Telecommunication equipment manufacturers predict that sooner or later carriers’ business will face with telecommunication services and outsourcing convergence. Offering corporate clients complex services with guaranteed quality level, including a liaison channel and the equipment necessary for its use, technical support, and telecommunication workers will be able to expand client base and increase revenue.
Telecommunication vendors traditionally stand as one of the driving forces of the whole branch development. To increase production volume and nomenclature they have to provide new technologies, solutions and concepts, which in their opinion, will allow telecommunications market to make a step forward. Thus some proposals are caught with the market players immediately, and others have to wait for the moment for a long time. Managed Services concept concerns just the second case. Formulated several years ago, it hasn’t got wide circulation yet in Russia. However there is a background for that, therefore several large carriers examine Managed Services model, mentally trying on it to their business.
The uniform in three
Managed Services Concept stands for telecommunications services and outsourcing merge, when a provider offers clients not just a set of various liaison channels, but the whole range of services: from necessary equipment lease and its installation on own technical platforms up to the telecommunication infrastructure outsourcing. At the same time equipment maintenance can be done distantly within functionality implied in the technical solutions. Thus the carrier can simultaneously become for its clients a services provider, an integrator and an outsourcer and guarantee the certain service level.
For the Manages Services Concept development equipment producers provide specialized technical solutions. In particular, in the Cisco product portfolio includes equipment and the software, which can be supervised and served distantly by provider’s personnel. These solutions are divided into parts according to the tasks that they are intended for: managed wire and wireless networks, managed unified communications, managed security means, managed data centers, managed applications, etc.
Upon that most of the Cisco solutions enable to design all necessary IT-infrastructure for small and medium enterprises and for the large company’s branch as well.
Ilya Fedorushkin, Cisco’s Business development manager, points out that Service Level Agreements (SLA) signed with the carrier, in general describe only such parameters as availability, packet losses and data transmission delay within the own network. But modern companies have other needs: not only following any technical parameters of liaison channels providing, but also the guarantee that their business won’t suffer due to any problems with telecommunication infrastructure.
In other words such moments as response speed to the arising carrier’s problems, time to repair etc. should be specified properly under SLA. Oriented to the managed service concept technical solutions enable the carrier to expand SLA terms sufficiently and guarantee to the clients the adherence to these terms.
Though managed services remain exotic for Russia, some carriers already have experience of this concept implementation. For example, Gars Telecom and Orange Business Services have been developing this direction since 2004. “As if for today we manage more than 40% of IP-VPN networks of our clients, including such companies as “BAT Russia”, “Koltso Urala” bank and “Kaspersky Lab”, — Bart Staelens (Director of Strategic marketing, “Orange Business Services Russia&CIS”) underlines. According to him, key demand for working in this segment is inspection in the field of solutions of the major telecommunication equipment producers, and also the presence of advanced technical and organizational infrastructure across the whole country.
“The market passes the establishment phase, some carriers are already ready, the others are don’t, but technological leaders, that promote managed services concept and realize their attraction in the economic, organizational and technological context, will favor this market development”, — Alexander Tvorogov (Director of the Telecommunication sector cooperation Department, “Open Technologies”) sais.
In the nearest time the “Big Three” carriers may join Gars Telecom and Orange Business Services. According to Oleg Stepanov, the Senior manager on development of products and services for business market of Beeline Business, Vipmelcom has certain plans concerning managed services development but it is not ready to announce them yet. Valeriy Shorzhin (IT director, MTS) adds: “At the moment we don’t have such range of services because our company is focused at providing subscribers with mobile communications, but in the nearest future the changes regarding MTS transformation into a universal carrier are possible.”
Market players agree that crisis has created a background for managed services demand increase. Bart Staelens (Orange Business Services Russia & CIS) is sure, that “current economic situation becomes an accelerator of the wide spread of this concept in Russia, because its key advantages include TCO decrease, absence of non-core equipment and technical staff on-site capital commitments, and also a possibility to focus on a key business”. In his opinion there are no serious problems on the way to the practice realization of the managed services concept, we have only mistrust, caused with the lack of the necessary detailed information upon it.
Ilya Fedorushkin (Cisco) is convinced, that: “In the economic recession period the value of the managed services increases dramatically, that is why they’ve got wide spread all over the world, except Russia, where awake relation to IT-outsourcing dominates”. Upon his words the most of Russian companies worry for the safety of confidential data in the systems transferred to outsourcing. And IT departments, in their turn, worry for their own future: if the most IT-cases are passed to the third party, there will be no necessity in these departments. But Ilya Fedorushkin is sure that both worries are vain. The first one is easy to chase away by SLA signing, and the second one doesn’t have a reason: IT department understands the Company’s business demands and knows how to organize IT infrastructure properly, that is why it can’t be avoided, even when part of the secondary IT-cases is transferred to the third party.
Hidden rocks of the service model
In spite of an advantageous economic situation, there is a number of drawbacks reasoned by the specificity and the development level of Russian telecommunication market on the way to the managed services expansion. Oleg Stepanov (Senior manager on development of products and services for business market, Beeline Business) underlines, that “the managed services concept fits the current tendencies, but still remains a concept: market is waiting for the certain decisions, profitable at a price, simple in operation and reliable in maintenance.” At the same time we need to overcome such familiar to Russian business stereotypes as prejudice against strange equipment installation on the own platform, and also necessity to revise staff schedule during the transfer of the help desk function to an external supplier.
In some segments managed services show effectiveness, but there is no exploding development of this concept", — states Michael Sergeev (Corporate Communications Director, Gars Telecom). As the main reason of this fact he finds immaturity оf Russian market: small companies don’t see the economic expediency to change for such form of cooperation with the carrier, and large clients often are ensured that such change will lead to the loss of the situation control. This medal has the reverse, i.e. established principles of work of Russian telecommunication specialists. Large fix carriers are still oriented to the simple and plain form of cooperation with a client — resale of the existing resources. At the same moment nobody’s going to reform business to the service model under the terms of the lack of stable demand for such services. As for the small carriers — they just don’t possess enough opportunities to get specialized solutions and to build efficient system of clients servicing upon the managed services concept. “Managed services concept development in Russia passes the traditional way of the outsourcing technologies”, — Alexander Tvorogov (Director of the department of cooperation with the carriers, Open Technologies) concludes. Potential customers of the service value its technological and economic characteristics, and also risks connected with the control loss of their systems. In their turn, the carriers test the managed services and prepare them for the mass demand.
The carriers are interested in any new services which possess good demand potential and provide the requested level of the profitability. But according to Valery Shorzhin (IT Director, MTS), in the case of managed services everything rests on an opportunity and readiness to invest in this trend, because in order to provide controllability start capital, either for personnel, or for equipment, or for business processes is required. Otherwise, the standardization level of the managed services is too low yet, because there are no enough competitive supplies with a clear mechanism of their pricing and certain quality on the market. The most of the carriers agree that the key moment, that makes the managed services business model inaccessible for the most of the mass audience — medium business, is the high cost on the equipment and software ownership. Michael Sergeev (Gars Telecom) is sure that the managed services market can develop much faster if the cost of the workplace is at least 30% less: “Everything depends on the equipment and software producers: if they realize new pricing algorithms, taking into consideration reality of Russian market, service trends will go uphill”.
Competitors or Partners?
Managed services concept means the carrier’s transformation to a service IT Company, and as a result, invasion into the system integrators’ territory. The example is Orange Business Services’ experience, which has been appearing for its clients as not only telecommunication services provider, but also integrator. “For example, recently we have finished works on IT infrastructure organization of the “BAT Russia” new office in Saint Petersburg, Bart Staelens (Director of the Strategic marketing, Orange Business Services Russia&CIS) reminds.
Upon Michael Sergeev’s (Gars Telecom) opinion, for the consumers of the managed services the game is worth candle only when the whole necessary range of services can be got from single hands. But the integrators, generally, don’t have licenses of carrier activity, and their infrastructure is not oriented to a service support. That is why it is easier for the carriers to develop a new service format, but for these purposes they have to invest into a new resource base (as in hardware and software, as the profile specialists). At the same time all large clients are already pegged by the integrators, which they have arranged long-term partnership relations with. Michael Sergeev predicts that there will be no actual competitiveness: integrators will still be working in the large orders segment, assimilating a new format of managed services; and the carriers will get an opportunity to take SMB segment which traditionally is less interesting for the integrators.
There are also the variants of the development of the managed services concept, when the carriers and the integrators can be partners. Ilya Fedorushkin (Cisco) points out three main models of the managed services providing. At the first case the carrier becomes a single provider of managed services and renders them to a client all-alone. The second model nominates an integrator as a managed services supplier, which includes the carriers’ services into a pack of manages services under an agency contract. Finally, there is third variant, when the system integrator provides the clients the managed services on behalf of the provider under the subcontract.
In Ilya Fedorushkin’s opinion, the last model is more perspective, because it doesn’t require a complicated reconstruction of business processes of the carrier.
In order to optimize expenditures it is easier for the carriers to use the infrastructure of data-centers and system integrators’ services for SLA-terms execution, leaving services transfer within own transport network and all questions concerning relations with the end customers.
Alexander Tvorogov (“Open Technologies”) agrees with his colleague that now it is too expensive and inefficient to do everything themselves. One of the cases that shall be solved by the pioneers of the managed services is the definition of their audience. According to Bart Staelence, Orange Business Services’ experience shows that by today managed services have been required only by large customers with the branches in different cities of Russia. But the format of servicing, when telecommunication equipment is leased to the client, and all necessary installations are made by the carrier’s specialists, may be interesting for the less large companies as well. Oleg Stepanov (Beeline) is convinced, that "Managed services concept is universal and can be implemented to any market segment — from a sole entrepreneur to a large corporation. That is why it is necessary to elaborate proper supplies for each segment.