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Consolidation, centralization change the face of WAN managed services

In an era of tight budgets, a shortage of skilled staff and increasing network demands, WAN managed services are looking better as an option to help eliminate management and support stress on a company's IT department. There are also some definite economic factors in favor of managed service providers (MSPs), including a savings in capital expenditures, since there is no need to purchase equipment if desired, and faster access to upgrades and improvements.

Tight budgets, a shortage of skilled staff and increasing network demands are all good reasons today to supplement in-house WAN optimization solutions with outsourced or managed services alternatives.

However, as managed service provider (MSP) options become more accessible and more easily integrated into existing WAN structures, the outsourced approach is becoming more of a mainstream than a make-do option for companies looking to keep pace with users and new applications challenges.

"There are some definite economic factors in favor of MSPs," said Kurt Johnson, vice president of sales at Virtela Communications, a managed network services provider. These benefits range from a savings in capital expenditures, since there is no need to purchase equipment if desired, to less reliance on in-house expertise and resources, which may both be in short supply at smaller companies.

Large corporations are also attracted to MSPs for "nuisance administration," notes Johnson, which can involve things like asset and licensing management and even regular upgrades of WAN systems.

We usually have to come to a middle ground somewhere in terms of change management since business-level planning impacts applications and usage, as well as the infrastructure that supports it.
Jean Critcher
Solution Director, Business Acceleration Consulting & Solutions IntegrationOrange Business Services.

Managed services premiums, previously hovering in the 20-30% range, have also dropped significantly because of changes in the technology, adoption of pricing structures that are similar to network operators, and the economy. Virtela actually got its start as a virtual network operator (VNO) and continues to play that role, adding network integration and MSP services.

The rise in mobile workers and telecommuters is also having an impact on WAN performance and stirring interest in non do-it-yourself alternatives. "There are a lot of mobile folks out here right now, all over the planet, and they have to be available and connected anytime of the day," said Johnson.

An uptick in the number of consolidation and centralization projects at medium-to-large scale companies, brought on by efforts to reduce infrastructure and make do with current equipment, has also helped drive the MSP business. At the same time, companies have to keep up with such technology trends as cloud computing, virtualized environments and an increase in customized business-critical applications.

All of these elements can create problems for a WAN system and headaches for companies looking to keep up with demands and remain competitive without spending a lot of money or devoting resources that may not be available.

WAN optimization urgency

"There is absolutely no negotiation in terms of capital expenditures," points out Jean Critcher, solution director of Business Acceleration Consulting & Solutions Integration at Orange Business Services. As companies continue to consolidate and centralize resources to reduce the current infrastructure, there is definitely a sense of urgency, she said. "They're trying to get the most out of present equipment, but that doesn't apply if you don't have the right equipment in the first place."

Orange, which is a subsidiary of the France Telecom Group, is a leading provider of global telecommunication services and has been involved in WAN optimization since the late 1990s, beginning with France Telecom's acquisition of Packeteer (sold to Blue Coat Systems) and later Equant, Inc. The company started offering WAN managed services in 2001, primarily using the Packeteer technology, and later working with partners like Riverbed Technology.

With more than 25,000 people in its consulting and managed services organization, and roughly 150 of those specializing in WAN optimization, Orange is definitely the 500-pound gorilla in the managed services space. With its long history, Orange has also experienced first-hand the shift in managed services from the days of large capital expenditures and duplicated systems at branch office locations to today's business environment of consolidated resources, one-time install fees, and monthly charges for soup-to-nuts management and support.

WAN technology providers and partners like Riverbed increasingly rely on MSPs for business because they work with customers to help them use their capital more effectively. In fact, more than 30% of Riverbed's revenues now come from MSP and systems integrator (SI) activities as opposed to direct sales, according to internal sources.

Change management mindset

Many of the companies Orange deals with -- - especially in the pharmaceuticals and financial organizations -- - are focused on change management. Specifically, how quickly can a new technology or technology approach spark a change in a company's IT infrastructure or the way that company conducts business?

"Change management is the requirement on which we are always challenged," states Critcher, who has personally managed Orange's consulting based for the past four years. "We usually have to come to a middle ground somewhere in terms of change management since business-level planning impacts applications and usage, as well as the infrastructure that supports it."

Keeping pace with the latest trends and moving beyond the buzzwords is also important, she notes. Traditional factors like performance and security are always important, but emerging trends like hosted and private cloud computing, and cloud optimization techniques are also critical as companies look to fine tune their networks and remain competitive in a global marketplace.

Essentially, it all comes down to developing the appropriate service level agreements (SLAs) for a client that provides boundaries for applications and performance over a network, but do not dictate how a company conducts its core business.

"Ultimately, it is Orange that is responsible since we are pulling the whole thing together," says Critcher, pointing out that the application s SLAs developed by Orange are a major differentiator.

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