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Managed WAN services best practices: How to triple the odds of success

Before procuring managed WAN services for your enterprise wide area network, read these best practices for tripling your success and finding a provider that can guarantee good service.

In the first article of this two-part series, we discussed how to choose a provider for WAN managed services for your enterprise. In this article, we will discuss how to triple your odds of success for procuring managed WAN services for your enterprise WAN.

Many companies find the notion of managed WAN services attracting and frightening at the same time. On one hand, these services can significantly reduce the internal support costs of networking, but on the other, they may put your enterprise's survival in the hands of another -- a managed service provider (MSP) who may or may not be responsive or even capable.

An analysis of WAN managed services project outcomes for the last three years suggests that enterprises can significantly influence their odds of success. In fact, using a three point best practices “axiom” for buying managed WAN services produces nearly triple the chances of a successful project versus the worst-case approaches, and double the chances of success when one or two axioms are followed. The optimum strategy for buying managed WAN services consists of the following three points or axioms:

The first axiom of buying managed WAN services is to get a meaningful guarantee from a managed service provider who controls your risks. There are two steps to this:

  • Know where the MSP is not likely to meet your requirements. If the managed WAN service you’re contemplating covers multiple geographic areas, which one is the most at risk for failure? If multiple technologies are included (communications and hosting, for example), which will be the most vulnerable?
  • Know the provider with the largest financial stake in your success. What managed WAN service provider will actually get most of your money? They’re the one most likely to offer you a reasonable assurance of success because they have the most to lose.

The ideal scenario will be where the provider with the highest financial stakes is able to control your primary risk sources. If you’re negotiating a multi-national network deal, try to find a provider who handles the areas with the largest service risk while covering the largest overall geography. If you’re negotiating a multi-technology deal, get the riskiest technology from the prime stake-holder. Avoid deals where the managed service provider is a small player in the overall mix, or is simply acting as an integrator.

The second axiom in managed WAN services procurement is to write a service-level agreement (SLA) that focuses on monitoring and escalation. The biggest problem with WAN SLAs, enterprises report, is defining and managing a problem with precision. Companies tend to shoehorn monitoring and problem escalation terms into an SLA framed by quantities and penalties, and it should be the other way around; companies should first look at escalation and monitoring, then define penalties and quantities.

An optimum WAN services SLA starts by defining precisely where the point of service demarcation is and how each side of that hand-off between operator and enterprise will be monitored. Every agreed-upon service parameter must be visible at that point, and for each defined parameter there must be a specific monitoring procedure defined that will determine whether it’s being met.

When a parameter is not being met or a response time becomes less-than acceptable, the SLA must focus on a tandem process of escalation and reimbursement. A service failure triggers an escalation in the way the problem is handled -- from a local rep to a manager, for example. With each escalation there is an escalating rebate in service fees; if the problem is solved at the first level, a day’s billing is credited, but if it requires a second level then the loss is a week’s billing, and so forth. The key is to get the problem visible to the senior people at the managed service provider, and to make them aware that further delay will result in further loss of revenue.

The final axiom of managed WAN services is to protect your business in fact and not just in law. Every managed WAN service should have a provision where portions of the service deemed at risk are provided with backup as part of the service agreement. Would your business survive a month-long outage? Probably not, and yet if you have no recourse except the courts, there’s no way of insuring that won’t happen. Most managed services are a combination of facilities and operations management and support resources. The facilities should be specified in detail and known to be reliable based on past history, or be provided with fail-over mechanisms. The resources needed should be specified as "on-call" or "available" within a specific time, and if they are late, there should be a subcontractor identified who will provide what’s needed at no cost to you, as part of the escalation process previously defined.

Companies who follow this basic model report less than a 5% incidence of a significant managed WAN services failure, which is less than half the 10.8% reported by all enterprises for the last three years and a third of the 15.3% failure rate reported by the group who simply took the lowest-priced alternative. Interestingly, the “best” group reported only 7% higher costs than that low-bidder group, and that savings was more than eaten up by their outage costs. The moral is that good contract negotiations based on accepted market terms will produce the best result.

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 networking blog Uncommon Wisdom.

This was last published in October 2010

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