Huge untapped opportunity in Indian RIM space
THIRUVANANTHAPURAM, INDIA: As Remote Infrastructure Management (RIM) gains in popularity, there is a shift in demand from basic management services to help with more complex initiatives, says AN Rao, vice president, ITIS Practice, Cognizant, in a detailed interview with CyberMediaNews.
Going by a recent Nasscom-McKinsey study, outsourcing of Remote Infrastructure Management (RIM) services could become a $13-15 billion opportunity for the Indian IT industry over the next five years. What is the kind of growth you see here?
India continues to be the primary offshore destination in the RIM space. However, India’s current share of this market is only $4 billion. There exists a huge untapped opportunity in this space for India.
Within Cognizant, IT Infrastructure Services (ITIS) is one of the fastest growing practices. In 2009, we grew our RIM revenues well above the company growth rates of 16.4 percent. The growth has been broad-based, coming from new geographies, such as Continental Europe, and new RIM services such as integrated services, cloud and emerging technologies.
With the Indian IT and ITeS companies tilting towards increased adoption of off-shored or remote IMS outsourcing, does Cognizant believe in such a potential in the coming decade? Where does Cognizant see itself in this arena of increased adoption of RIM services?
We are very optimistic and well positioned to support clients in this space in 2010. New geo-market opportunities in Europe, consulting and professional services, and complex multivendor service integration are some of the growth areas.
As RIM becomes more popular, there is a shift in demand from basic management services to help with more complex initiatives. The reason: while the initial emphasis was on cost reduction, RIM is being used for its business benefits and strategic impact on the organization.
“Integrated services” using RIM are also favored by companies where the service provider is responsible for the full stack, which includes business application support, thus shifting the focus from technology SLA to business KPI.
Could you please elaborate on the new trends in offshoring of Infrastructure Management Services and remote infrastructure management?
One significant trend in the infrastructure market is that of the convergence of traditional and offshore players. By virtue of its asset-light approach, RIM gives companies control over their IT assets. Companies, today, are looking beyond just transactional technical support from service providers.
They are engaging service providers in transformational services, such as risk management, virtualization and cloud computing. On their part, offshore providers are relooking and changing their pricing models to accommodate utility-based pricing that helps companies pay only for what they use.
We are also witnessing selective sourcing approach in terms of services. Another emerging trend for offshore providers involves multi vendor integration, with the shift from large monolithic deals to a multivendor sourcing strategy.
Could you tell us briefly on how companies would benefit from RIM? What would the market offer RIM?
RIM benefits are numerous: cost reduction through offshoring remote management tasks, service improvements through SLA compliance, improved productivity through tool automation, productivity gains and reduced risk through asset light approach and operational transparency.
RIM leverages standard tool sets and common delivery methods and processes (ITIL, ISO, and Six Sigma) that can drive costs down and free up capital. RIM also promotes virtualization for servers and storage along with automated tools for enhanced service delivery.
Traditional RIM is beginning to yield transformation outsourcing. Cognizant provides flexible delivery models to meet the needs of each client’s unique needs. The shared services global delivery model has resources across projects and provides cost efficiencies and nimbleness for highly standardized projects with smaller team requirements.
What are the key growth areas in RIM services?
RIM services continue to grow in all towers. However, there is significant growth in convergent telecom and network management services, database management services, server services, dynamic IT infrastructure services, and data center services.
Consulting and system integration services around IT Service Management, virtualization solutions and cloud computing are the other key growth areas. Business KPI-aligned integrated services form an aggressively emerging opportunity where Cognizant is taking a leadership position.
As multi-vendor deals take a larger share from single-vendor mega deals, multivendor service integration is a rapidly emerging opportunity. Nontraditional services in the integrated service domain such as TEMS (Test Environment Management System) and Common Command center are emerging areas.
What are the challenges?
RIM can be challenging if too much emphasis is placed on cost savings, at the expense of SLAs and contract terms. It may not be the best option where there is a demand for high-end technical and delivery resources, which can potentially negate cost savings.
RIM may not deliver significant benefits at low support volumes unless combined with alternate delivery models, such as shared delivery structures. RIM can also be challenging in managing a legacy environment, where firmware and hardware administration is as crucial as the management of operating systems and solutions.
This entails moving from skill-based tribal knowledge operations to knowledgebase process-oriented operations. Acceptance of RIM as a joint responsibility, in the customer mindset, may be a complex change management issue.
Could you tell us more about Cognizant’s activities in this arena? How would you explain your next generation RIM 2.0?
Cognizant’s RIM 2.0, consists of a set of robust and clearly defined processes and services that are easy and safe to implement and ensure predictable and superior business results.
In addition, our portfolio of services provides a cost-effective and proven onshore/offshore model that delivers a repeatable set of productized services wrapped in the process maturity of our RIM 2.0 methodology.
This provides our clients with infrastructure management at a predictable fixed cost, reduced downtime, improved availability, and better performance. RIM 2.0 provides a flexible, yet disciplined approach to IT infrastructure management that typically reduces 20-40 per cent off IT support costs.
Cognizant’s next generation RIM 2.0 is uniquely positioned to provide the ultimate in customer satisfaction, using the following four pillars:
OnTarget Framework – mature framework for delivering automation to clients with a strong integrated monitoring and full featured ITIL based incident management system.
Operations Maturity Model-enable best-in-class, consistent, and cost efficient IT IS service delivery to customers, from global delivery centers, using standard process frameworks, tools, and metrics.
Productization – Cognizant’s Managed Services are well defined and documented using a “factory model” concept. This ensures consistent processes, delivery and reporting mechanisms.
Global Delivery Model – Cognizant provides flexible delivery models (dedicated, shared and hybrid) to meet the needs of each client’s unique needs.
RIM 2.0 framework offers a high degree of operational flexibility and customization to suit infrastructure requirement of organizations operating in different lines of business, with an unparalleled emphasis on execution.
How big is Cognizant’s RIM practice? How well have you charted out your expansion in this regard?
Cognizant’s ITIS headcount has doubled in the last two years and we are consistently increasing our employee base to meet the growing demand in the infrastructure space. Much of it has been non-linear revenue growth.
In addition to the Global Operations Center (GOC) in India, our GOCs in Budapest and Holliston are operational and seamlessly integrated with the Indian Center. The ITIS line of business has been identified as a key strategic growth engine in 2010.
As part of our endeavor to provide our clients with the best-in-class delivery and consulting services, in 2009, we acquired Pepperweed Advisors, a company recognized as a high-end consulting business services provider with a primary focus on IT Infrastructure Library (ITIL) and IT process improvement and governance.
It brought on board mature consulting experience, along with top quality consulting and process tools that have helped us enhance our current consulting service offerings in IT Service Management (ITSM) and IT Asset Management (ITAM).
Later in 2009, Cognizant acquired UBS ISC (India Service Center), which has significantly extended our capabilities in IT Remote Management Services and has also enabled us to reduce time-to-market, expand service delivery, and enhance productivity, operational efficiency, and quality.
How would you explain selective outsourcing?
Traditionally, large enterprises outsourced their entire IT operations, including Capex and Opex IT spends. This has changed over the last few years. In the last five years or so, the trend indicates that the number of ‘mega deals’ has come down globally.
Companies have started looking at different vendors for different services. The emergence and maturity of offshore-centric providers into the big league and customer confidence in global delivery model have had their impact on how companies look at outsourcing.
Today, customers can pick the most suitable partners for IT outsourcing and this has led to what we call as ‘selective sourcing’ or ‘best-of-breed’ sourcing.
This helps customers break up the functions that they want to outsource and retain some in-house without losing control or knowledge on the business context of their IT infrastructure. Typically, in the selective sourcing model where there are two or more service providers, customers have the flexibility to benchmark performance and price points on a regular basis and are in a better position to make changes, as necessary.
The maturity and confidence in Remote Infrastructure Management services over the last few years have made an impact on how traditional ITO deals are structured.
Many large and mid-sized organizations have adapted selective sourcing strategy to partner with the best ‘fit for job’ providers. In short, the selective sourcing model is a modular sourcing model compared to traditional ITO mega deals model; and a far more mature model compared to out-tasking model.
What are the factors to be taken into account while considering RIM? What are the most critical factors considered when selecting an IT service provider for infrastructure management?
According to the 2008 survey conducted for Cognizant by Ziff Davis Enterprises and the Strategy Group, the service provider’s technical expertise tops the list. This is followed by service guarantees offered by the provider and guaranteed response times to resolve problems. Respondents did not consider location of the provider’s operation center to be very important, according to the survey.
One of the critical factors to be considered when selecting a service provider is to first identify the business reason to outsource the current operations to be managed by a third party.
It may either be the cost factor or a business decision to outsource all non-core tasks or reduction of risk. Vendor ability to provide a flexible approach and demonstrate investments in emerging technologies, new delivery and pricing models is critical. Other business drivers to consider RIM, are the length of the engagement, the level of automation and the levels of required support.
