Eric Goodness
Research VP
10 years at Gartner
21 years IT industry
Eric Goodness is a vice president in Gartner Research, where he is the agenda manager and customer lead for Managed Services in the Communications sector. His research and advisory services focus on customer and vendor outsourcing and IT services… Read Full Bio
by Eric Goodness | January 29, 2009 | 1 Comment
Sprint’s planned reduction in force of 8000 workers, including chief network officer Kathy Walker, is a sure sign that the company must seek outsourcers to maintain operations.
Outsourcing has been an accursed concept with carriers because the network is a core competency to the business. However, many would rightly argue that Sprint’s core competency should be customer acquisition.
Change has slowly been creeping across the continents to the North American service providers. Asia Pacific, Latin American and African operators have been the first adopters to outsource some carrier operations. Companies such as Ericsson, Motorola, Alcatel-Lucent, Tech Mahindra and Dimension Data have made significant in-roads to become outsourcers of choice.
To date, many of the outsourcing agreements with carriers are fairly simple instruments focused on multivendor maintenance of systems and staff augmentation in operations centers. As more fixed and mobile providers look to become ‘acquirers of customers’ – business and consumer - instead of ’operators of networks’ the structure of these agreements will change more rapidly.
My bet is that scope of most new agreements will not change too drastically too soon. In fact, they will likely be band-aid approaches for cost reduction and avoidance. Looking to third party services companies to help the carriers manage and operate networks more efficiently will be enough for most organizations. There are certainly existing arrangements in the market that do incent outsourcers based on the success of new service creation initiatives; however, the operators generally still own the infrastructure and bear most of the risks.
The market to outsource carrier operations will begin to kick into hypercompetitiveness in 2009 as many Enterprise outsourcers look to supplement underperforming Enterprise pipelines with new carrier-centric opportunities. The main battle will be waged by the service organizations of manufacturers (e.g. Ericsson, Nortel, Motorola, Alcatel-Lucent), legacy outsourcers (e.g. IBM, CapGemini and EDS) and a hungry contingent of Offshore service providers (e.g. TCS, Wipro, Tech Mahindra). Smaller, niche companies (e.g. Telent, ThruPoint, EFI Telecom) will be relegated to staff-augmentation roles.
This new wave of carrier outsourcing requirements just might coax Cisco from behind its curtain of clandestine operations to compete openly in a Services market without polarizing its legion of Enterprise focused partners. The Cisco Advanced Services business unit already provides direct consulting and integration services to the carriers and Cisco is already managing Communications-as-a-Service platforms for carrier partners.
Anyway, this market is going to heat up fast and be very interesting. I’d like to hear what the network IT services community sees happening.
Category: IT Services outsourcing Tags: Advanced Services, alcatel lucent, carrier operations outsourcing, Cisco, Cisco Advanced Services, Cisco Services, ericsson, managed service, motorola, sprint, Tech Mahindra
by Eric Goodness | January 28, 2009 | Comments Off
I recently returned home from South Africa. I traveled there to attend Dimension Data’s global analyst conference.
- Travel time was approximately 45 hours by plane and car to make the meetings and return home
- My luggage was lost by the airline for most of the visit
- Connectivity, to keep up with corporate communications, was dicey
It was the best analyst conference I’ve ever attended.
I offer this post as a best practice consideration for vendors planning their next analyst event. What made the conference so valuable was its focus on 1-on-1 sessions. Sure most conferences today offer 1-on-1s; however, Dimension Data clearly prepped for the conversations with analysts.
Dimension Data is a very decentralized company. In addition to its corporate CEO, each major geography is managed by a separate chief executive that reports in to the corporate CEO. All analysts were able to speak to Dimension Data CEOs - Corporate, Asia-Pac, Australia, Africa-MEA and Europe (unfortunately the Americas chief executive did not make the conference).
The Dimension Data executives distinguished themselves by providing insight into country level, and solution set detail, in terms of market drivers and inhibitors rarely found at other analyst conference or in any other type of engagement…not even in Marketscope or Magic Quadrant conversations.
Too often executives at analysts conferences practice their marketing-arts-of-obfuscation; either to maintain imagined competitive advantage or to mask a lack of knowledge of the market. My advice to vendors scheduling 1-on-1s is: If your executives, and non-executives, can’t provide insight expressed as operations benchmarks, market drivers-and-inhibitors or prevailing trends for contract structure at analyst conferences – don’t bother.
The information provided by Dimension Data was focused and straightforward to help the analysts community understand their operations and business direction. Most impressive of all was the clarity of insight they brought to the table about small and mid size emerging economies.
I regularly attend conferences and briefings by the top 30 outsourcers and I’ve never received information, or vendor opinion, to the level of detail as I did at this conference.
The other attending Gartner analysts and I will likely create an Event note to talk about what we learned and our impressions of Dimension Data looking forward. I offer this post simply as a well deserved ‘atta-boy’ to the Dimension Data team (take note Knowledge Capital, SageCircle et al!).
Many thanks to Connie De Lange, Hillary King, Jeanne Day-Spriesterbach and Barbara Beauchamp who sponsored and managed the event.
Category: IT Services outsourcing Tags: analyst conference, Dimension Data, Knowledge Capital Group, SageCircle
by Eric Goodness | January 20, 2009 | 7 Comments
Gartner published a Marketscope on Remote Infrastructure Management (RIM) in the second half of 2008. In 2009, Gartner plans a Magic Quadrant on the same topic. However, we’re having some internal debate at Gartner as to whether RIM services is a discrete market, or simply an evolving mode of delivery for traditional change management and improved (proactive) service management.
I’ll admit it - I’m changing my opinion – I believe RIM is a Mode, not a Market. I’ve been working with RIM services for nearly 10 years at Gartner. I’ve also been responsible for Gartner’s forecasts on RIM services for the past 8 years. All along, I’ve strongly believed that RIM services were a discrete market.
Prior to my employment at Gartner, I was the product marketer a number of years ago for Bay Network’s ServiceLink RIM services. If service providers think RIM is a tough sell now… they should have experienced selling RIM services in 1995. Our best successes were follow on contracts cemented after our sales teams integrated core router management as a benefit within aloyalty program we built for Bay’s most strategic customers. It was never profitable in that setting. The principals of the ServiceLink offering left Bay Networks (John Igoe, Robert Klotz and Deb MacCallum) and started Silverback Technologies (now part of Dell). They were trailblazers.
In the late 90s, private equity was pouring into standalone managed services providers (MSP) and life was good. Netsolve (purchased by Cisco) at one time had a market cap of $1 billion on revenue under $50 million. A niche MSP could command significant gross margin rates on their services. They could also live on RIM services alone. Then the bubble burst, customer acquisition models changed and user organizations never really returned to the boutiques.
The days of MSPs are gone because pure, RIM-based MSPs don’t really exist anymore. Most MSPs have been forced by their customers to expand their value. They been asked to sell pass-through maintenance contracts or resell hardware or software or to offer professional services to prop up slumping monthly recurring charges (MRC). In fact in the recent past, the first clear sign that an MSP was in trouble was when professional services revenue grew to more than 50 percent of overall revenue. That’s because an MSPs business plan was predicated on recurring revenue. Professional services are non-recurring. There are a few significant standalone companies providing RIM services but those companies are outliers. IPSoft remains one of the most compelling in the market.
Anyway, I’d like to get the readers of this post to let me know their opinion about RIM services: Market or Mode?
Please reply to this post directly or you can also provide your opinion in this very, very short survey. Paste this link into your browser:
| https://www.surveymonkey.com/s.aspx?sm=mGwbgdPaaZ0zmsO5hECf1Q_3d_3d |
Category: IT Services outsourcing Tags: hardware resale, maintenance, managed services, network operations center, NOC, outsourcing, remote infrastructure management, software resale, support
by Eric Goodness | January 16, 2009 | Comments Off
I’ve read a lot in the past 48 hours about Nortel’s Chapter 11 filing and there is a lot of speculation about the future of Nortel and its next best steps.
A popular line of conventional wisdom emerging on the blogs and in the press is the possibility that Nortel be reinvented as an IT Services-led company. Few companies have successfully managed that kind of transition. There are a few network- and voice-OEMs currently working towards the same goal. One example of success, particularly in the Americas, is NEC. They’ve taken their lumps as a product company and really done a nice job creating a trusted, go-to organization to provide direct, or private-labeled, multi-vendor IT services to the market.
The belief that Nortel can similarly reinvent the Company as an IT Services Provider is unrealistic.
Nortel doesn’t have the bench strength to create, market, sell and deliver services for complex, multi-vendor environments. The Services organization hasn’t been allowed to thrive and mature appropriately. Nortel’s decades long recursive history of divestiture and re-investment in the Enterprise and Carrier services organizations is a case study for finger-in-the-wind management. Of course, these mistakes are common in product-centric companies when they struggle to determine the strategic nature of Services.
Compounding the problem, the Nortel’s services marketing organization only develops solutions appropriate for immediate plotting on the ‘Plateau of Productivity’ in Gartner’s Hype Cycles. Nortel services have consistently been devoid of innovation. Most service products are released after Cisco and Avaya have brought them to market years earlier. Subsequently, new service products are released into highly commoditized environments where no marketable differentiation is possible. Additionally, the services marketing organization never appeared to actually market Nortel services.
Gartner’s published Magic Quadrants and Vendor Rating documents have chronicled Nortel’s inconsistencies. The Services organizations do not provide any foundational strength upon which ‘Nortel 2.0′ can be built. The irony of course is that the IT services for Enterprise Communications will show good growth, relative to other industry segments, in a recessive economy. Gartner’s inquiry requests from mid size and large companies looking at single-tower managed service/outsourcing projects are increasing. Post-recessionary outlook for the market is even better as investments in Unified Communications are expected to show very strong growth. IT Services is an important catalyst to facilitate market adoption and successful migration to Unified Communications.
If Nortel is going to survive as a Services-led company, then they will require a massive re-evaluation of executive and marketing talent charged to lead those services organizations.
Category: Infrastructure IT Services outsourcing Tags: Avaya, Chapter 11, Cisco, IT Services, managed services, NEC, network equipment manufacturer, network outsourcing, Nortel, Nortel bankruptcy, unified communications
by Eric Goodness | January 15, 2009 | 4 Comments
Today Tangoe, Inc. announced its acquisition of mobile device management (MDM) software vendor InterNoded, Inc.
The acquisition effectively enables Tangoe to deliver services in which it currently markets capabilities: Communications Lifecycle Management. Until now, Tangoe hasn’t actually provided Communications Lifecycle Management (CLM). That’s because the company has been missing a huge piece of the solution – IT management capabilities (which they now curiously call ’3rd Generation TEM Services). The great promise of Telecom Expense Management has been that a bridge will be built to the values provided in communications infrastructure and applications management; that is, an integrated view of telecommunication’s impact on a company from a financial and technological perspective.
Mobile device management, provided as a service, has incredible potential from a user and a vendor perspective. The most crystallized value statement I can provide for MDM services is that the services provide centralized application and hardware resource control. The centralized control of mobile devices is effected by remote, or over-the-air (OTA), capabilities.
For users, the OTA capabilities of MDM applies more sophistication to the management of devices beyond ordering and provisioning and other logistics services offered in traditional TEM contracts. For vendors, the OTA capabilities of MDM allow TEM vendors to extend into an adjacent market and increase their revenue per user. MDM services are more dynamic, and less reactive, than traditional, facilities-bound kitting, advance replacements and depot repair. MDM services also potentially offer the stewardship that has been lacking to improve the security and migration activities associated with the porting of key Enterprise Applications to the mobile environment. Tangoe, like service providers in general, faces a few challenges as it works to navigate and create an MDM services market:
First, Tangoe is entering an untested and uneducated market. Gartner believes that there is modest demand for service-based MDM solutions; however, hard work by more than a few companies is needed to condition the market to accept the value propositions of MDM services and to feel comfortable sourcing MDM services from a third party. Right now, the data points are very meager in terms of case studies and the cost reductions promised are much ‘softer’ than the hard dollar guarantees that TEM providers are used to selling. Add to this that this is a service for smart phones which currently account for only 20 percent of existing Enterprise devices.
Second, pricing, and value-perceptions, may prove problematic. For a company with 1000 devices, they are likely paying $5 to $10 per device for their TEM services; depending on service levels. A full lifecycle mobile device management solution for that same company is likely to be priced at $10 to $20 per user. In this economic environment, that is no slam dunk. Even if Tangoe enters the market with enhanced asset management for $1 to $2 per device; that’s at least a 10 percent increase in cost and the service doesn’t really advance the robustness of MDM services. To date, Telwares is the only legacy TEM service provider that has announced MDM services for the market. This service is predicated on leveraging the Perlego MDM platform. There has been interest in the service, but the adoption hasn’t been noteworthy.
Third, the integration of Internoded and becoming an IT Outsourcer could cause hiccups. Tangoe has made a few acquisitions over the past few years. The integration of ISG has been seamless by all accounts. The integration of Traq Wireless proved problematic and it took a while for Tangoe to address problems arising from the acquisition. Tangoe does not have an IT outsourcing legacy and their services organization is not lead by an individual with significant IT outsourcing experience. In TEM, users have been gracious with service lapses and auditing errors because the net hard dollars recapture was irrefutable. They should be under no such delusion when it comes to IT management and outsourcing.
Ultimately, Tangoe’s acquisition of Internoded is an exciting new chapter in service delivery capabilities for legacy TEM vendors and the IT Outsourcing market in general. The key to Tangoe’s near-term success will be their execution and focus on packaging, pricing and how they sell the services (because the buying centers of TEM and MDM are different). An alternate channel to market, such as outsourcers, to bring them to market is a must. Having big friends in big places reduces the cost of sales and opens doors.
The key to their long-term success is service delivery excellence. That will require a little on the job training and a lot of investment in resources with relevant skills and experience.
What do you think? Are companies ready to purchase Mobile Device Management services? I’d like to hear your opinions. Please post to this blog, or weigh in on this survey I’m hosting:
https://www.surveymonkey.com/s.aspx?sm=_2b0ibX9_2bl2xi5_2b2mX3c4S4Q_3d_3d
Paste the URL above into your browser. The aggregate survey results will be viewable to you immediately when you complete the survey.
Gartner has a growing body of work in the MDM space. If there is interest, I suggest searching for related docs under the following analyst names:
Category: outsourcing Tags: IT outsourcing, managed services, mobile device management, telecom expense management
by Eric Goodness | September 25, 2008 | 1 Comment
I attended a managed services end-user event yesterday held in Cincinnati (birthplace of Kevin Youkilis, Red Sox first baseman extraordinaire). The event was sponsored by Logicalis. What really struck me about the event was how the Logicalis executives focused strongly on the their desire to sustain their customer’s business focus by supporting the tactical day-to-day operation of their underlying systems. Michael Cox, Chairman of Logicalis’ US operations, led off the event by explaining how his company ‘inverts the pyramid’ for his customers (what presentation would be complete without a pyramid?). The pyramid that Michael refers to is a representation of the operational requirements to support business IT where strategy, representing a small portion of investment and cost, sits atop the pyramid and operational expenses for day-to-day control lie beneath – and these responsibilities are best migrated to trusted partners. Michael’s point, which is usually referenced obliquely in most managed services provider’s presentation as ‘maintaining strategic control’ was the center point of most of Logicalis’ presentation bolstered by good examples and references.
Andy Wood, the CIO of Wilton Re a life reinsurer based in Wilton CT, provided an interesting customer presentation validating Logicalis’ message from a user perspective. Andy made some excellent points and validated my belief that managed services represent an intermediate step towards accepting ‘The Cloud’. It is a point not well represented in the media, or in analyst presentations, that the drive towards Cloud services will require some intermediary step for user organizations to become familar, and comfortable, with IT resources that are shared and not owned, located or managed by the user.
Andy made other interesting points supporting my belief that IT markets will not ‘sublimate’ to cloud computing and indicated that his relationship with his managed services provider, Logicalis, will change as his company embraces maturing cloud offerings.
Another reinforcing observation I took away from the Logicalis event is that the promise of ‘Managed Services’ is very interesting to small, medium and large companies without significant experience in traditional outsourcing relationships. A noteworthy gating factor in their decision making is their lack of knowledge in structuring deals and underlying agreements such as statements of work, SLAs (including escalation policies and thresholds) and other Ts and Cs.
Category: outsourcing Tags: cloud computing, managed services, outsourcing
by Eric Goodness | September 23, 2008 | 3 Comments
We in the IT Services and Outsourcing groups are hip deep in the forecast season. I’m responsible for the forecasts related to communications IT services in North and Latin America.
IT services in the communications market have been doing very well. The adoption of IP communications has inserted complexity in businesses and as a result, user are requiring more third party services. Given the economic pressures in the US (and the world) over the past months, I decided to reach out to 15 large multinational companies planning network outsourcing or managed services deals.
Their response didn’t reduce any concern that user demand for communications IT services will soften; however, their responses didn’t contribute to any prevailing FUD that the bottom will fall out. All agreed that the drive for outsourcing deals will continue. But, the complexion of most of these deals will change. Two prevailing views came across in my conversations – Cost reduction is King and Time equals Money. Focus on waste and execute as soon as possible. Remote management and Telecom Expense Management will be key outsourcing tools to realize user expectations.
What was missing from my conversations was the users’ original desire for strategic, transformative initiatives focused on the integration of more communications services to create real Unified Communications. I imagine that transformative initiatives will be pushed out past year 2 or 3; probably in a wholly separate agreement. What was clear in my conversations is that these companies were not planning, or considering, to migrate to broader UC capabilities through hosted or, Unified Communications-as-a-Service. Of course, these were only 15 companies, but they also represented the market’s next mega- or near-megadeals for communications outsourcing.
In separate conversations with smaller companies, it is clear that there will be more pricing pressure on managed services. Managed services pricing in the communications sector has already been halved in the past 32 months.
Hold on.
Category: Uncategorized Tags: communications-as-a-service, managed services, outsourcing
by Eric Goodness | September 21, 2008 | 4 Comments
In my coverage of remote infrastructure management (RIM) services, I’m often asked by user organizations about the advantages of leveraging offshore vendors. My usual response is ‘it doesn’t matter’. I’m actually seeing more and more offshore-only RIM strategies by our clients. It is a flawed approach.
RIM-based service agreements are growing rapidly as a replacement for traditionally inflexible and unwieldy outsourcing agreements. The current drive, and attention, to enlist offshore companies has become a reflexive and lazy approach to vendor selection.
My mantra when advising clients looking at RIM vendors is “It’s all about the Systems”. Early in my pursuit to characterize RIM services I focused on Service Level Agreements (SLA) claiming that the underlying management system didn’t matter as long as the vendor met expectations for service delivery. I called the users’ systems reviews ‘tool belt wars’ as these conversation were invariably ‘rat hole’ discussions between influencers on the IT staff debating and the RIM vendor regarding the effectiveness of one major BSM platform over another.
I was dead wrong.
RIM services are all about automated, or ‘autonomic’, management of IT (and business) processes. Users are much better served by focusing more heavily on the vendors’ RIM services strategy to provide advanced IT and business process management and the vendor’s research and development investments directed to their current systems and to fulfill their service strategy.
Now that doesn’t mean service attributes such as SLAs, processes and methodologies, IT expertise and helpdesks are unimportant. They clearly are integral to providing excellent service levels. However, each of those service attributes reflects traditional, reactive support approaches which have long histories of review processes. RIM services are all about proactive, self-remediation capabilities which are quite new to many IT managers in terms of due diligence. An over reliance by vendors on non-automated service capabilities can mean diminishing margins for them which always translates into diminishing service levels for customers. A non-automated RIM system also reduces the level of service efficiency. For example, a lack of automation affects the number of events a vendor system can ‘cure’ before an outage occurs or how effectively a system can predict conflicts in a customer environment brought about by software upgrades, updates, patches or fixes.
To date, traditional offshore providers continue to rely more heavily on labor arbitrage; simply the replacement of personnel in a customer’s IT operations center while using the customer management system. The offshore vendors’ heavy reliance on an FTE-driven model has actually slowed the required investment in better, more proactive systems for RIM services while onshore providers of RIM services, which are not able to offer cost reduction through labor arbitrage, have invested a higher percentage of revenue in their management systems to provide services automation.
My advice to customers when taking the first step to perform their due diligence on RIM vendors is to make the bid list ‘shore less’. There are good providers in all geographies. Carefully examine the vendor’s proactive RIM service capabilities in conjunction with their SLAs, structured processes and methodologies and other operations services.
Services strategy and R&D will be powerful lenses through which you view your RIM providers and how the vendor can help your business do business.
Category: Infrastructure Tags: business service management, managed services, offshore IT services, onshore IT services, remote infrastructure management, Remote Infrastructure Management (RIM) provider
by Eric Goodness | September 15, 2008 | Comments Off
There’s lots of buzz around mobile device management (MDM). A fair number of my colleagues are busy with inquiries aimed at helping users acquire software for self-management solutions. As an analyst focused on managed services and outsourcing my first question is always: Are users willing to shift the burden of management and operations to a third party provider?
Today the answer is a definite – Maybe.
Right now ‘buy’ decisions are trailing hype when it comes to users who are looking for integrator/outsourcer-based solutions. Conversations with software publishers, carriers, integrators and outsourcers reveal a lack of investment, in terms of capital and personnel, to prove to the market that they are serious about providing MDM services. User conversations present interest but with the acknowledgement that the return-on-investment arguments by the vendors still seem unconvincing.
Of course, the market needs to be tested. I’ve been working on a User Wants and Needs survey to determine when, and if, MDM-as-a-Service will become established as an addressable market for vendors and a viable solution for users. The intent of the survey is crystallized in the survey introduction:
The purpose of this survey is to identify how companies manage mobility assets (e.g. devices, service contracts) from a financial and IT management perspective. Our primary focus is to determine the decision points that would lead to the adoption of managed services or outsourcing agreements for third parties to mange elements of your mobile communications. Many of the services included in such agreements include:
What I think will distinguish this study is how we capture user decision points in terms of value required of a ‘Service’ and determining the user calculus as they identify the price-to-value ratios they require for a buy decision.
The survey is going through some fine tuning before it is released. Let me know if you have any thoughts on the subject.
Category: Infrastructure Tags: managed services, mobile device management, outsourcing
by Eric Goodness | September 15, 2008 | 1 Comment
Thanks for checking out my blog. Gartner’s new blogging policy provides me an opportunity to frame my thoughts and ideas with greater intimacy (we don’t need no stinking style guide) and reader responsiveness; that is, a discussion less burdened by industry cant or slang (or Sturm and Drang).
I’ve got a few modest goals for my ‘blog:
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Create a dialogue between end-users and vendors about managed services and outsourcing.
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Present user and vendor trends and forces in the managed services and outsourcing markets. I’ll make the blog worth your time.
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Tell users and vendors what is working and what isn’t working.
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Provide timely feedback to all comments.
Some of the topics I will be addressing in the blog include:
- remote infrastructure management services (e.g. server, storage, database, network)
- hosting and colocation services
- mobile device management services (e.g. over-the-air updates, upgrades and patches/fixes)
- telecom expense management services (e.g. automated invoice auditing, chargeback, and dispute management)
- consulting and professional services for specialized Enterprise requirements like virtualization and communications-enable business process
- communications-as-a-service and hosted communications
- prevailing market pricing, SLAs and contract structures for managed services and IT outsourcing
Feedback and comments welcomed.
Category: Uncategorized Tags: communications-as-a-service, communications-enable business process, hosting and colocation services, mobile device management, pricing, remote infrastructure management, service level agreements, SLA, telecom expense management, Virtualization
