Acadia’s ‘service’ model is presently Build-Operate-Transfer.  My question is, can (or will) the organization work to address the growing requirement for a Build-Operate-Manage model where the user is more reliant on partners to manage the growing complexity of their solutions?  The JV wasn’t formed with any intent towards becoming an outsourcer, but bringing a JV to market based on deep expertise and an ability to ensure architectural predominance for Acadia’s investors must make some form of ongoing ‘managed services‘ fairly appealing.  I look forward to what Acadia will bring to the market.

The challenge to creating MQ criteria is to make the field of vendors relevant to the greatest part of the market.  Generally we work to focus on providers that will openly bid, and service, mid size as well as large Enterprises.  Revenue is usually the most imposing impediment to entry for most providers.  I’d like to also apply a few filters to assure that we represent mid-market requirements and providers as well.

I’m offering the following criteria for your review.  One set is for the NA MQ and one set is for the WW MQ.  I’d love to hear your feedback and/or respond to requests for the rationale for the chosen (draft) criteria:

COPS MQ – North America

• In 2008, service providers recognized at least $200 million dollars in revenue in communications IT services. 
• Service provider competes for, and deliver, standalone COPS opportunities to address a growing need for communications selective sourcing.
• Service providers may not recognize more than 70 percent of COPS revenue from a single vertical market.
• Service providers must be able to demonstrate the ability to provides communications outsourcing services as a sole-source, direct provider (communications outsourcing delivered entirely by partners or subcontractors are excluded).
• Service providers must operate in at least 80 percent of the lower 48 states of the United States; and/or,
• Service providers must operate in 8 of the 10 provinces in Canada.
• Service providers must not recognize 80 percent, or more, of their revenue in a single business process or IT service category as the MQ seeks to exhibit broad value.

COPS MQ – Worldwide

• In 2008, service providers recognized at least $300 million dollars in revenue in communications IT services. 
• Service provider competes for, and deliver, standalone COPS opportunities to address a growing need for communications selective sourcing.
• Service providers may not recognize more than 70 percent of COPS revenue from a single vertical market.
• Service providers must be able to demonstrate the ability to provide communications outsourcing services as a sole-source, direct provider (communications outsourcing delivered entirely by partners or subcontractors are excluded).
• Service providers must operate in at least (4) of the (7) geographies tracked by Gartner.  The geographies are: Asia Pacific, Eastern Europe, Japan, Latin America, Middle East/Africa, North America and Western Europe.
• Service providers must not recognize 70 percent, or more, of their COPS revenue in a single geography as the MQ seeks to exhibit broad value.

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:

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. 

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:

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.

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.

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.

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:

• Expense management
• Helpdesk services (as part of an ordering and provisioning service)
• Over-the-Air (remote) handset and application management

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.