Return to centre

28 Nov 2007

Key to any managed services offering is an off-site data centre and Ireland is well served on that front. According to some estimates, there are more than 100 facilities offering basic services such as hosting of web servers or email systems.

Within that group, a top tier of providers has emerged, with the infrastructure to support very complex IT operations, keep them running and provide highly available enterprise-class IT services to a level agreed with customers.

Some suggest we may be reaching a tipping point where the wider market is finally realising the benefits of this approach, after what everyone would agree has been a long gestation period. The reluctance of many organisations to countenance handing over their IT to an outsider has diminished in the face of sound business sense. As for the supply side, after years of establishing themselves data centre operators and managed service providers can now boast what every Irish politician relies on: a track record.

Consequently Maurice Mortell, chief executive of Data Electronics, says the last 18 months has seen a significant upswing in the numbers of companies now using a managed service or outsourcing elements of their IT infrastructure to a third party. What has changed, he believes, is both sides have grown up. “There has been a change of mindset about the ownership of IT, to thinking of it as a service rather than an asset. Instead of having a big capital cost and owning the infrastructure, organisations can pay a monthly fee and get rid of a lot of the headaches they have now.”

Mike Davidson, business development director for enterprise solutions with Eircom, suggests handing over some portion of IT to a third party is being driven in many cases by outside influences. “Increasingly, there’s a requirement for compliance with industry regulations. There’s a discipline around off-site retention of core data. Dual siting with backup addresses that. Using a partner data centre provider gives an extra level of resilience that’s important.”

The typical managed service customer falls into one of three categories, says Davidson. One needs an application provided to them but doesn’t have the skills in-house to do so. The second needs an application hosted and because it is not critical to how they run the business, they don’t want to do it themselves. The third runs and maintains the application but for reasons of resilience and backup, has the data mirrored at a second site.

According to Tanya Duncan, managing director of Interxion, demand is coming from all sides of the business spectrum – proving that the managed service model is suitable for a wide range of organisations. “There’s an even split of customer profile, from corporates, enterprises and financial institutions, down to startups with one server. It’s a real mix,” she reports.

One of the key benefits to partnering with a data centre operator is scalability. These facilities are purpose-built to hold large amounts of hardware for multiple customers, with the necessary support structures in place, from redundant power supplies to air conditioning and available floor space – the kinds of commodities that are generally at a premium in city centre office developments. “Quite often, organisations will have their IT infrastructure in-house in a small computer room where there isn’t much room to expand. Being in a data centre allows you to grow a lot more freely,” Duncan points out.

In addition, the latest technology often needs a level of attention and management that an individual enterprise may not be able to dedicate. “Blade servers need specialist air conditioning systems and require lots of power, so companies with an expertise in this area can far better cater for those needs. The client can concentrate on their core business and no longer worry about their server going down,” says Duncan. From a business strategy standpoint, having capacity management handled by a third party also makes sense, she adds. “Having proactive management in your systems allows you to plan better. You’re able to predict what your needs will be into the future. You’re not firefighting. More predictability allows you to operate more effectively.”

Mortell says that while many data centres provide space for hardware, this area is commoditised and the discussion for customers revolves purely around price. Where providers such as Data Electronics and others look to differentiate themselves is in providing value-added services that require technical staff on-site. The typical range of skills might include security, database, operating systems, networks and even applications such as CRM. Mortell advises that for the more complex undertakings around management and monitoring of infrastructure, prospective customers should ask to see references from other customers with similar requirements. “Look at what you’re trying to do before you outsource. Send out a request for information so you’re as educated as you can be before you get into a price discussion. Then pick your providers and have a conversation with them,” he says.

Contract duration naturally varies but lately it has tended towards the upper end. Three years is a standard minimum and in some cases five- or 10-year deals are not uncommon, says Mortell. “There’s a large commitment on both sides,” he points out. Ultimately the decision rests with the customer, but it doesn’t have to be an all-or-nothing approach. Many organisations start small and as they become familiar with how the managed services model works, they can apply it to other areas of their IT. “On every engagement we say, ‘only let go what you’re comfortable with’,” Mortell concludes.

By Gordon Smith