Changing priorities

Businesses are trying hard to find a way to manage their IT better during the current downturn. This in turn is keeping infrastructure management providers busy in chalking their strategies to offer more value for money to enterprises and manage their IT in a better way. CXO level decision makers in all organizations are relooking at optimization of their existing IT infrastructure, and are also looking for ways to get more out of less. A lot of companies are looking at cutting the cost of supporting their operations and are looking at outsourcing and out-tasking their operations.

Aditya Singhal, country manager, infrastructure services, IBM India/S Asia feels that customers are redefining their priorities. He says, Couple of months back, customers were looking at addressing the growth issues. Right now, the biggest challenge is how we can do more with less. Different people are looking at IT in different ways. Some of the organizations are looking at how to cut down the cost of IT operations because the budgets have shrunk.

Similar sentiments are shared by KS Ganesan, CTO, Microland, While all of us are accepting the slowness in growth, reality checks on how IT is delivered will only lead to IT optimization models and ensure that costs are kept down. This will lead to service innovation. Hence, efficiency improvement models will take center stage, and engagement models will be tuned to reflect this thinking.

Would there be a freeze on spending by CIOs that in turn would impact the businesses of infrastructure management providers? Answers Girish Krishnamurthy of Kaseya, A CIOs nightmare is to keep the infrastructure working appropriately, and given the current scenario, they dont want to make additional investments or increase capital expenses.

From Onsite to remote

A lot of transformation has taken place in terms of how we deliver services to our clients, says Singhal. He talks about the mix between onsite and remote: Considering the complex nature of the infrastructure services, it is difficult to quantify the mix. But there is a clear trend toward remote infrastructure management, though the existing arrangement can be termed as a hybrid model. Singhal also attributes increased traction toward remote management to the reduction in cost of telecom infrastructure and increased reliability of the network resulting in better service levels.

Wipro Infotechs revenue mix from its domestic infrastructure management gives a good indication of the shape of things to come. Eighteen percent of the companys IM revenues comes from remote management while the rest is from onsite services. Prakash MS, director, ITO, Hewlett Packard, adds to the onsite-offshore debate: The onsite-offshore split depends to a large extent on the type of service being delivered as well as the maturity of the service provider, the robustness of the tooling fabric and discipline around process adherence. Typically, a 80:20 offshore:onsite split in infrastructure technology outsourcing can be easily achieved.

In fact, HCLs 80 percent of revenues are from remote infrastructure while the rest of the 20 percent are onsite, but on specific customer preferences.

From large to small

One encouraging development is that infrastructure management is now percolating beyond the large enterprises, with some of the enterprises with regional focus also outsourcing their IT infrastructure. A case in point is the five year IT outsourcing deal that IBM has signed with Madhav Nagrik Sahakari Bank, a leading co-operative bank in Rajasthan, based in the small town of Sirohi. IBM will host and manage the banks IT infrastructure and help it reduce the capital expenditure. It will also enable services like Internet, Mobile banking and ATM, which till now were restricted only to larger pan India banks.

Challenges ahead

Both vendors and enterprises are looking at the future with cautious optimism. Predicts KS Vishwanathan of Microland, We are entering into a cycle starting 2009 where we are not going to see a growth curve which we saw in last five years. This will lead to transformation of already built IT environmentsmoving into technology areas like unified communications, virtualization, remote operations, better management of assets and improving utilization of the existing infrastructure. The broad business theme will be optimization of IT.

The talent available for providing real time services would be a challenge. The IT personnel have not been trained to handle the real time situation and the skill matrix is also changing. Retaining this resource is becoming a big challenge. The infrastructure business model has to change and enterprises have to move toward a model where the IT has to be done automatically. Most of the vendors Dataquest spoke to believe that remote models can move toward cloud once the offering of infrastructure as a service becomes mainstream. Cloud though has its inherent weaknesses in terms of outage and the kind of impact it can have, as has been seen in the recent Gmail blink.