This heralds good news for
solution providers, who can scale up their business to maintain the IT
infrastructure of these companies.
The last few years have seen Indian enterprises take greater cognizance of
the vast benefits of IP technology. In the new globalized economy, this is
delivering greater benefits, such as higher productivity and reduction in manual
time spent on the job.
As India integrates itself with the rest of the business world, there is an
urgent need for Indian enterprises to realign themselves with international
standards and norms vis-Ã -vis business practices. IT too has an integral role
to play in this regard.
In fact, Indian enterprises are fast recognizing the true impact of an
IT-enabled business environment. According to New York-based Access Markets
International report, 20,500 Indian enterprises invested over $596 million in
various kinds of telecommunications over the course of last year. This rapid
pace of IT adoption is expected to grow by 17.39% to $26.39 billion this year,
according to a study by World Information Technology and Services Alliance.
What managed services is about
This increasing adoption is giving birth to a new trend of managed services,
whereby enterprises and SMBs are looking to outsource some/all of their
networks/services to the service provider. By doing so, enterprises are
increasingly focusing on their core competencies, leaving the task of everyday
network management to the experts.
Outsourcing
certain networking solutions allows them to reassign IT staff to higher-value
work such as developing important new applications, rather than managing the
network. As suggested earlier, many organizations are adopting IP-based ICT
solutions to drive down operating costs, increase functionality and improve
quality.
Since most service providers have already built out the network, it's
cheaper if organizations to share it rather than build their own. Every business
depending on its need can outsource either the whole or a part of its networking
requirements.
Managed services go beyond providing just the pipe and basic connectivity
services. It is about managing the end point of the pipe. The Customer Premise
Equipment (CPE), creates more stickiness for organizations by offering more
professional services, thereby preventing them to move on to other vendors.
This also presents a tremendous business opportunity for service providers.
With falling average revenue per user (ARPU), service providers need to offer an
enterprise and value added services as this adds to their revenue stream.
Ideal for SMEs
The reasons for increasing midsize enterprise demand for managed IP-based
services are simple, yet compelling. The nature of the applications used most by
MEs to enhance productivity and trim costs is changing dramatically, from
simple, low-bandwidth applications to higher-bandwidth, business-critical
multimedia applications that are policy-based, network-intensive, and
time-sensitive.
These value-added services include videoconferencing, hosting services, IP
telephony, and distance learning. These applications, and others, have become
more critical to business success because of their remarkable ability to improve
productivity while reducing costs. The foundation for enabling these converged
services is IP VPN. A converged data and voice WAN requires the implementation
of an IP VPN to prioritize and secure traffic. Without IP VPN, convergence is
more difficult.
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The most significant of these changes to the customer's operations is the
transition to IP telephony from traditional private-branch-exchange (PBX)
switching. The primary benefits of migrating from a traditional PBX environment
to IP telephony are savings in networking costs and complexity-and a rapid
return on investment (ROI)-all of which are made possible by converging voice
and data over a single network infrastructure. A core enabler of IP telephony is
IP VPN, so at a minimum, these two managed services tend to be deployed in
tandem, simplifying network operations and reducing its cost structure.
Although, there is a large gamut of services that service providers can look
to provide, the need is dictated by enterprises. Some of the more common
requirements for an enterprise include:
Managed IP VPNs
For an enterprise, managing VPNs requires large capital outlay for equipment
and ongoing commitment of human resources. From a total cost of ownership (TCO)
perspective, out-tasking is advantageous because many companies can share the
costs of using a common infrastructure — a concept that has taken off among
some Indian service providers.
In fact, Indian enterprises are increasingly leveraging IP VPN services.
Bajaj Auto in the private sector and UCO Bank in the public sector are two such
examples that have adopted this approach and are benefiting immensely. In fact,
IDC predicts that revenues from IP VPN services are likely to cross Rs 1,100
crore by 2008 up from Rs 230 crore in 2003.
Managed IP Telephony
In India, IDC expects the IP telephony market to grow at a CAGR of 119% to
touch Rs 13,000 crore during the course of 2005. However, IP telephony requires
much more external assistance throughout the life cycle, including planning,
deployment, and support services, than other technologies such as VPNs and WLANs,
a fact corroborated by Gartner.
The complexity of call servers, unified messaging services, and collaboration
tools is a far cry from the simple plug-and-play devices. This is a prime
opportunity for services companies to deliver comprehensive IP telephony
services to enterprises that are looking to save communication costs by adopting
IP telephony.
IP-managed security
Today IT is at the heart of all business operations, irrespective of the
size of the business. It is imperative to have a secure network that can repel
any form of cyber attack. A recent Gartner study found that 97% of the cyber
attacks exploited known security flaws for which a patch already exists.
Clearly, investing in security applications is not adequate enough.
Enterprises need to continuously monitor their networks and constantly upgrade
their knowledge vis-Ã -vis new threats, viruses, patches etc, something that is
not their core competency.
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To sum it up, as basic IP connectivity becomes a commodity, enterprises need
to avail the benefits offered by IP-based technology. As networks become more
complex and face an ever-increasing threat from external elements, Indian
enterprises should look to out-task their network management to 'capable'
service providers.
This will go a long way for them to gain an edge over competition and
enhanced productivity. Service providers on their part need to take the
initiative of driving these services to the enterprises. Â
Shrikant Shitole is the New Business Development Manager at Cisco Systems.