A data center reality check

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Today's managed services providers need to integrate closely with the IT department.

CIOs are not happy with their managed services providers. A recent study by Info-Tech Research Group found that 42 percent of CIOs who entered into a new outsourcing opportunity said they did not receive the expected value from the relationship. It wasn’t necessarily because the vendors didn’t do a good job, however. In many instances, the CIOs went into the relationship with the wrong expectations, said Darin Stahl, a lead analyst at Info-Tech Research Group.

“They misunderstood how much effort has to go into managing a vendor,” he said. “Data center outsourcing is not a set-it-and-forget-it type of thing.” In addition, many did not take into account the real-world issues and maintenance that can pop up occasionally.

The solution to the problem, Stahl said, is to think of the managed services provider as an extension of the IT department. Once that happens, things move more smoothly and problems don’t seem as daunting. The idea is the exact opposite of what goes on in most data centers, however. Today, when most CIOs talk about their managed services providers, they describe them in terms that make it clear that they are outside the parameters of the IT department. This carries over into all their interactions with the vendor, especially when negotiating new or extended contracts and the service-level agreements (SLAs) that govern them. This is a mistake, Stahl said.

Take something as simple as negotiating an SLA. The biggest problem, Stahl said, is that CIOs and other IT executives take an adversarial approach during negotiations, focusing on the wrong issues. Financial penalties in particular often guide the conversation. For instance, he said he often watches his clients spend enormous amounts of time trying to negotiate financial penalties for non-performance with their outsourced provider.

“If you look at an SLA and demand that you’re going to get 15 to 30 percent of your monthly rate back because the provider didn’t do something within 20 minutes, that’s not really going to matter much in the long term,” he said. “A better strategy is to embrace that failure is going to happen and try to negotiate continuous improvements in mean time to repair.” That’s what most CIOs do internally and with better success, he added.

Other important items that should be included in the SLA discussion are definitions of performance and the specific metrics you will require to check that the vendor is meeting those SLAs. The CIO should also ask to speak with current and previous customers and have the provider detail exactly how the relationship undergoing discussion might end. For example, how quickly can the provider extract your data and equipment from the facility and at what cost?

Another smart tactic is setting up regular meetings with the data center provider. Once everything is going well and you’ve moved into the facility, it can help to sit down with the provider and talk about any new changes and scheduled maintenance for downtime and upgrades that the provider is planning. The CIO should contribute to the conversation, too, explaining any issues and service additions that might be needed.

“While you’re not going to stop the provider from making those changes — and they don’t count toward SLAs usually — at least you know and you’re not going to get grief from the business owners,” he said.

These monthly meetings should be in addition to regular quarterly meetings where you assess the service and resolutions of any issues. “This is when you present your action items and the provider tells you about any upgrades and new services they’ve brought online — new software or batteries,” Stahl said.

Unfortunately, few CIOs are following this advice, Stahl said. In fact, most data center customers have very little contact with their providers until they are about a year away from renewing. “Then they don’t have enough time to plan a move if they are unhappy so they are locked in for another three years with a provider they may not like or trust,” he said.


About this report

This report was commissioned by the Content Solutions unit, an independent editorial arm of 1105 Government Information Group. Specific topics are chosen in response to interest from the vendor community; however, sponsors are not guaranteed content contribution or review of content before publication. For more information about 1105 Government Information Group Content Solutions, please e-mail us at GIGCustomMedia@1105govinfo.com.