Beating the slowdown
With economic slowdown imminent, some service providers are betting on remote infrastructure management services to beat the downturn
By Priyanka Chowdhury
Despite the slowdown, one business that seems to doing pretty well is remote infrastructure management services (RIMS). According to market projections, the RIMS market in India is expected to cross Rs 300 crore by the end of FY08-09, and grow at more than 30 percent over the next three years.
Says Bimal Raj, CEO of Mumbai-based Allied Digital, “While demand for IT products is slowing down, we have seen revenues from RIMS grow at an exponential pace. In the JAS 2008 quarter, our RIMS revenues touched Rs 34 crore. In the first two quarters alone, we have seen our RIMS revenue quadruple over last year’s revenue.”
Chennai-based systems integrator, Precision Techserve (PT), has also seen a healthy growth in its RIMS business. “We have seen a rise of around 30 percent in RIMS. We forecast this growth to accelerate in the next three years,” says P Ramesh, Founder Director and CEO of PT, which manages nearly 50,000 end-points in the country.
Ramesh analyzes the opportunity in detail. “In view of the expected global recession, the Indian CIO is focusing on reducing the cost of IT operations, and is increasingly looking to outsource the IT management function. Another reason for the growth is that organizations often face a shortage of qualified and trained professionals, especially domain experts. This, in turn, helps to push organizations to spend a large portion of their budget on labor. Hence, sharing of expertise through RIMS has become an important way to reduce costs. The increased dependency of business on IT has put enormous pressure on organizations to continuously increase the efficiency bar on service levels, including the availability of round-the-clock services and instant support for outages.”
According to PT, the segments that are leading the demand for infrastructure management services are banking, finance, insurance, manufacturing and telecom. Notes Ramesh, “There has been an increase in the demand for RIMS from the IT and ITES segments in India. With the telecom and retail sector booming, we also expect to see demand from these verticals soon.”
Mumbai-based solutions provider, Orient Technologies also plans to cash in on the opportunity. The company is in the initial stages of setting up an NOC, and has allocated around Rs 4 crore for the project. “The slowdown in the economy will surely force customers to look at more cost-effective ways of managing their IT infrastructure. It’s not just large enterprises; even SMB customers in many verticals are opening up to the concept of RIMS,” says Umesh Shah, director at Orient.
Kaseya, a UK-based $200 million provider of RIMS and MSP platforms, is making a strong bid to corner a share of the managed services market in the country. Says Girish Krishnamurthy, Managing Director, Kaseya India, “We reckon India as the second-largest market for managed services after the US. Not only is the domestic demand for managed services growing at a fast pace, but several SIs are also investing in providing offshore remote managed services to clients globally.”
The company has recently opened an office in Mumbai, in addition to the one in Bangalore. It plans to open offices in Delhi, Chennai and Hyderabad over the next quarter. Operating in India for a year, Kaseya has invested about $10 million to set up an NOC at Bangalore. It presently manages around 1,25,000 end-points in the country, while globally it manages three million. “We are also in talks with SIs to deploy our MSP platform. We have multiple offerings ranging from 100 to 5,000 end-point licenses, and our pricings can go as low as Rs 15 per end-point per month,” reveals Krishnamurthy.
Smaller solution providers are also jumping on the RIMS bandwagon. Mumbai-based Express Computers has invested in a RIMS operation with a 500-device MSP license. “Currently, we have 20 customers from the SMB
Segment with an IT infrastructure
ranging from 20 to 250 nodes,” informs Chetan Shah, MD of Xpress. He expects to double this customer base in 2009.
Biren Selarka, CEO of Mumbai-based Acma Computers, is also bullish about RIMS taking off, and has licensed a 500-node MSP platform. “With the slowdown, SMBs are looking at
controlling their operating expenditure by decreasing the number of people in the organization while including more technology-based solutions. This makes RIMS attractive to them.”
Appreciable savings
According to Raj, RIMS allows a customer to save up to 20 percent of its IT budget. “Companies not only save on HR costs but also in terms of enhanced productivity due to more uptime,” he points out. Adds Umesh Shah, “Some of the benefits that RIMS provides to its customers are lower downtime, customized solutions, complete 24-hour support, efficiency in service delivery, availability of domain experts, and measurable and metric-based service delivery processes. RIMS is also the best way to scale up the level of service as and when the demand grows.”
The pricing of RIMS is also quite competitive. Chetan Shah provides some figures. “Right now our prices range from Rs 600 to Rs 800 per server per month, and Rs 130 to Rs 160 per client node based on the type of services they want us to provide. As the demand for RIMS increases, there will definitely be a drop in the prices of the services. With the growth in the popularity of RIMS, companies will also soon start providing value-added services (such as e-mail filtering) to their customers which would make RIMS even more attractive.”
Major challenges
Because the concept is still young, partners face a lot of challenges in providing RIMS. “One of the major obstacles we face is the low awareness about the service among our customers,” comments Selarka. “They are also apprehensive about security and the privacy of their confidential data.”
Another challenge is to meet the stringent quality of service that customers expect. The current standards of infrastructure management are ITIL and ITSM, but complying with these requires substantial investments by channels in systems and processes. Says Krishnamurthy of Kaseya, “Setting the SLAs and deciding the pricing are the biggest challenges. For RIMS to succeed, providers will have to set and abide by high standards for service delivery, for which they need to have a quality framework in place.”
The future of RIMS seems to be quite bright. Prices of the services will drop, thus making them more accessible to customers. Partners also believe that it will be progressively easier for them to deploy higher-end platforms. According to Ramesh of PT, “RIMS will not only be easier to deploy in the next one to two years, but there will also be an increase in the acceptance of open source tools. In addition, cost-effective tools will replace high-cost enterprise tools.” |