How to Assess Risks and Choose

the Right Service Provider for

According to a study by 451 research, the amount of DataCenter space is growing world over, on average, about 9%a year. Cost of power is only increasing and will continue toskyrocket in times to come, owing to shortage of variousresources for generating and distributing power. WithinIndia, it is only getting worse day by day. Another key factoradding to cost of datacenters is the shortage of skilledresources to man data center operations.

Demand is really rising and growing faster than supplymaking running of owned-and-managed Data Centers to bean extremely complex and expensive proposition fororganizations.

Data Center Outsourcing has emerged as a winning strategythat CIOs are increasingly adopting in India to ensure thatthey can do more with less - outsource pieces of IT thatexperts in the industry can manage for them.

And, major forces are shaping this market. Physicallimitations of existing captive DCs are a major concern forCIOs across the globe. Some of the key challenges faced bycaptive DCs are:

� Advent of high-density computing technologies� Increasing volumes of storage � Coping up with increasing power and cooling

requirements and escalating costs� Technology refresh � Need to consolidate for efficiency and security � Technologies relating to SMAC (Social, Mobile, Analytics

and Cloud)

Risks Associated with Outsourcing

The fact remains that outsourcing is not only based on

Data Center Outsourcing

How to Assess Risks and Choose the Right Service Provider for Data Center Outsourcing

financial gains - it is not just about the economics. The mostimportant aspect of outsourcing is the level of maturity of theclient organization - if the organization is mature enough tomanage an outsourced partner, do they have a culture tosupport outsourcing, etc. These are the factors that oneneeds to find answers to before evaluating on the financialaspects of outsourcing.

Even within the financial aspect, CIOs of client organizationsstarts answering questions like what is the scale, what is thehorizon of the particular investment, what kind of businessgrowth can be expected that needs to be supported by IT.

One of the risks that challenge CIOs while outsourcing theirData Center operations and infrastructure is that associatedwith loss of control over their assets and intellectualproperty. It is very important for CIOs to admit that it is nowa third-party operation and control over assets issignificantly reduced. They need to look for ways to put inplace a governance framework and to safeguard theintellectual property that might be at risk.

Another important point to consider while outsourcing DataCenter infrastructure and its management is how toseamlessly integrate the organizations processes with thatof the Outsourcing Service Provider (OSP). It is importantthat these processes are monitored continuously to avoidthe risk of poorly performing processes at the OSP level, andmitigate any issues resulting from it.

By the virtue of leaving substantial control of assets andmanagement in the hands of an OSP, there is the inherentrisk of business getting affected because of SLA non-conformance by the service provider. Risk of businesscontinuity resulting from this non-conformance should bemitigated by carefully planning the outsourcing strategy,clear expectations setting from the beginning, ensuringchoice of the right partner for the deal and putting in place astringent governance framework.

It is also important that the service providers as well as theclient organization be sensitive about changing regulationsand its impact on the technology piece. Choosing a partnerwho does not have the expertise in the domain of the client'sbusiness increases risk substantially.

Finally, financial implication of changing costs and exchangerates if applicable has to be monitored regularly. Projecttimes lines as planned and the financial implications of anydelays have direct impact on the perceived benefits of anyoutsourcing deal.

Service Provider Landscape

The resulting offering in the marketplace today is veryinteresting. Service providers are exploring multipledirections to offer these services from various vantagepoints - each having its own limitations and benefits.

Major among types of providers are:

� Telecommunication Providers� System Integrators � Technology Providers� Data Center Providers (Table 1.1 chart gives details of description, benefits andlimitations of these service provider types)

2

Chart 1.1: Strengths and Weaknesses of various provider types

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Choosing the Right Data Center OutsourcingPartner

Here are some of the considerations and evaluation criterionfor choosing the right partner to outsource your Data Centerinfrastructure and management:

Understanding Provider Types

It is important for client organizations to evaluate serviceprovider types and choose partner based on the present andfuture needs. Table 1.1 will give details of benefits andlimitations of the various service provider types.

Financial Health

An assessment of the financial health of the OSP is a keyconsideration while putting the responsibility of the DataCenter operations in the hands of a partner. It is importantfor partner to be able to invest in technologies and people tostay ahead of their competition and able to deliver best-in-class services that can propel your business.

Innovation

Innovation is what sets you apart - it is important to analyzethe innovation quotient of the OSP before signing a multi-year deal. Innovative approach to products and solutionscan benefit client organizations to help them do more forless.

Proven Track Record

The partner's track record in maintaining and deliveringsolutions on a long-term basis to clients in the same domainas the client organization proves the ability to deliver robustand performance-based solutions. It is important that thepartner has domain expertise in managing and continuouslydelivering to clients.

Responsiveness of the Partner

It is important for partner to be responsive to every need orrequest of the client organization. Evaluating an OSP onresponsiveness to various technology and businessdemands is a clear consideration to ensure that they arealways committed to supporting the future needs of theclient.

Technology Agnostic

OSPs should be able to support multiple technologyplatforms without selling or being proponents of a particular

one. Being technology agnostic helps organizations withvarious needs and demands.

Pricing Strategy and Flexibility

The partners' flexibility in pricing and ability to tweaksolutions to meet the needs of the client organization is verycritical. Their ability to manage deals, pricing and solutionoffering is a key consideration.

Ability to Attract and Retain Talent

In today's business environment the biggest challenge is thepeople challenge. CIOs constantly battle with the lack ofskilled resources available to run critical parts of their IT. It isthus important to evaluate the OSP's ability to hire and retainhighly skilled people, and keep them motivated.

Product Strategy

The OSP's product development and delivery strategies arevery important in deals that are long-term. It is important thatthe clients future need, market changes are taken intoconsiderations into the OSP's product and deliverystrategies in order to ensure that growth of the client'sbusiness is never hindered.

Geographical Reach

For most growing businesses it is important that theirstrategic partners also have the ability to quickly ramp uptheir services and reach as and when required. It isimportant to choose an OSP partner who has a global reachin delivering and supporting services across boundaries.

In Conclusion

While the advantages are many, the most significant wouldstill remain - peace of mind - from realizing that theorganization's backbone, mission-critical systems are in thehands of an expert, secured and always available to thebusiness.

CIOs should evaluate this new breed of service providers -Data Center Outsourcing providers - who can manage theentire lifecycle of the data center infrastructure; and ofcourse, not forget to evaluate risks involved in the wholeprocess.

Where are you in your quest for enterprise-class, future-ready IT Infrastructure? Are you evaluating Data CenterOutsourcing as a strategy that can have obvious andtangible business benefits?

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How to Assess Risks and Choose the Right Service Provider for Data Center Outsourcing

marketing@netmagicsolutions.com www.netmagicsolutions.com1800 103 3130

About Netmagic Solutions (An NTT Communications Company)

Netmagic, an NTT Communications company, is India’s leading Managed Hosting and Cloud Service Provider, with 8 carrier-neutral, state-of-the-art datacenters across the country. Established in 1998, Netmagic has been a pioneer in the Indian IT Infrastructure services space as it was the first to launch services such as cloud computing, managed security, Disaster Recovery-as-a-Service and software-defined storage. An IT Infrastructure Partner to more than 1400 enterprises globally, Netmagic, also delivers Remote Infrastructure Management services to NTT Communications’ customers across Americas, Europe and Asia-Pacific region. Netmagic is the recipient of several industry accolades and was recently chosen by India’s CIO community as the best service provider of Datacenter Managed Services and Cloud services, at the CIO Choice 2015 Awards.NTT Communications has subsidiaries and offices in 43 countries / regions, with over 21,600 employees worldwide. It had total operating revenues of 1230bilion JPY for year ending March 31, 2014 and has infrastructure worldwide, including leading global tier-1 IP network, the Arcstar Universal One™ VPN network reaching 196 countries/regions, and 130 secure datacenters.

NTT Communications is a part of NTT Corporation, Japan – one of world’s largest telecommunications companies and ranked 53 on Fortune Global 500 list (2014).

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About NTT Communications Corporation

NTT Communications provides consultancy, architecture, security and cloud services to optimize the information and communications technology (ICT) environments of enterprises. These offerings are backed by the company’s worldwide infrastructure, including leading global tier-1 IP network, Arcstar Universal One™ VPN network reaching 196 countries/regions, and over 150 secure data centers. NTT Communications’ solutions leverage the global resources of NTT Group companies including Dimension Data, NTT DOCOMO and NTT DATA