sullivan & Mr. Nitin Mishra, SVP - Products & Services, Netmagic.

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Foreword

Enterprises of all kinds, from organisations across the industrial spectrum, to governments and entrepreneurs, all

are seeking to enter newer business models, drive innovative services and much more. IT being the core enabler

of businesses, has forced IT departments to drive tremendous business value from their IT investments. In the

past and at present, enterprises have engaged external service providers in traditional service delivery

arrangements to handle the ongoing IT operations through models such as staff augmentation, co-owned delivery

etc. The traditional models may not suffice to manage the present day expectations of customers and business

stake holders such as reduced time to market, cost optimisation, on demand services and much more.

Hence a new breed of “next-generation” enterprise and “best in class” service providers are fostering a

collaborative approach to bring in newer models of service delivery, laying down the foundation for “Consumption

– based IT” that involve a mix of Usage based economies delivered through OpEx models.

Consumption – based IT services model ensures that organisations see consistently strong results from their IT

investments that positively influence their business outcomes when the service providers are empowered with a

sense of ownership, incentivised to think big, innovate and outperform the buyer’s expectations when the IT

management is passed on to them. This is the win – win model that this whitepaper intends to cover and how

enterprises can get more value from their Consumption based IT Services Provider.

Review the business needs in the below table and if the answers to any of these questions is yes, then this paper

helps to understand how newer models of Consumption based IT services can assist you to address your business

objective.

Exhibit 1:

Is your business facing these challenges?

Managing mission critical IT Infrastructure with higher operational efficiency

Lowering IT budgets and increasing productivity

Fulfilling business needs, managing multiple user groups and technology platform

Responding quickly to meet time to market demands

Operating in real time to meet 24-hour demand

Is your business in transition?

Needs to upgrade, refurbish, move, or relocate existing infrastructure.

A merger, partnership, or acquisition is altering operations.

A need to increase the coverage range and level of service.

The revenue targets depend on implementing new technologies.

There is a need to expand into new markets

Is your business struggling to increase profitability?

Currently witnessing a dynamic business growth while undergoing downsizing and hiring freezes

Agree that Consumption based IT is a good strategy for gaining efficiencies and reducing costs

We prefer to dedicate resources to our core competencies and mission critical processes rather than IT related activities

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The evolution of the IT landscape and the advent of newer service delivery models

The complexity of internal IT can often force in house IT staff to spend most their time

reacting to problems rather than bringing in new business processes or provide

advanced functionalities to existing processes. The traditional customer/service

provider relationship assumed that the service provider was selling a product and

ongoing maintenance & management would be part of a “do-it-yourself” solution.

Today’s networks are increasingly distributed so the IT assets being managed are

generally geographically remote from the IT centre and staff. The complexity and the

corresponding costs of monitoring and managing this expanding infrastructure is

increasing, and the costs of system down time are increasing. Also, management of IT is

not limited to just IT infrastructure, but is expected to deliver consumer-inspired user

experience. This raises a need for unified dashboards that replaces traditional

monitoring tools in order to monitor business services, applications and provide

analytical insights to react faster to problems.

Enterprise data centers are going through an evolutionary transformation. The advent

and proliferation of virtual infrastructure, is the anchor of this transformation. The

management of virtual infrastructure has become the next big obstacle for data center

managers. The integration of existing management tools is not mature enough to satisfy

the long-term demands of a highly dynamic, service-led data center. Virtualization-

specific management tools require integration with higher-level management or

orchestration frameworks. Lastly, the management across virtual infrastructure and

physical infrastructure that comprises of servers, storage, and networks is still not

integrated or automated. This integration is essential to achieving the dynamic, pooled

resource environment that is the solid foundation of IT service management and data

center transformation, in simple words – Consumption based IT.

Over the last several years, private cloud solutions have grown in number, concerns over the public cloud have

diminished and hybrid cloud is partially going main stream

The questions that most of the IT leaders have are

Where does each application belong, where do you source new applications- in the private

cloud, public cloud, hybrid cloud or the organisation’s legacy environment

Which model can provide us the best performance, cost and flexibility

How can you design today’s cloud in such a way that it will be compatible with the models that

will arrive in the next 2 years?

IT service management automation forms the underlying structure to private and public cloud architectures effectively providing scale-out, dynamic data center transformation. This is a pre-requisite to provide end-to-end provisioning of workload, server, hypervisor, network, and storage against a service delivery objective. Once the service is commissioned, ongoing monitoring and management of the hosted infrastructure must be conducted in an automated fashion. When sudden-demand conditions are detected, there should be automated workload and resource balancing or tuning to return the workload or service to expected service levels. The ultimate goal of data center transformation is using IT service automation to dynamically allocate workloads across cloud virtual and physical resources based on business-level objectives, achieving economies through usage based models.

Current complexity challenges

The Road to evolutionary transformation

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Consumption IT oriented Managed service provider as your IT Enabler and trusted partner for continued

business sustenance

Over the last two decades, the IT operations team has been struggling to provide

business team the required services on time. As business requirements

have mounted, generations of technology have been implemented side by side.

This resulted in data centers characterized by complex, static physical

configurations, incomplete virtualization efforts, and multiple silos of

management. But the emergence of better virtualization management tools,

converged infrastructure, multiple user operating systems, multiple workloads

platforms – public, private, hybrid, and hosted data centers has opened the

potential to create “Software Defined Data Center (SDDC)” a comprehensive

abstraction of a complete data center.

Exhibit 2: The potential impact of SDDC

The measure of the IT department’s success is about the service quality delivery speed to the business stake holders. For many organisations, this requires a transformation in how they operate and conduct businesses. Enterprises therefore need to address the fundamental assumptions of how IT is managed, delivered and consumed. But the most important decision centres on being able to give importance to not just the right cloud model, but also on the ongoing support model to sustain the solution deployed and provide the desired customer experiences. This creates a strong need for the right managed services partner.

Critical decision factors for Consumption IT oriented Managed Service Partners

Integrated architecture

Cloud computing

Workload-centric architectures

Single Manageable Domain

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Although SDDC is the vision that many enterprises today have, there are substantial challenges to achieve this

vision:

Skill gaps in the internal IT team to sort the challenges in this journey.

The significant challenge is the legacy mess consisting of applications that are

difficult to virtualise or whose owners want them to run on dedicated physical

servers only. This haphazard fashion of virtualized resources and legacy

applications has led enterprise data centers to in effect bifurcate their

management and architectures, leaving large fractions of their infrastructure

in two worlds — the virtual and the physical.

Also, there is the emergence of new cloud based platforms that the

enterprises want to leverage in sync with their existing systems.

How does an enterprise benefit from Consumption based IT services?

Focus on Core Business: Free up valuable internal resources, enable

them to work on more value-added work Increase operational efficiency and scalability

Lower Total Cost of Ownership: Ability to redirect cost to other strategic projects Better visibility to IT costs with pay per use price

models

Enhanced service levels: Ability to make the entire IT Infrastructure

accountable Enhance service level visibility through

automation and proactive management

Faster Time to market: Increased flexibility and responsiveness to your

business needs Improved customer satisfaction since IT is

provisioned on demand to enable quick services

Leverage disruptive technologies faster: Execute corporate strategy and top imperatives

with newer technologies with access to expertise

Stay ahead of competition with implementing innovative projects with provider’s expertise

Implement business productivity metrics: Allow IT to automate business processes Able to measure IT downtime in terms of revenue

loss.

Business benefits

This is the opportunity that Frost & Sullivan envisions for enterprises to engage a consumption IT oriented managed service provider who can take ownership of your present state of IT systems across

“plan-build-run” continuum to transform it to a future scalable software defined data center, with delivery models being a combination of OpEx driven, consumption based IT models

The result is combination of IT system that has left a hole in the ability of automated service provisioning.

In the consumption IT oriented managed services model, the service provider takes complete ownership across “plan-build-run” continuum of your IT strategy.

The enterprise has a choice to own or not own the IT assets, delegate the responsibility of a simple router up to a business outcome to the service provider and hold the service provider responsible to provision the required IT needed to achieve any new business decision.

The language that an enterprise can talk to the service provider can be about launch of a product / grant access to a particular website for 24/7 demand /Opening a bank account and the IT infra as well as the business process needed to achieve this outcome is taken care by the provider.

This ownership gives power to the service provider to think big, innovate and outperform at their own right to help an enterprise win in the market place.

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Focus on Core Business: Place workloads in platforms best suited for

them -public/private/hybrid/on premise –helps achieve cost reduction and strong foundation for future IT architecture

Increase operational efficiency and scalability

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Integration and management of legacy systems Beat obstacles of process integration or

incompatibility with the provider’s expertise Cost to run application decreases as more

application are added.(economies of scale)

Technology benefits

More transparency, flexibility and predictability Transparent Consumption meter will lead to

transparent costs Ability to quickly change solution portfolio

driven by changing business strategy Cost of introducing new services for now and

future can be clearly outlined Increase operational efficiency and scalability

Adherence to accurate sizing of infra rather than experience based estimation The enterprise pays only for the consumption and

hence accurate sizing of infra will be done Vendor agnostic solutions that solve the business

need will be deployed rather than being biased by specific vendor’s solutions

End to end management- legacy/new systems The service provide will be willing to assume

risk and “pain-share” The underlying legacy hardware or applications

will be given a vendor agnostic and a holistic approach for management. The main objective would be to achieve a business outcome rather than just infra uptime

Outcome rather than just infra uptime and scalability

End to end management- legacy/new systems The variety of demand, seasonal peaks, trough and

events that trigger volume spikes are understood Historical data of the pattern of IT demand will be

studied and taken to consideration to design your future infra.

Coverage for compliance, security and standardisation Meeting regulatory compliance requirements

and adopting standardisation of processes across global locations can be made simpler.

Security policies specific to your industry/location/customer/any other stake holders can be implemented faster.

Management of various delivery platforms in a single window Service provider can manage holistically all delivery

platforms spanning across public, private, on premise and any other legacy systems on a single window to deliver the business outcome as per contract.

This concept creates an infinite data centre or a borderless IT

“The collaborative capabilities and behaviours of both enterprise and service provider of IT services will determine the extent of success of the Consumption based IT services delivery. Establishing effective governance mechanisms and managing change in a planned manner are also critical requirements for

success”

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Transformation Journey of managed services provider – Transition from managed infra to managed

outcome, from fixed contracts to consumption based IT contracts

Exhibit 4

“Service providers are moving from simple risk-free contracts to end to end ownership contracts as shown in the exhibit above”

Exhibit 3: Roadmap of managed services provider’s service catalogue – from core infra management to software defined data center. The commercial model roadmap has gained new flavours that have extended from fixed price to consumption based pricing to gain-share.

Core systems (servers, storage, network)

Virtualisation and Orchestration management

Multiple Platforms management – Public,

Private and Hybrid clouds

Application integration

Software defined data center-managed outcome

Time & material contracts

Performance based pricing

User based pricing

Application based price

Gain-share

Fixed price

Deliverable, Scope and workloads are well defined

Repeatable services linked to applications

Commoditized services centred around users

Need a dramatic improvement in processes and want a strategic partner to lead this project

A varied range of services is expected

Large work volume but requires low per-unit effort

Common application maintenance, testing, infrastructure and business process services contracts

Transaction based pricing

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New application roll out cycle in the present is much faster than how it was in the future due to dynamic

business decisions. This calls for quick evaluation of numerous existing technologies to make right decisions.

Hiring skill sets to test and manage various new technologies can be very expensive and tedious.

Getting the legacy and new platforms in your enterprise to seamlessly connect and provide the service

quality that business expects in limited time can be expensive if provisioning and management is not

automated at every level.

Therefore a managed service provider transitioning to Consumption based IT services provider can help with

the end to end IT strategy plan, build scalable architectures and manage the daily operations. A managed

service provider is thus moving up the service catalogue from not just managing the core infrastructure, but

building an automated software defined architecture for your enterprise by leveraging the combination of

new cloud platforms and legacy systems, delivered through OpEx based models

Service providers are signing up managed services contracts in different types of outcome based commercial

models depending on the nature of processes that the enterprise runs. The commercial models in trend are -

per user/per device/per outcome based pricing which is directly related to consumption pattern.

While the right timing for your enterprise to involve a managed service provider may still be under internal

discussion, Frost & Sullivan believes that it may severely risk your enterprise in relative to peers who embrace it

early.

“It is important to know that the foundation that was laid in the past is the present day legacy systems that may be not be very flexible due to traditional architectures and the foundation that is laid for the

applications today will be the future. Hence, each additional step taken today has to be right”

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a) Thought leadership and transformation services: Providing organizations with thought leadership is a

critical anchor to Netmagic’s consumption driven IT managed services. Netmagic leverages its heritage

and extensive skills in data centre managed services to help organizations develop road maps and

blueprints that align their data centre architecture with business objectives. A key element of this

approach is Netmagic’s ability to assess, design, and implement these capabilities utilizing deep

knowledge in technology, process, and industry with the goal of ensuring effective transformation,

uninterrupted business operations, and operational excellence.

b) Modularity via services catalogue: Netmagic provides its consumption driven managed infrastructure

services as a set of modular options such as colocation, managed hosting, cloud solutions and other

auxiliary services such as managed security, disaster recovery strategy in order to approach IT holistically.

Netmagic also offers to organizations the ability to select only those micro elements across managed

services, such as basic monitoring, security management, or cloud services , where in enterprises can align

their requirements at a more granular level with the goal of consuming just what they need and

optimizing their investments while minimizing their costs. Additionally, organizations can utilize services

that help localize their needs to specific geographies, where critical regulations might need to be met, as

well as personalize services that can support role-based needs as determined by individual users, such as

with the increased adoption of mobility and bring your own device (BYOD). Enterprises indicated that a

key reason for working with Netmagic is the flexibility of the contract and excellent after sales support.

c) Depth and breadth of capability: Netmagic’s services support a full range of multivendor IT

environments, including data center infrastructure (e.g., servers, storage, databases); workspace

environments that include traditional PCs and laptops as well as smart devices (e.g., mobile phones and

tablets); business continuity/disaster recovery (BC/DR); and a comprehensive set of network

environments. Netmagic has partnerships across technologies with multiple OEMs and also supports

platforms across IT spectrum (OS, Database, Network, Storage, Virtualisation, Web application servers,

security, SAP-basis, Mail platforms). Additionally, these capabilities align with emerging technologies and

address disruptive service delivery models involving cloud, mobility, social media, and analytics. Netmagic

will also act as the single point of contact (SPOC) for all customer requirements, thereby eliminating the

potential challenges that arise for customers that are managing disparate vendors.

d) Industry specific expertise: Netmagic’s experience across various industries has given them the

perspective to provide infrastructure that is custom sized to your specific industry based on the workloads

that would be run. Also the future trends in the industry and other influential factors are kept in mind

while designing the enterprise’s data centre solution. What powers their efforts on this unique journey is

the faith and support entrusted by market leaders like Ratnakar Bank, Flipkart, India Infoline, Thomson

Reuters, H&R Johnson, Hungama, Yatra, Eureka Forbes, Mahindra Holidays, C-Edge and others. The

breadth of customers cuts across diverse industry verticals including banking and financial services,

Insurance, e-commerce, Healthcare, Manufacturing, Media & Entertainment, IT & ITeS, Logistics,

Hospitality, and Education.

e) Global delivery and localisation: Netmagic provides organizations with a global footprint of data centres

by which it can ensure that services are provisioned with consistency of quality and integration of multiple

offices across geographies with standardisation of IT architectures. Services are localized to specific

Profile of Netmagic as a service provider – Strategic differentiators

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geographies where local regulations often need to be met. The global data centers are built to provide

maximum uptime and business continuity.

Key Highlights of Mumbai Data center 5:

• 300,000 sq ft Data Center space in a 'state-of-the-art' facility, with space for more than 2,700 high-density

racks. Has full access to 20 MW of power (expandable to about 28 MW) and cooling facilities

• Apart from multiple UPS, backed by batteries, there are gensets that can ensure 48 hours of nonstop power

on full load. The gensets are backed with four underground tanks in the premises that hold 200,000 litres of

diesel at any given time, to face any emergency

• Being carrier neutral, Netmagic's DC5 has abundant network connectivity from all the major service

providers, resulting in adequate redundancy on this front. Add to this, 4 distinct fibre paths ensure reduced

latency and better network performance

• Comprehensive physical and logical security arrangements: CCTV camera surveillance, entry barriers and

man-traps at DC floor, Access Card / Biometric authentication for entry, etc. besides others

The Global- Netmagic Advantage:

• Built to the exacting global design standards of NTT Communications (the largest Data Center provider in the

world; managing over 140 Data Centers worldwide), defining a higher level of redundancy and uptime for its

IT and other deployed equipment

• The latest in global Data Center technology in India, with no dearth of space for future business expansion

• Benefit from Netmagic's expertise in serving the unique IT infrastructure needs of the Indian enterprises for

over 17 years and NTT Communications' globally benchmarked engineering and technological practices

• Support for custom configurations of compute, storage, networking as well as power, cooling and type of

deployment (custom high density racks, caged rack, etc.)

Netmagic’s New Data Center in Mumbai – Global Scale Centre for Delivery of Consumption driven IT

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The Last Word:

What it means?

• If your enterprise has a heterogeneous mixture of multiple legacy systems that exhibit deep

seated reluctance to run new business models, the Managed service provider turned

Consumption based IT Service provider can take over to study the environment and bring the

best out of old systems along with new platforms, through optimal combination of CapEx – OpEx

based models, to help you achieve the desired outcome. The solution can be a combination of on

premise, public, private and hybrid cloud technologies that will be provisioned on a single

management console.

• This transformed service provider can manage your multi-vendor IT assets that spans across

multiple geographies to bring about standardisation and then automate IT provisioning to an

extent that every new business requirement can be addressed faster, eliminating manual

resource provisioning.

• Evaluating multiple technologies from multiple vendors and integrating new technologies by your

self can create integration or performance gaps. However, a consumption based IT service

provider will wrap the most appropriate technology around each workload to provide unmatched

performance, security, or potentially both.

• This scenario is not to imply that the IT and security organizations can retire. On the contrary,

they are re-purposed to focus more on how IT and security technologies can be put to use in

support of strategic business initiatives. Also, they become liaisons with the MSP to ensure that

the needs of the business are understood and followed through by the MSP as he transcends to

becoming a Consumption based IT service provider

Critical success factors to business transformation is future proofing your managed service strategy

Frost & Sullivan believes that “A Consumption based IT Service Provider can provide more incremental value in many forms than what an enterprise can achieve on their own since the solution deployment

approach will be holistic and will be subject to continuous improvisation through automation.”

“This consumption oriented MSP ownership concept will create a borderless IT .This ownership will allow the MSP to not just build-run, but can be part of your strategic decision making to outline what

the technology implication would be to a business change.”

“In a manner of speaking, the MSP’s roles transform from extensively operational to leadership; and, positively, the business directs more of its in-house talent into contributing to those aspects of the

business that differentiate itself in the marketplace”.

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Appendix

About Frost & Sullivan

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