 Cover Story
Remote Control
Many leading solutions providers are betting big on remote infrastructure management services
By Dhaval Valia
Just 12 months after its entry into remote infrastructure management services (RIMS), Mumbai-based Acma Computers is planning for a 10-fold increase in the business.
The company, which started its RIMS services in May 2008 with a 1,000-node license, recently bought an additional 10,000-devices license and is increasing both its manpower and NOC infrastructure. Says Biren Selarka, CEO, Acma, “In the first 12 months we have contracted 1,000 AMC nodes under RIMS, over the next 12-18 months we hope to scale it to 10,000.”
Acma is not the only one betting big on RIMS. Mumbai-based Magnamious Systems also has ambitious plans around RIMS after venturing into the business at the end of last year. Explains Jiten Mehta, Director, Magnamious, “Our decision to enter RIMS was sudden, and came in the wake of the global economic slowdown. Many customers wanted to renegotiate their annual contract by almost 30 percent. We knew that such a deep discount would impact revenues and profits badly, but that if we didn’t give it we could lose the customer.”
This scenario compelled Magnamious to find new ideas for offering more value-addition to customers in order to maintain AMC revenues and also retain customers. “We also had to look at ways to optimize our services business so that we could do more with less. That’s when we thought of RIMS,” recalls Mehta.
The company bought 2,500 end-point MSP software, and is now gearing to deploy 10,000 more end-points. Comments Mehta, “We didn’t expect such a fast ramp-up for the business. In fact we were skeptical that customers would be willing to pay a premium for RIMS. However the customer response has been good, and apart from our existing AMC customers we have also signed up new customers on the back of RIMS, thus growing our overall service revenue pie.”
Then there’s Compton Computers. The Delhi-based solutions provider (SP) ventured into RIMS to drive efficiency in its service delivery process and ensure faster turnaround times. Catering to the media and entertainment segment, Compton has a large deployment of graphics-rendering servers and high-end workstations doing real-time graphics editing, a field where SLAs are stringent.
“As the number of machines under our services portfolio grew, it was becoming increasing difficult to manage day-to-day software-related issues which were trivial in nature but required onsite support,” says Sandeep Vahi, Managing Director, Compton Computers.
“Our engineers took a lot of time traveling in the Delhi traffic, thus reducing the number of calls each engineer could make. This delayed our service turnaround and affected customer satisfaction. Our service staffers were also complaining since they felt that they were wasting lot of time solving trivial issues onsite instead of doing something more meaningful.”
But since January Compton has been running a 1,000 end-point RIMS operation from its NOC in Noida, and Vahi expects to have 2,000 nodes under RIMS by end of FY2009-10.
Why RIMS?
While RIMS has been called the next big wave for India’s software and services industry, with majors such as Wipro, HCL and TCS betting big on offshoring such services, what is noteworthy is the growing number of smaller SPs like Acma that are providing RIMS. This development marks the popularization of this service-delivery model among SMBs.
“It’s the right time for SPs to get into the RIMS business because within three years we expect RIMS to become a commodity. It will become a part of every onsite support agreement. SPs who make an entry now will have the time to evolve an optimized RIMS business model and also add managed services around it,” believes Girish Krishnamurthy, Managing Director, Kaseya Software, a leading provider of MSP platform. Since it began its India operations in 2008, Kaseya has sold more than 2,20,000 end-point licenses to MSPs alone.
According to Krishnamurthy, the traditional break-fix service model employed by most channel partners has three broad variants—AMC, facility management and per-call support. All these models are resource-intensive, have lower efficiency, and hence lower profitability. The AMC model usually has 10-15 percent gross margins, facility management services provide 15-20 percent, while the per-call model could earn resellers up to 25 percent.
“In the traditional model, partners often have one engineer to manage 200 nodes though the ideal ratio is 1:100. This leaves the customer infrastructure either unmanaged or undermanaged, and causes customer dissatisfaction. No matter how much a partner tries, in the break-fix model the customer is always unhappy. Customer dissatisfaction leads to lower profitability as he will not pay a premium for the stuff he buys from you,” opines Krishnamurthy.
But with the proactive infrastructure monitoring and management offered by RIMS, partners can prevent IT failures much before they happen. “When we analyzed our onsite calls, we found that nearly 30 percent were software- or virus-related. Now with RIMS we are able to resolve these calls remotely from our central console. We have set up proactive alerts for any new software or antivirus patch that is required, and we install them remotely on the customer end-points,” says Mehta.
Also, in cases of hardware failure, engineers have to be sent to the customer site, first to diagnose the problem and then to install the replacement part. With RIMS, the hardware failure diagnosis can be done remotely and the engineer has to make only one visit to the customer to replace the spare.
“In our estimate a partner can manage 1,000 nodes per engineer using RIMS as compared to the ratio of 1:100 in the traditional model. This simply means that you can scale up your services business 10 times with almost the same number of field engineers,” Krishnamurthy states.
In addition, there’s tremendous improvement in the quality of service provided to the customer, says Compton’s Vahi. “RIMS has helped automate our entire service delivery process, which was manual earlier. We use to physically tag customers’ IT assets for inventory management, but now this is automated. The preventive maintenance that we ran at the customer site every week manually is now automated, and so is the tracking of customer call history. We have set alerts to remind people about various software and service upgrades.”
Says Acma’s Selarka, “In the first year we have seen cost savings of 30 percent in the form of reduced onsite calls. The savings increase as the number of nodes under RIMS rises and you further optimize the service delivery process and add new managed services.”
How to start RIMS
According to the RIMS providers we spoke to, the initial investment required to start the services is in the range of Rs 8-12 lakh. “It took us approximately Rs 7 lakh to set up the NOC infrastructure for 2,500 end-points. Then there’s an opex of Rs 1 lakh per month toward the licensing cost of the MSP software, 1 Mbps leased line, and the salaries of two people we have hired to run the NOC,” explains Mehta.
Many MSP softwares are available in the market such as N-Able, Kaseya, Level Platform, LAN Desk and Adventnet; these are better suited for SMB customers. At the enterprise level there are tools like HP’s OpenView, IBM’s Tivoli, and CA’s Unicenter.
“We considered Open View, Tivoli and Unicenter, but found that the big boys don’t have strong MSP modules,” notes Mehta. “They are better suited for enterprise users. We chose Kaseya because their platform is suited for SMBs. They have a flexible platform that allows easy customization of alerts and reports. Eventually one has to consider the commercials in terms of pricing and local support.”
Chetan Shah, CEO of the Mumbai-based Xpress Computer, and one of the early adopters of RIMS, has chosen the MSP platform from N-Able. “We reviewed a few solutions and found N-Able matching our needs and commercials,” he explains.
Entry strategy
The most critical aspect of the RIMS strategy is to convince the customer to pay for a RIMS-enabled AMC or facility management. Says Mehta, “Initially we faced the challenge of getting premium from customer, so we started pre-loading the products on new machines and started showing them some of the reports which made them realize the value of RIMS. Yes it took six months, but we started getting the extra money out of them.”
Xpress also used the strategy of pre-bundling MSP agents on servers and high-end PCs. “Secondly, we bundle it with AMC contracts when they come up for renewal, especially for servers and the nodes of key managers,” says Shah.
“Since the concept is relatively new, customers are not willing to pay anything above 10 percent extra for remote management services with the AMC contracts,” Vahi says. “In such cases you have to educate them and that’s what we did by running extensive demos and trials. Also, in case of large customers who were not comfortable giving us remote access due to security issues, we set up a local server and had engineers providing RIMS onsite.”
Hyderabad-based Choice Solutions, which has invested Rs 2 crore to roll out RIMS services, recently undertook an exercise to convince one of its large customers about the benefits of RIMS. “We demonstrated the value of this model by deploying an NOC infrastructure within their premises. Our FMS team on the customer premise used to be pretty large—close to 35 engineers—and we reduced the number to five by deploying RIMS,” says Ravi Devulapalli, Director, Choice. Sharing this case study with customers has helped Choice to convince many of its existing FMS customers to use RIMS. “Our strategy has been to show clear ROI calculations to our customers, and show the savings between FMS and RIMS services,” adds Devulapalli.
Right pricing
Apart from creating awareness about the benefits of RIMS, another factor is pricing. Krishnamurthy agrees that the pricing of RIMS is a sticky issue especially in the initial days when the volumes are low and the service delivery process is not optimized. “When we first approached many of our existing MSP partners and did trials for them, they would come back saying that their customers were not willing to pay a premium for the service and hence it didn’t make sense for them to invest in RIMS. So we sat down with them and prepared a three-year roadmap comparing the break-fix model and the RIMS-enabled model. We demonstrated that in the second and third year, once they reach a critical mass, evolve their service model, and optimize their delivery, they would be in a position to provide RIMS at the same price as an AMC.”
Mehta says that after seeing the benefits of RIMS, his customers who were earlier asking for a downward revision of AMCs are now willing to pay a premium of Rs 500 per desktop per annum above the AMC charges. “The art is in packaging the solutions smartly. When they realize significant improvement in infrastructure uptime, they are convinced.”
Channel options
Krishnamurthy is clear that investing in one’s own NOC for providing RIMS is only for those SPs who are looking to deploy a 1,000 end-point solution initially and can then scale up to 5,000 end-points in three years. “For smaller needs it makes sense to look at a hosted or cloud model. Very soon we will be launching these two models for smaller SPs catering to customers having 20-100 nodes.”
Many of the RIMS players are themselves looking to launch their MSP model for small partners.
Choice is betting big on the channel model. “A lot of customers today depend on the reseller for their infrastructure services. Many of these resellers are small, and can only provide onsite resources to support customer infrastructure—they cannot afford to build an NOC on their own. Such resellers are our potential partners. They can outsource the management to us and continue to provide onsite support to customers. In this way, smaller resellers can expand their services to include more customers without much investment,” explains Devulapalli.
So far Choice has signed up 10 partners to provide RIMS, and expects to take this number to 40 by the end of this year. “Our aim is to have 50,000 end-devices under RIMS by the end of the current fiscal; of this 40 percent would come from channels. Our target is to clock $3 million in revenues from this business over the next two years,” Devulapalli states.
There is little doubt that RIMS is slowly but steadily making its way into the IT channels. The concept will gather speed as new software and service delivery models such as SaaS and cloud computing evolve and become popular. Partners starting early in the RIMS arena will have a headstart over their peers. |