Monthly Archives: May 2014

IT Operations Analytics : Opening New Frontiers in IT Operations

In the last couple of years the rumble and excitement around IT Operations Analytics (ITOA) is now becoming a steady, solid noise. As it matures, it will soon be better orchestrated and turn into consistent rhythm.

The buzz is not without any reason. ITOA takes IT operations to new frontiers where it will be more respected by business. No longer will it then be good to find “what happened” or “what may happen” but it would be time to act on such information to “prevent what may have happened”.

The excitement has merits because:

1. This turns the big noise around Big Data internally towards Enterprise IT where analytics will now provide actionable insights from the reams of performance and operational data being generated

2. The focus on Application Performance Monitoring is central through most solutions ensuring that the view is external and not revolving around the internal consumption patterns of IT resources like CPU, memory, bandwidth etc. The focus is on the real life hero — the user (!) and her experience when using the application.

3. Patterns of good performance would be formed across performance metrics through heuristic assisted cognitive logic against which real time performance metrics can be compared to identify propensity to fail before actual failure strikes business.

4. The system will only get better with time. As the deployment matures the system will learn better and get better in identifying false positives and eliminating them.

5. ITOA would bring real integration of machine generated data like log files, performance reports etc. along with user generated data like trouble tickets, change records etc. to analyze and help co-relate these for improving IT operations through learning from the past and extrapolating into the future based on real time data.

6. ITOA will also open the floodgates for several data streams which were not explored as the human processing power was the limiting factor in the past in analyzing streams of performance data from systems, networks and applications. Organizations will be emboldened now to get as much data as possible to support more robust decision making.

7. For the first time business will really appreciate the disruptive and sheer meaningful capability of being able to avoid impact to business than the traditional ability to recover fast once an impact has happened.

Three caveats though:

1. All this can be orchestrated for an enterprise on the back of solid processes (think core ITIL processes) without which decision making and actions will be weak. Technology can still not act without proper decision and action driven through disciplined processes.

2. There will be a cooling period before the returns on investment are visible due to the maturing technology ( key challenges are around false positives and pervasive integration across monitoring applications) and the learning period that is required for such solutions

3. Finally, IT will have to work harder to demonstrate the value it would be bringing! When the impact to business (like an outage) is predicted and avoided, business would never know about the train wreck that was avoided because there was no wreckage. CIOs and IT Directors will need to see that such higher business value is understood and demonstrated for business to continue to partner and appreciate the RoI on such technologies.

Service Provider Dynamics in Executing Offshore Leveraged IT Outsourcing Contracts

With some of the recent trends in contracting models, most service providers (and many reluctantly) have moved towards fixed price contracts. For several years most offshore based outsourcing IT service providers worked on time and material (T&M) contracts. This was lucrative and did not require too much of maths — the key was to tap into the huge labor arbitrage opportunity. However with time and increasing competition the contracts have now moved to largely fixed price contracts where the service provider signs up to manage some of the operational risks which otherwise expose the enterprises in a traditional T&M model.

With all this, what are the key operational issues and dynamics that the leadership team at offshore based IT service organizations looking at when executing contracts (excludes business acquisition)?

1. People, People, People! : Having the right skilled people at the right time.  Most providers have a large staff base pyramid but find that each engagement needs to have some rock stars to manage the clutter and run the operations with low skilled staff base. These rock stars are in short supply and are rapidly thrown at the next big engagement that comes in. The new or the squeakier wheels/clients get these rock stars. These are people who understand technology but more important are articulate and “get it” when talking to clients or their onshore colleagues which happens more often.

The other challenge is to handle sudden exit of key staff which can affect quality of service in the absence of good knowledge management practices.

2.  Managing Staff Aspirations: Linked to the people problem is the associated focus of retaining existing staff. Most individuals would like to rapidly move on to ‘management’ cadre in an organization. This means staying technical and finding a future as a senior technical resource is not on the list of most folks. Part of this has been due to the way these organizations used management roles as carrots and part of it is to do with the colonial hangover where having more people reporting to a person is seen as a sign of authority and growth.

3. Onsite- offshore Dynamics : In all offshore leveraged teams, there is a big internal thing that always goes on between the onsite and offshore staff servicing a client. There are several factors at play but in summary the onshore colleagues always have the upper hand in most discussions since they can use the ultimate trump card of “client has asked for this” or “this is important to keep the client happy”. The offshore leadership team is always embattled in managing the team members, staffing issues, pushing back on what cannot be done in the given time/cost etc. In companies which are offshore headquartered in India ( India based IT service providers) the core leadership is out of India though and so the offshore leaders in an account are often closer to the business leaders and more aligned to them. This can be frustrating for the onsite team in such cases especially if they have not previously worked at offshore locations and hence do not have connects with top management at offshore.

The case of service providers which are headquartered in the US or Europe but have large offshore/India presence is queer though. The dynamics there plays out similarly but here the onshore client facing teams almost always call the shots as they are with the client and the company leadership is also based out of their home location.

Other major point of contention is that face/voice time with clients is mostly with and guarded by the onshore teams. Hence the clients are mostly seeing and hearing the onshore staff who then come back and relay the client’s expectations to their offshore colleagues.  The offshore colleagues most often feel that the client could be handled differently but are not left too many choices. Geographic advantage is always with the onshore staff and the client is often oblivious to the underlying dynamics where there are really two organizations at play.

4. Cost Reduction : In both cases, the offshore based teams are tasked with managing cost and reducing it year-on-year. This comes often at the cost of bloated estimates for earlier years of the contract in a multi-year contract, staff reduction causing service quality issues or some truly innovative work in service improvements or development efforts as the case may be. This really is where clients look at fixed price contract to drive such cost efficiency. Knowing this and engaging with the service provider can help enterprises reap benefits of not just reduced cost but better service quality.

5. Recurring Issues: Ask any offshore based manager and they will tell you that they are spending at least 40% of their time firefighting and responding to escalations,  causes of which are 95% of the times the same. There is so much of thematic recurrence but surprisingly these just don’t stop. And the reason : there is not much done in any of these companies to address recurring issues. Of course when there are big fiascoes with huge penalties paid ( like a Unix admin bought  the SAP environment of a F500 client down when testing some script!!!) there is a lot of work done to how this does not happen again but over time the next big issue takes over and the rules/processes made are no longer enforced and checked to maintain compliance. Also due to staff movement laterally, upwardly or externally there is constant churn of people at all levels and so the new set of people would have not lived the big fiasco to understand the gravity of the changes that were brought on. And so life continues as there are so many clients and so much work that eventually many people get thick skinned to some of these.

6. Service Differentiators : Structurally most offshore service organizations were built around the labor arbitrage which scuttled any focus on innovation and differentiators. Money was cheap and opportunities in bundles. Now as service providers seek competitive differentiators in execution they find that this has not been part of their DNA and the going is challenging from having the right people to think on these to having the teams embrace such changes. There are some very serious attempts in the space of automation and improvement in operating models but the hangover of a labor arbitrage regime continues to slow the progress.

7. Delivery Models : Really looking at what would be the best delivery model in terms of quality of service if the cost and long term strategy is not compromised or better still is baked into it. Most companies can play between onshore (more expensive) to a multitude of offshore based locations. Even within India there are several centers to decide from. Aside of locations, the model of delivery — largely dedicated vs largely shared is a key element that all service providers work through. These may not always be clearly mentioned as both sides may make assumptions but this is one big element which affects service pricing, quality, sustenance and really overall alignment of service teams to client’s business.

 

Europe Opening to Offshoring of IT Services

There is an increasing buzz about outsourcing in Europe picking up in the recent months. For several years most of the offshore based service providers have focused on the North American continent for business. Over the years many also found themselves too dependent on the economy in the US and limited geo-politically. Some companies drove a mandate to spread their eggs across new baskets in Europe.

Europe is outsourcing and offshoring like never before. And increasingly, the beneficiaries are India based IT companies, unlike earlier when the preference was for Europe-based ones. Competitive pressures and cost pressures look to be forcing a change in the continent, which often in the past has been referred to as Fortress Europe for its inward looking policies. 

Many service providers were not looking at Europe as a target market with the same zeal as the US because:

1. With the exception of UK, the policies in most countries in mainland Europe and the general business preference was to be outsource to local players

2, In general outsourcing was not big and so offshoring as a next step was even further away from the agenda. Businesses still preferred local support staff even if it cost more money.

3. It has traditionally been difficult to run outsourcing mandates within European companies (like those in the US) due to their different labor laws which required much more business planning when work is displaced from existing European workers to other countries. The obligations on part of enterprises is much more than that in the US and this continues to be a key obligation for businesses.

4. The region is split (unlike US) into multiple operating units for many businesses and so it has never been a single entity as compared to US which is mostly a single business/country entity for most companies. This was an issue esp with companies with European headquarters

5. For some of the touch services and service desk services, the multiplicty of language that was to be supported outside of English made it difficult to have a set up with the same critical mass as was done with the English across the North American continent.

6. Data Protection Laws being different and in some cases more stringent in Europe/EU with restrictions on nature of work that could be done outside of the continent.

7. Strong local players from the continent and other global players stepped in the recent years with a near-shore centric model which was like a good middle path for most of the challenges. The cost efficiency was not as much as that from an offshore location in India but it provided cost reductions with good skills and language support from locations in East Europe.

Times have changed and with the new focus and in many cases with the leadership for many service providers in Europe coming in form of more aggressive leaders, they are gradually getting to decipher the local nuances and identifying regions and verticals to establish base and spread. Also since cost of operations are generally higher in Europe than in the US, the offshoring business case for the CFO is more alluring and they are looking at finding ways to enable these.

Interesting times ahead for both enterprises and service providers as Europe lowers its fortress walls.

 

Managing Remotely Delivered IT Services

As outsourcing has grown, so have the models of engagement and service delivery. In their attempts to be more competitive, cost effective and with the advent of new players, most mid/large IT services contract have some remote IT services play. The “remoteness” has also morphed from being ‘somewhere in the country’ to being few thousands of miles across the globe. Most service providers today have offshore service delivery factories which provide cheaper labor and in some cases more skilled ones. While enterprise clients are glad to see the same work being contracted for less (or more work being done for the same cost), reality strikes soon as the full implications of an offshored service model plays out.

This is not to underestimate their preparedness of most CIOs and IT Directors. Of course they knew that they need to expect differently but reality dawns on the first and second generation offshorers pretty sharply. Collaborating with teams which have a different cultural background is a totally different experience beyond the language and accent issues. In most cases there is a local onsite team which works with the client but in the first few months it becomes clear that there is an internal divide that exists between the teams at onsite and offshore within the service providers’ organizations. Further, when connecting with the offshore based teams, the whole approach to work seems different if not alien. Also, there are fewer opportunities to work with the leadership team at offshore as most of them do not work post local business hours, which is really prime business hours for most clients in the US. European clients do find some overlaps in time zone but the model at offshore is largely built on a pyramid of low cost labor almost like a factory against the boutique experiences of a dedicated balanced team.

Business colleagues of CIOs are not getting any lenient in their ever growing expectations from IT. This makes the job of CIOs, IT Directors and their team challenging in managing the fine balance of high expectations and a different service model. Frustrations early or during a contract cannot always be met with a plan to change the service provider. In making it work, need for specialized skills and deeper understanding of the local nuances of the offshore teams are key for a stronger partnership with IT service providers.