Where is South Africa in terms of managed services? Will business applications become hosted-only? What effect are the telcos having? ITWeb recently brought together a selection of industry experts to debate these and other issues.
Present were: Greg Montjoie, manager for hosted solutions at Internet Solutions; Jeremy Waterman, MD of Softline Accpac; Abdul Mohammed, client solution executive at IBM Global Technology Services; Gary Lawrence, country manager of CA Africa; Leslie Forsman, business development manager at Avaya; Deon Scheepers, technology solutions director of Atio; Gopal Govinder, director of business development and professional services at JC Communicom; Fairoz Jaffer, CEO of Abnoba Information Dynamics; Steve Dalgarno, GM of Light Edge; Julian Liebenberg, divisional executive for sales and marketing at Business Connexion; Jacques du Toit, MD of Orion Telecom; JC van Niekerk, outsource executive at GijimaAst; and Garon Cumberledge, manager of managed services at Bytes Technology Services.
ITWeb: How mature is the local market for managed services?
JC van Niekerk, GijimaAst: We`re seeing that economic realities are forcing companies to go down that road. People would rather have less technical resources and work with companies that can give them peace of mind.
Garon Cumberledge, Bytes Technology Services: If you approach a managed solution as a solution rather than product-specific, both the vendor and the client get the benefit. It`s not a client`s core business to deal with 12 different vendors.
Fairoz Jaffer, Abnoba Information Dynamics: Skills shortages are an issue. We all have vacancies, as do our customers and competitors. That means customers can`t hold on to staff, so they say: let`s rather get someone who has that in the pool already and let them manage it. The other side is that with lower margins, customers look at what they`re really doing. Is it to serve their clients or to manage a large IT infrastructure?
Selective outsourcing is for the mature customer.
Abdul Mohammed, client solution executive, IBM
Gary Lawrence, CA Africa: Three to four years ago, organisations were looking to outsource their IT environment primarily based on cost reduction. Now we`re seeing outsourcing for additional value. Our customer base is asking how outsourced environments can drive future benefits. SLAs are big here, but you need to make sure the outsource agreement keeps up with the times. Previous agreements often stifled the customer because they were designed in such a way as to reduce cost and cost only. We have instances where customers are using our software that is five years old and they won`t upgrade it because it`s not in their interest. We need to overcome that sort of attitude.
ITWeb: How specialised will managed services become?
Greg Montjoie, IS: There is a cut-off point for providers. If you get too specialised, then it won`t allow you to leverage off other technologies. You can become an island. On the client side, there is a barrier to entry for SMEs to come in and deploy their own network, for example. By outsourcing it, they`re effectively leveraging an economy of scale that already exists.
Julian Liebenberg, Business Connexion: I think selective outsourcing is on its way out because the divisions between desktop, mobile and laptop are diminishing. In two years, all devices will be mobile. Should a customer pick a network provider or an IT outsource provider? If the servers are in the data centre, that`s right in the middle of the network. Customers will drive us providers to being a single provider. Perhaps we`ll become more of an aggregator. Customers also need to find a way to trust their providers. If I was a customer, I would pick a service I could outsource and if the provider proves himself, give him more business over time.
Van Niekerk: You sum it up very well. Customers want a partner they can trust and are willing to work with. Previously, outsourcing was about wresting control away. Today, it`s more about collaboration.
Abdul Mohammed, IBM: Selective outsourcing is certainly for the mature customer, but it can only be done if the service elements have been properly defined. What exactly is it they wish to outsource? Selective outsourcing will always have a role, but only for those departments that can break their infrastructure into components properly. It`s very important that you can plug into one service provider today and plug into another one tomorrow. That comes down to architecture.
ITWeb: What services are best suited to managed services?
Lawrence: One of the things that customers are asking for is a window into seeing how good their arrangement is: portals and dashboards and so on. How to build up trust? Give them a window so they can see for themselves.
Jacques du Toit, Orion Telecom: Small and medium companies want a service that just works. We no longer sell on features, but on the service. The top end of the market is totally different: the big corporates are happy to pay for a service, but they say: `That Cisco box is mine and it stays on my premises.`
Lawrence: I see that all the time and I find it amazing. The big problem then for the outsourcer is that they have to invest in a dozen sets of skills and can`t get an end-to-end view of the customer`s environment. One of the reasons is that the CIO has been buying the stuff for years and has existing relationships with vendors, so he doesn`t want to give it away. You never hear the HR manager saying: `You will use this particular payroll.` He doesn`t care - it`s not his business. But the CIO does care because it is his business and, therefore, he wants to give it away but never quite does it.
Customers want a partner they can trust.
JC van Niekerk, outsource executive, GijimaAST
Liebenberg: One of the inhibitors to a total outsource is that many companies only want to outsource their problems and that`s where relationships get ugly. If a network is a pain and gets outsourced, then the poor network provider has to try to figure out what`s been done wrong for the last 20 years - and then fix it.
Montjoie: In the US and UK, if you ask for a service and then try to cannibalise it, the provider will put his foot down and tell you how it is. This is how we sell it and, if you don`t like it, you can go elsewhere. In South Africa, we`ll do almost anything to keep the client happy. Perhaps this is a function of the maturity of the providers. We`re too scared to put our foot down.
ITWeb: Are the telcos moving into this space?
Gopal Govinder, JC Communicom: We`ve done a lot of work for large telcos and what we find is that they are ideally positioned to mirror the service provider companies. Broadband, voice, video and data - telcos are the ones that own those technologies and are now moving into developing operations centres for services such as backup.
Du Toit: Telcos want to own the customer because that`s where the value lies, but they don`t understand what it takes to keep him happy. Customers are getting smarter; they don`t want to deal with 12 people. That means the best-positioned companies are the aggregators. Take a bit of MTN, a bit of Vodacom, a bit of Telkom and offer a service that way.
Cumberledge: A client is looking for value-add. No more are there promises of a holiday to the coast. The client wants to see a business saving or a better deployment.
Govinder: As telcos reinvent themselves, they will be looking for providers to add services to what they have. As such, companies like MTN are very well positioned.
Liebenberg: The service aggregator is becoming the real outsourcer, which is why I said selective outsourcing was on the way out. We have customers with 20 to 30 providers, but they don`t even know they have that many because we manage it for them.
Summing up
True multi-sourcing, according to Gartner research VP Chris Ambrose, is a strategic discipline that an organisation adopts to enable it to choose the best internal and external source of the services it needs to advance the business.
"Just having a lot of vendors doesn`t mean you are multi-sourcing or that you are effectively multi-sourcing," he states.
We`re too scared to put our foot down.
Greg Montjoie, manager for hosted solutions, IS
In the local market, true instances of multi-sourcing are rare, and local providers and end-user organisations are going to need to get their collective heads around what it is and why it can add value if they are to keep up with global trends in this market.
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