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Remote Network Management: The Make Vs. Buy Decision.

A dramatic transition is underway in network management. Information Technology (IT) professionals are exploring "make vs. buy" options and a significant number are opting to buy. In fact, a 1997 Dataquest study predicted a slow but steady annual rise--11 to 14 percent--in the use of Remote Network Management Services (RNMS) during 1998. Their crystal ball was proven right about the trend, wrong about the pace. By December of 1998, 19 percent of the users polled had started using outside resources to manage their networks with a predicted increase to 29 percent at the end of 1999. Now, Dataquest is predicting a 30 percent growth rate in the next three years with the market exceeding $450 million. What is driving this trend? Industry analysts point to two main factors: the network's importance to the enterprise company's business and the lack of skilled IT workers and that's just the beginning.

The swell of interest in RNMS stems from new challenges that make it difficult for network managers to maintain the status quo.

* Networks are not static. Rapid changes within the organization create a dynamic technology environment that takes more time to maintain. Twenty-six percent of network managers polled by the Gartner Group indicated that daily fire-fighting is the most challenging aspect of their job.

* Hardware and software systems are evolving faster than ever. Staying current with the technology takes time away from strategic pursuits.

* As companies grow, the number of network sites increases, adding to the complexity of network management.

* E-commerce and electronic business partnerships mandate a 24x7 on-line presence. For the enterprise to compete in the digital world, network performance must be monitored 24x7. Downtime translates into lost business opportunity.

* More mission critical applications are running today, which means network managers must maximize performance and ensure reliability.

With its role in e-commerce, the network is becoming a revenue-bearing tool. To capitalize on the opportunities this presents, network managers must replace firefighting tasks with more strategic responsibilities. Workloads are increasing, but budgets and capable personnel are not keeping pace.

What Are The Options?

The most important factor in opting to buy network management is identifying the best resource. Today, there are four basic RNMS options:

* Outsourcers, where the customer transfers equipment and personnel to the provider. In this arrangement, the IT infrastructure becomes a budgeted monthly expense item purchased from an outside supplier. Outsourcing is characterized by long-term contracts, customized solutions, and some risk based on a loss of control.

* Out-taskers are a new alternative where one specific task--network management--is taken over by an outside resource, freeing the internal staff to pursue strategic endeavors. Out-taskers are dedicated to the job of network management. They offer specialized tools, support hundreds of customers' networks, and use well-established processes.

* Carriers have frame relay and transport technology skills that are invaluable. Additionally, many have excellent router management skills. The flip side is that carriers only manage their own transport. Changing transport vendors down the line means changing network management providers, as well.

* VARs and systems integrators offering network management services. Often, VARs partner with RNM companies and resell their services. The challenge is ensuring that the selected VAR or systems integrator will make the substantial investment in a Network Operating Center and sustain a long-term commitment to 24x7 network maintenance.

Identifying True Network Management Costs

At the heart of the make vs. buy decision is the cost of each option. Today, internal network management costs are increasing dramatically in multiple areas. According to the Gartner Group, "The acquisition costs for Wide Area Network (WAN) equipment and management tools can be a relatively small part of a data WAN's Total Cost of Ownership (TCO)." Analysts discussing network operating costs with IS managers question the anticipated amount of change in the enterprise's network.

Human resources account for another significant cost factor. The scarcity of skilled resources is real and growing. The Gartner Group reports that approximately 300,000 IT jobs were unfilled in 1998. That number is expected to rise to 500,000 in 1999. Capable network engineers command high salaries and benefits and are easily romanced away to a more competitive bidder. Finding, keeping, and affording skilled, engineering talent may be the most overwhelming barrier to in-house network management.

What About Control?

In evaulating the advantages of RNM, many IT professionals are concerned about giving up direct control of their network. Network managers want to see what's going on and tweak it if necessary. If an internal customer calls with questions, network managers want immediate answers.

Resolving the control issue depends on what the RNMS provider has to offer. Using either proprietary or commercial tools, the RNMS can and should provide internal staff with the means to track the network at all times. Some companies offer a Web interface, giving the network manager a real-time window into all network activity. With this capability, inside network managers get all of the monitoring capabilities without all of the maintenance headaches.

The Out-Tasking Advantage

As the network becomes more strategic to an enterprise's business, finding the most effective way to manage it becomes imperative. Out-tasking enables companies to:

* Lower network maintenance costs.

* Decrease mean time to repair, maximizing network reliability.

* Maintain control of the network by augmenting staff, not supplanting it.

* Gain access to network management tools and the staff to run them 24x7.

* Free up internal resources to focus on programs such as Y2K, e-business initiatives, Web strategy, and new network applications.

* Overcome the challenges associated with the scarcity of qualified resources.

* Lower risks associated with the outsource model where someone else owns the IT environment.

The advantage to out-tasking is that network management is the RNMS provider's primary focus. This means the company has the experience and staff necessary to rapidly identify problems and resolve them.

Making A Cost Comparison

Accurately assessing the cost of internal versus outside network management can be difficult. Based on extensive industry experience, NetSolve has developed a way to make the comparison easier. The tool is an interactive customizable cost model that helps companies evaluate the true differences between in-house management and out-tasking. The model is called the NetSolve Remote Network Management Cost Analyzer. Based on the network size entered, the program calculates the estimated annual cost for NetSolve's services. Using a ten-site network as an example, the management fee totals $27,000 annually versus doing it in-house.

In addition, the model presents a list of off-the-shelf network management hardware and software tools and related maintenance needed to manage the WAN over a three-year period. These expenses, which must be considered in evaluating internal network management, break down into four categories:

* Project management and design

* Fault and configuration management

* Performance management

* Asset management

Using that same 10-site network as an example, the Annual Equipment and Maintenance Expense equals $15,420. The difference between NetSolve's management fee and the materials necessary to manage the network internally is approximately $11,580. Based on this formula, if the cost of building and maintaining internal network tools and staff exceeds $11,580, there is a distinct advantage to out-tasking.

Clearly, the time is right for evaluating the benefits of buying network management services. With smart, cost-effective options such as out-tasking available, the viability of internal network management must be reassessed.

Harry Budow is the vice president of marketing at NetSolve, Inc. (Austin, TX).
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Article Details
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Title Annotation:Industry Trend or Event
Author:Budow, Harry
Publication:Computer Technology Review
Geographic Code:1USA
Date:Nov 1, 1999
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