Wide area network (WAN) managed services have been an option for enterprises for decades, but in recent years they've become much more popular, even in markets like the U.S. where they've traditionally lagged self-integrated
Enterprises offer three benefits to justify a decision to deploy WAN managed services. Two benefits of WAN managed services -- the conservation of capital costs and reductions in support/operations cost -- are the normal outcome of increased cost control pressures placed on network planners. The third benefit is more subtle, but in many ways it's the most critical question of all in WAN managed services: Which is the optimum provider for WAN managed services for my business? The likely answer and third benefit of WAN managed services is increased accountability and lower business risk.
Every project is based on a few critical assumptions, and in WAN managed services, the assumption most critical to validate is that the provider understands the requirements the service must meet and is prepared to meet them. This means that the first test of managed service provider (MSP) credibility is to answer the question: Does the MSP have specific expertise in supporting the business application and communications goals of my business? A banking application of network services is a network application to be sure, but first and foremost it's a banking application. An MSP with banking-specific application experience better understands your needs and is more likely to have considered all aspects of those needs -- even some you may not have considered -- in proposing a managed service relationship.
This first critical assumption is the dividing point between network-centric MSPs and IT-centric MSPs as the most credible source of services. If your WAN needs are framed totally in network terms, which is likely to be the case if you have a stable network deployment that you're looking to outsource to an MSP provider, your best choice for an MSP will probably be a network operator. On the other hand, if you frame WAN needs in terms of application performance at a high level, you are probably going to be happier with WAN managed services from a large IT vendor or integrator.
A second element in choosing WAN managed services, and the one that is likely to have the most significant impact on pricing, is how the financial risk is balanced among the service components the MSP is guaranteeing. A managed service whose cost is 80% WAN connectivity and 20% hardware is one where your greatest cost risk comes from the WAN services. It makes sense to assume that a WAN service provider would charge less to manage WAN services that it provides itself, and thus would be likely to represent a lower cost to you. Where there is a significant equipment or software cost component, those providers are probably a better source. The firm with the largest financial component of your service is probably the most credible provider.
The third factor is the level of network integration skill demonstrated by the candidates. WAN managed services are created from a combination of elements, and a key requirement for an MSP is to be able to integrate and manage those elements as a cohesive whole. Lack of experience in integration creates a risk that the MSP won't be able to manage the finger-pointing that's inevitable in multi-vendor, multi-carrier relationships. An MSP that has a well-managed integration group is likely to produce the best service results for you.
As a practical matter, most enterprises draw managed WAN services from one of three sources:
- A service provider
- A managed service provider
- An IT provider with a professional/managed services business
While the answers to the three questions posed earlier represent the best way to make a final decision, prospective WAN managed service buyers may also be helped by the overall experience of their enterprise peers.
Where managed WAN services are needed in a fairly contained geography, most enterprises select a WAN provider for their managed service needs. Such a provider has the resources and skills needed to provide a meaningful service guarantee, or service-level agreement (SLA) , at an optimum price.
The need for an SLA is particularly real if several WAN providers can offer the services needed completely on their own network. Enterprises also report that a WAN managed service provider in a very interconnected market like the European Union may be the best choice, even if the network spans multiple countries.
Most enterprises that select equipment vendors or IT vendors for WAN managed services say their motivation is one of special application needs. Where the network decision is tightly linked to application needs and where it will be difficult to separate the behavior of the application and that of the network, a single guarantor is the logical choice.
MSPs that are neither carriers nor IT/equipment vendors are selected most often where there is a need to integrate a managed service into a broader IT and network strategy that is already in place. In some cases, the enterprise may want to outsource its own current network and combine it with a managed service; and in other cases, it may simply need to integrate the two very tightly. The more providers and vendors that are involved in this kind of project, the more likely it is that an independent MSP will be the best choice as a partner.
All managed services are only as good as their contract, of course. No matter who the provider may be, it is absolutely critical to get all of the key issues of service performance, problem response, and financial guarantees laid out in contract form. It's worth the time to write a solid request for proposal (RFP). This must include specific mechanisms for monitoring the parameters of service that are being guaranteed to identify a fault or failure.
Managed services outsource both technology and accountability, and only a contract can ensure that both these outsourcings are successful. To ensure a successful WAN managed service buy, continue reading part 2 of this article: Managed WAN services best practices: How to triple the odds of success.
About the author:
Tom Nolle is president of CIMI Corporation, a strategic consulting firm specializing in telecommunications and data communications since 1982. He is the publisher of Netwatcher, a journal addressing advanced telecommunications strategy issues. Check out his SearchTelecom.com networking blog Uncommon Wisdom.
This was first published in March 2010