Outsourcing’s Brave New World | Article

Colored WireFrom time to time in InfoServer, we focus on an important development in the outsourcing industry. This month, our discussion centers on a metamorphosis that is taking place. IT outsourcing is moving into the brave new world of network-centric outsourcing, where the emphasis is not on the mainframe or client servers, but on the ability to manage the network.

What this means, basically, is that the center of the infrastructure is changing. Originally, the data process infrastructure centered around the mainframe, and other services such as management of the network and desktops orbited around that center. Now, with the shift toward distributed computing, the network has become the center of the infrastructure, and servers and other components orbit around that new center.

From this trend has emerged a new type of outsourcing, one described not by equipment but by the capability for all the nodes or pieces of equipment on the network to communicate with one another. The focus is on applications and their effectiveness, rather than where they run. With access to applications and high levels of responsiveness established as the goals for network-centric outsourcing relationships, the key components to success now are effective network configurations and management of network performance.

Major Players

The shape of this new outsourcing business may best be described by Andersen Consulting’s Service Net, in which applications are written to be accessed from anywhere in the world and designed to reside on the Andersen network and run over Andersen servers. Rather than running on a single server or series of servers, the applications often are replicated through Lotus Notes to run simultaneously in all the Andersen data centers throughout the world. That gives Service Net customers the ability to get the same applications running concurrently to serve their worldwide constituency without having to implement their own network or upgrade the network to handle increasing capacity or security issues.

AT&T Solutions, which offers similar services, is the poster child for this new type of outsourcing. The company’s phenomenal growth has been driven by their response to this new shape of the infrastructure. AT&T Solutions has gone beyond what some companies are doing by moving its model from doing just network management to defining as part of its services anything that attaches to the network.

With this metamorphosis of the infrastructure have come changes in the key issues. In the traditional server-oriented environment, the issues were mainframe or server availability and server response time. Performance was described in terms of server performance, with less attention to the network. In the new model, the issues that take precedence are security, access and end-to-end response time. Essentially, customers are buying accessibility and the capability of the network, as well as the security associated with that.

The Drivers

The drivers for network-centric outsourcing are multiple and diverse. First, we have an environment in which the infrastructure is being increasingly dominated by desktop services, a fact that has triggered the emerging importance of the network. Added to that are the difficulty in retaining world class network management expertise and the challenge of effecting even implementation of network services in a variety of locations, whether that be around the world or across the country. The need for that even implementation is amplified by the trend toward a peripatetic work force that demands new and better ways of communicating.

Then there’s the rapid pace of change in technology. It’s very difficult for a company to continue to evaluate and implement the new technology that’s coming on the scene almost every day. Prime examples are the emerging roles of both the Internet and intranets as components of companies’ networks.

Technology is the linchpin for network-centric outsourcing. Servers have become cheaper and more stable, creating a situation where more can be demanded of a network. And those demands are increasing. Many applications today are written to run on a network rather than a single server. The underlying technology is changing constantly, as evidenced by the Internet, radio frequency, and cellular.

While cost is no longer the primary driver in outsourcing, it must be considered, and network-centric outsourcing is no exception. The costs of investing in and keeping the tools and techniques necessary for effective network management are high. Key outsourcing providers offer substantial economies of scale by being able to leverage their security, backbone networks and expertise.

Outsourcing’s New Shape

This then is the new shape of IT outsourcing. The evolving infrastructure requires expertise in the network, and that expertise is scarce. Applications are demanding more and more of the network, and even implementation can be essential to business success. Out of this shifting environment has grown network-centric outsourcing, where the focus is on network management and the potential for growth is unlimited.

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