Analysis of MF

A REPORT

ON

Customer Segmentation Analysis of Managed Services: A case study of Oracle Solution

Services India (SSI)

BY

Vishesh Kumar

(Enrollment No. 10BSP1181)

Name of the organisation:

ORACLE SOLUTION SERVICES INDIA

A REPORT

ON

Customer Segmentation Analysis of Managed Services: A case study of Oracle Solution

Services India (SSI)

By

Vishesh Kumar

(Enrollment No.-10BSP1181)

ORACLE SOLUTION SERVICES INDIA

A report submitted in partial fulfilment of the requirements of PGPM Program of

IBS Bangalore

Distribution List:

Faculty guide Company guide

Dr. Ashish Dash Mr. Suresh Seetharaman

Date of Submission: 10-04-2023

Authorisation

I hereby authorise that the project entitled “Customer Segmentation Analysis of Managed Services: A case study of Oracle Solution Services India” conducted at Oracle Solution Services India Pvt.Ltd. is a record work carried out by me during the academic year 2011 under the guidance of my faculty guide, Dr Ashish Dash, faculty for economics at IBS-B, Bangalore and my company guide Mr. Suresh Seetharaman. I also declare that this project is the result of my effort and has not been submitted to any other university or institution for the award of any degree, or personal favour whatsoever. I also declare that all the details and analysis provided in the report hold true and to the best of my knowledge.

Place – Bangalore

Date – 10th May, 2011

Acknowledgement

I hereby take this wonderful opportunity to thank all those people who have helped me in one way or the other in successful completion of the project. The guidance and support of these people have been immense and invaluable throughout the project.

I extend my heartiest gratitude to Mr. Tarakesh Tummapudi and Mr. Anand Huchappa, of Oracle Solution Services India Pvt. Ltd. for giving me the best opportunity to work as an intern in such an esteemed organisation.

I also thank my company guide Mr. Suresh Seetharaman for his valuable inputs at various stages which has proved to be really useful in structuring and carrying out the project.

I would specially thank my faculty guide Dr. Ashish Dash, faculty of economics at IBS-B for all the encouragement and indispensable feedback.

I also take this opportunity to thank all the people who have been directly or indirectly related to this project and have helped me in some way or another.

CONTENT

1. Executive Summary

2. Managed Service Industry Analysisa. Global Marketb. Indian Market

3. Managed Services Benefits & Challenges

4. Competitor Analysisa. HPb. IBMc. HCLd. Wipro Infoteche. Rolta TUSC f. TCSg. Accentureh. Dell

5. KYC Analysis

6. Appendix A (Delivery Models)

7. Appendix B (Pricing Model)

8. Appendix C (Major Deals)

9. Appendix D (MS Applications & Technology Updated Data)

Executive Summary

This report is the result of the research and survey conducted by me, Vishesh Kumar (Enrolment No. 10BSP1188) while working as an intern in Oracle Solutions Services India Pvt. Ltd. situated in Bangalore.

Oracle SSI is a premier offshore consulting division of Oracle Corporation. Customer engagement happens through Oracle’s local service organization to deliver services & solutions to Oracle customers across the EMEA, APAC & North America (limited coverage) regions.

Title of Project: Customer Segmentation Analysis of Managed Services: A case study of Oracle Solution Services India(SSI).

Objective: In-depth analysis of managed services industry and competitor analysis. Analysis of the OSSI customers. Recommend a better bidding process for OSSI.

Background

This report is based on the secondary data collected from the internet. First part of this report contains the analysis of market opportunities for managed services both in global context and in Indian market. The second part contains the analysis of the managed services provided by some of the key players such as:

• Dell • TCS

• HP • Accenture

• IBM • Wipro Infotech

• HCL • Rolta TUSC

The third part of the report contains findings about oracles customers segment and the SWOT analysis of oracle managed services along with recommendation for a better bidding process.

In order to make this report I have collected secondary data from latest published reports by some of the prominent information technology research and advisory firms. I have also prepared a questionnaire to collect primary data on oracles internal customers.

Findings & Conclusion

On completion of my tenure of 14 weeks of work at OSSI I found that global market for managed services is showing a huge potential and is growing at almost 30% compounded annual growth rate, the research also indicates that Indian managed services market is huge and is growing at a tremendous rate and is expected to reach US$3.8 billion by 2013.

After analyzing all the data I concluded that Oracle needs to curve out their niche market in the managed services industry and should focus on retaining their existing customers as they are offering only limited services.

I would like to recommend OSSI that they should focus on improving their bidding process and strengthening their resource pool in order to get a large share in the exponentially growing managed services market.

INTRODUCTION

This report is based on the research I have done in the managed services industry while working as an intern in Oracle Solution Services India Pvt. Ltd. (henceforth used as Oracle SSI) starting from 1st March 2011 up to 30th April 2011. During my period of work in Oracle SSI a lot of important topics have been covered and a lot of secondary data has been collected on the managed services industry. The findings of the research are given.

Included in the report are some analysis of the industry like who are the top players in terms of revenue, what are the services offered by them. The report is also closed with references.

I hope that this report serves well to all the readers who need information on the Managed services industry.

Company and Industry Information

Oracle SSI:

Oracle SSI is a premier offshore consulting division of Oracle Corporation. More than 1000 consultants focus entirely on Oracle Applications & Technology at SSI. The team brings to fore its experience of having executed more than 1200 engagements across 35 countries & 15 industry domains. Customer engagement happens through Oracle’s local service organization (maintaining the single point of accountability) to deliver services & solutions to Oracle customers across the EMEA, APAC & North America (limited coverage) regions.

Services are offered for all stages of the solution lifecycle, from design, implementation, maintenance, optimization to upgrades. Applications covered include Oracle E-Business Suite, Siebel, Oracle Retail, PeopleSoft, JD Edwards, OTM, Demantra & Agile. Technology services and skills cover integration and SOA, security services, J2EE, rapid applications development, content and collaboration, business intelligence, data warehousing, architecture, upgrades and migration, and so on.

Co-located with the Oracle’s product development & support teams, Oracle SSI leverages access to various Oracle teams to build industry solutions, best practices & services that help customers best leverage their Oracle investments.

Industry Definition

Managed Services: According to Wikipedia “Managed services are the practice of transferring day-to-day related management responsibility as a strategic method for improved effective and efficient operations. It’s a remote management of information technology to support a business customer’s processes. A managed service typically contains the following characteristics: remote provisioning and trouble management, remote monitoring of all solution elements, detailed service-level agreements, and contracts that extend beyond one year.”

Managed Services Industry Analysis

Global Market

Ovum, a consulting firm that specializes in telecom and software consulting, released a study projecting that the global market for managed services will deliver revenues of $66 billion by 2012.

The study, which collected data from more than 1,300 enterprise managed service users in 14 countries, projects that managed IP-based services will see a compound annual growth rate of 18% over the next four years.

Overall, the study finds that the managed services generating the most interest among corporate users are managed metro Ethernet, managed IP, VPNs, managed VoIP and managed security.

IP VPN services are the largest global managed services market, with revenues totaling $17 billion, the study finds. While the study projects VPN services to remain the most widely deployed managed service in 2012, it also says that VoIP will experience the fastest growth over the next four years with a 39% compound annual growth rate (CAGR).

Other studies have also shown a fast-growing market for managed security services. Data published by business research and consulting firm Frost & Sullivan, for instance, projects that the managed security services will exceed $6 billion by 2011.

In addition to its findings on global managed services growth, the study also projects that North America has overtaken Europe as the largest overall market for managed services, and that the Asia-Pacific managed services market will see 27% CAGR that the study says will be driven mostly by growth in India and China.1

Fig: Global Managed Services Growth Rates.

Source: “Next-Generation Managed Services: Winning Strategies for Network Service Providers,” Cisco IBSG, October 2008. Additional analysis provided by Datamonitor; IDC; Frost & Sullivan; Forrester Research; and Gartner, Inc.

1 Study conducted by Ovum Consulting firm that specializes in telecom and software consulting.

Indian Market

The IT managed services market in India is growing at a CAGR of 22.8%, according to IT market research specialist Springboard Research's newly released report 'Indian Managed IT Services Market'.

The market is expected to reach US$3.8 billion in 2013 from US$1.6 billion in 2009, and this growth is higher than the growth rate of the overall IT services market.

The report says that Wipro Infotech has the highest market share, and HCL Infosystems leads in user satisfaction.

By 2013, the highest growth will be recorded by managed application services that are predicted to grow at a CAGR of 26.2%.2

The worldwide recession and the competitive market have made the companies realize the importance of making the optimum use of their IT infrastructure and finding innovative ways to reduce the cost. In addition, as the companies grow, they have to deploy complex applications to function efficiently; and deployment of such applications leads to issues like security, business continuity, disaster recovery, controlling and monitoring etc. In midst of all these companies also have to ensure that they provide quality services to their users. The Managed Services providers (MSPs) have come as blessing for the companies to take care of all the above mentioned issues and problems.

The Indian managed services market is huge and is growing at a tremendous pace. Some of the current trends in the Indian market are:3

Managed Application Services: It has gained prominence as applications have become more complex and mission critical; as a result proactive and 24x7 monitoring of applications for performance, capacity and availability have become extremely important.

Integrated Application Support Services: It involves all the end-to-end application support, and different lines of support services.

Application Maintenance Support Services: It includes end user support, code maintenance and bug fixation, data conversion and migration, specialized reports, application interfacing, integration etc.

Managed Security Services: All the companies have become extremely security conscious but instead of hiring people on their own, they seem to prefer to outsource to the security management services providers who are clearly the domain experts.

Managed Load Balancing Services: Major Telecom and IT companies are slowly outsourcing their load balancing (which ensures that the work is equally divided between the servers) services.

Managed VoIP Services: Many companies prefer to outsource the deployment and maintenance their new VoIP solution, as well as the maintenance of their existing telephony solutions.

Managed Data Center Services: It involves the management of servers, storage and network services of companies. It also covers all IT infrastructure components of the data center including virtualization, automation and integration.

Managed Storage and Backup Services: It involves all backup of the applications and data, and different storage requirements of the companies.

2 Findings are based on Springboard's latest research titled “Indian Managed IT Services Market”(April 2010), which was conducted on 187 CIOs and IT budget decision makers in enterprises large and small in India.3 Managed Services-The Cost Effective Model for Enterprises : http://voicendata.ciol.com/content/ContributoryArticles/110060101.asp

Infrastructure Support Services: It includes operating system management, hot fixes and security patches, disaster recovery planning, testing and verification, security management end user support etc.

Managed Services Benefits & Challenges

The usage of managed services, undoubtedly, limits the risks related to economic and technological investments of the companies. As the businesses look for ways to reduce cost but continue with the best of class services, the dependency on MSPs is bound to increase. The importance of MSPs will increase in this cost conscious market as they offer cost effective bundled solutions that are customized to the companies' needs and requirements, and as they provide services to manage and monitor all the mission critical aspects required for the growth and survival of the businesses.

There are several reasons why outsourcing IT-related functions to MSPs has become an essential component of business growth and development:

Enables the company to focus on its core competency It reduces IT support costs by enhancing efficiency levels Quick access to highly-trained and on-call IT professionals Availability of 24/7 support Remote access to the company's computing environment which allows the IT

personnel to quickly resolve issues Constant analysis and monitoring of IT-related problems MSPs set strict SLAs (Service Level Agreements) so companies are assured that

systems are always functioning well

There are definite challenges and limiting factors that are hindering the growth of managed services in India. Traditionally, the Indian companies are bit hesitant about outsourcing their mission critical operations to others. So the main challenge for the MSPs would be convincing these hesitant customers that managed services would be secured, best of the class quality and would ensure a faster ROI. In addition, defining or creating service definitions, determining the appropriate pricing and migrating existing customers to the new managed services model are some challenges in the Indian market.

World-wide IT Spending Forecast by Sector, 2011-2015:

2011 2012 2013 2014 2015 CAGR (%)

2011-2015

Computing Hardware

Spending ($B)409 438 469 505 554 8.2

Annual Growth (%) - 7.2 7.1 7.6 9.6 -

Software

Spending ($B) 255 273 291 309 328 6.7

Annual Growth (%) - 6.8 6.5 6.3 6.2 -

IT Services

Spending ($B) 824 862 901 944 989 4.7

Annual Growth (%) - 4.5 4.6 4.7 4.8 -

Telecommunications

Spending ($B) 2,110 2,186 2,271 2,355 2,430 3.9

Annual Growth (%) - 3.6 3.9 3.7 3.2 -

All IT

Spending ($B) 3,598 3,759 3,932 4,112 4,301 4.8

Annual Growth (%) - 4.5 4.6 4.6 4.6 -

Overall IT (Excl. Telecom Services)Spending ($B) 1941 2057 2179 2305 2448 6.2

Annual Growth (%) - 5.9 5.9 5.8 6.2 -

CAGR: CAGR = Compound Annual Growth Rate

Source: Gartner (March 2011)

Forrester Wave™: North American Applications Outsourcing, Q3 ’10:

Source: Forrester Research Inc.

Competitor Analysis

HP Services for Oracle Solutions: 4

Service Offerings Overview

Application architecture assessment

HP performs a detailed assessment of your current E-Business Suite, PeopleSoft, JD Edwards or Siebel environment and the architectural considerations associated with a future move.

Application configuration optimization

During system installation, HP configures recommended kernel or registry parameters that are specific to E-Business Suite, PeopleSoft, JD Edwards, or Siebel rollout, then reviews configuration files for database, the application suite, and associated third-party applications.

Application systems performance analysis

During peak utilization, HP measures performance and makes observations regarding current configuration, followed by high level recommendations for parameters and capacity requirements for E-Business Suite, PeopleSoft, JD Edwards, or Siebel implementation.

Application systems performance tuningBased on a repeatable load test provided by client, HP tunes client’s E-Business Suite, PeopleSoft, JD Edwards, or Siebel environment to optimize performance.

Application jumpstart and migration services

HP helps configure and deploy a basic E-Business Suite, PeopleSoft, JD Edwards, or Siebel application with demo database. HP can also help with certain maintenance upgrades and database or operating system migrations.

Oracle database services

HP can help to install, migrate, upgrade, or optimize Oracle database. With its specific content knowledge around Oracle database, RAC, and grid solutions, backed by HP server and storage expertise, HP Services offers the experience need to optimize client’s solution.

Oracle middleware servicesHP offers services to help build a Service Oriented Architecture (SOA) built on Oracle middleware.

4 http://h71028.www7.hp.com/enterprise/downloads/HP%20Services%20for%20Oracle%20Solutions.pdf

IBM Application Services for Oracle: 5

Provides cost-effective management of Oracle E-Business Suite

Simplifying IT management with the help of on demand solutions and services

Optimizing solution capabilities with the help of professional services

Offering a choice of delivery models to support unique needs

Reducing cost and complexity with the help of automation

Provides cost-effective management of Oracle E-Business SuiteThe Applications on Demand service gives the flexibility to deploy Oracle EBS on IBM’s infrastructure or to have IBM’s experts manage the application on existing assets. Engaging IBM means that key IT talent is freed up to focus on strategic initiatives such as building your company’s core business and sustaining competitive advantage.

Simplifying IT management with the help of on demand solutions and servicesClients can access Oracle E-Business Suite without running and maintaining the application in-house. Applications on Demand delivers reliable and scalable access to expert managed services without the overhead of retaining full-time staff. Applications on Demand offers IBM Application Services for Oracle – Onsite to deliver applications management for Oracle E-Business Suite running on your infrastructure and IBM Application Services for Oracle - Full Service for an end-to-end managed service, including managed infrastructure.

Optimizing solution capabilities with the help of professional servicesIBM Professional Services for Oracle allow our clients to tap into an experienced pool of certified professionals for help with:• Performance testing• New implementations or new functionality• Upgrades• Project management• New development, customizations, interfaces• Offshore services• Integration services

Reducing cost and complexity with the help of automationIBM automations for Oracle include:• Oracle environment creation/refresh• Oracle object migration• Oracle patch application

5 http://www-935.ibm.com/services/us/imc/pdf/app_services_oracle.pdf

HCL Technologies Ltd: 6

HCL's Oracle Universe (OU) is a 2500+ strong integrated services group developing high value solutions in Oracle, PeopleSoft, Siebel, JD Edwards, Hyperion, Agile, Oracle Transportation Management, Stellent, and other Oracle Edge applications and technology products. Our dedicated CoEs in CRM, SCM, ERP, HCM and Technology develop technology-based business optimization solutions on Package Applications, Fusion Middleware, and Business Intelligence & Data Warehousing.

HCL's OU provides service delivery excellence through proven solution accelerators and proprietary tools, built to support the Oracle product suite. In addition to professional services, OU provides Product Engineering on Oracle Applications and Fusion Middleware, building connectors for Oracle's Content Management products, and testing services for Oracle product suites.

Wipro Infotech :

Wipro’s Application Management Services focus on application management and production support of enterprise applications. Application management service offerings are aimed at ensuring interoperability, performance and availability of the enterprise application and its ecosystem.

6 http://www.hcltech.com/enterprise-application-services/oracle/

Wipro’s ORACLE Application Support and Database Administration

ORACLE Application Services ORACLE Core DBAORACLE Applications DBAORACLE Apps techno-functional Support

Upgrade/Migration ServicesAudit ServicesConsulting Portfolio Analysis Backup and Recovery Solution, and ValidationDatabase consolidationCapacity planningORACLE RAC, standby, replication for business continuity and disaster recovery planning

ORACLE Application Helpdesk

Rolta TUSC Managed Services 7 :

Rolta TUSC provides expert-level support for all Oracle Database, middle-tier, Unix OS, Linux, E-Business Suite, and SQL Server system needs.

Rolta TUSC Managed Services covers: Database (Oracle, SQL Server) Oracle E-Business Suite (technical and functional) Middle-tier and Operating System

Oracle Applications Implementation and Support (includes E-Business Suite):

Oracle E-Business Suite (EBS) provides global, integrated business applications that drive business performance.

SOLUTION OVERVIEW

Rolta TUSC provides full lifecycle implementation and support services for core EBS application modules, including:

Financial Supply Chain Management Distribution Human Resource Management Systems Customer Relationship Management

7 http://www.tusc.com/oracle/mservices/service.html

Tata Consultancy Services Offerings 8 :

Expertise spans across Oracle Enterprise Applications (Oracle E-Business Suite, PeopleSoft,JD Edwards, Retek, and Siebel) and Technologies (Database and Fusion Middleware such as Application Server, Development Tools, Analytics, Integration, and Security). Our extensive industry experience, comprehensive knowledge, and strong partnership have enabled us to manage and execute complex end-to-end enterprise solutions based on Oracle platforms, involving diverse technologies, across multiple geographies, always on time and within budget.

8 Oracle Enterprise Solutions A4_Web250607.pdf

Accenture’s Services for Oracle Solutions:

Accenture has Oracle applications-specific delivery centers across the globe—giving our clients a great deal of flexibility in implementing and operating Oracle applications. Accenture centers in Chicago, India, Malaga, Manila, Mauritius, Montreal, Sao Paulo and the United Kingdom provide Oracle E-Business Suite capabilities; centers in Almere (the Netherlands), Atlanta, Cincinnati, India, Manila, Mauritius, Paris, Reston, Sao Paulo, and Toronto provide PeopleSoft and JD Edwards capabilities; centers in Bratislava, India, London, Manila, Mauritius, Riga, Sao Paulo and Toronto offer Siebel capabilities; and centers in India and Manila offer Oracle Retail capabilities.

Accenture SOA ReferenceArchitecture for Oracle

Based on Oracle’s Fusion Middleware platform, this solution includes a set of definitions, frameworks, best practices, decision trees, and code to help design and build a service-oriented architecture (SOA)—helping reduce technical architecture challenges, design and development time, and delivery risk.

Accenture Midtier Retail Proposition for Oracle

This solution provides an implementation and hosting approach based on software products from Oracle Retail, covering merchandising, planning, financials, human resources, store systems, supplier collaboration, and customer interaction, and geared specifically for the middle market.

Accenture HR Online Support Center

Helping companies to achieve high performance through HR leveraging Oracle Fusion.

Accenture Loyalty Solutions Accenture has a long history of helping develop and deliver Oracle’s Siebel Customer Relationship Management (CRM) family of products. Accenture takes a scientific, data-driven approach to analyzing clients’ loyalty drivers and executing full-circle lifetime loyalty management.

Accenture Delivery Tools Accenture Delivery Tools for Oracle Applications is a set of tools that can be used to support the entire Oracle project lifecycle.

Services offered for Oracle Application by competitors:

ORACLE Application Support and Database Administration

Wipro Infotech

HCL Dell Rolta TUSC

HP TCS

ORACLE Application ServicesORACLE Core DBA

ORACLE Applications DBA

ORACLE Apps techno-functional Support

PeopleSoft Human Resource Management System

Oracle E-Business ERP Applications

Siebel CRM JD Edwards SCM Upgrade/Migration Services

Audit Services ConsultingPortfolio Analysis Backup and Recovery Solution, and Validation

Database consolidation

Capacity planning ORACLE RAC, standby, replication for business continuity and disaster recovery planning

ORACLE Application Helpdesk

Oracle Edge Applications

Oracle’s Solution & Service Map:

Services/Features Software Fixing

Software Operation

User Guidance

Optimal Usage

Performance monitoring

Software Update

Best practices

sDBA: Remote Monitoring

sDBA: Application DBA

sDBA: FMW Administration

sDBA: Health Checks

sDBA: Hosting

sHD: Service Desk

sHD: Functional Help Desk

sHD: IT Operations Consulting

ESAS: CEMLI Support

ESAS: Bespoke Application Support

TCS: Testing

AMS: Application Management Service

Providers’ Top Three Applications Outsourcing Verticals:

Source: The Forrester Wave™: North American Applications Outsourcing, Q3 2010

Delivery Models of Competitors

IBM delivery models to support unique needs9:

IBM offers different delivery models to suit your applications management needs.

Full Service is an end-to-end enterprise solution delivering applications management and infrastructure support services—servers, storage, networking, monitoring, security, 24x7 break/fix support and data center for a predictable monthly fee.

OnSite is a remote applications management service for Oracle EBS instances running on client-managed infrastructure and is available for a predictable monthly fee. OnSite allows clients to benefit from IBM’s application management expertise and leverage existing investments in client infrastructure. OnSite represents the fastest, least-expensive means to access experienced applications management talent, tools and automations to eliminate patch management challenges and support Oracle E-Business Suite in a scalable 24x7 model.

Development offers a fully installed Oracle environment deployed in as little as ten days, within a “pay-as-you-go,” utility-like model. Development represents all of the benefits of having your own solution center at a fraction of the cost of having to build one. Development helps IT organizations reduce operational expenses by accelerating projects and deferring long-term investments in assets that are only required temporarily.

Enhancements is a set of fixed-priced application enhancements, such as reports, modifications, customizations or interfaces, for Oracle E-Business Suite. Enhancements is delivered from a menu of fixed-priced, high-quality event based deliverables. Enhancements shifts clients away from a focus on FTEs or hourly rates, and provide predictable pricing.

Professional Services allow our clients to tap into an experienced pool of certified professionals for help with:• Performance testing • Offshore services• New implementations or new functionality • Integration services• Upgrades

9 http://www-935.ibm.com/services/us/imc/pdf/app_services_oracle.pdf

IBM Full Service

IBM OnSite

IBM Development

IBM Enhancements

IBM Professional Services

All applications management and infrastructure to deliver applications on demand

Expert remote managed services of applications running on your infrastructure

A fully patched development environment in as little as ten days

Application enhancements with fixed pricing based on deliverables, not hours

Expert implementations, upgrades and project help

• Project management• New development, customizations, interfaces

HCL’s Engagement Models: HCL is known to collaborate with forward – looking customers through the following 3 engagement models:

Systems Integration- Focus on Complex implementation involving multiple technologies with turnkey program management and partnerships across IT and Non IT like IBMS, DC Build components.

Managed Services- ITIL driven Proactive Full or Discrete IT Managed Services delivered in various models like RIM, complete onsite or hybrid. A strong pedigree of Network & Managed security services in India we have today leadership positioning in RIM with right Global partnerships available like Cisco Managed Service Partner, HP, BMC, IBM and large skill pool of ITIL certifications.

Strategic Sourcing- Focus on transformation benefits to the customer in a collaborative model to resolve common business problems using the right mix of people, technology and process

HCL’s Oracle universe (OU)10:

HCL's Oracle Universe (OU) has a large customer base in the Americas, EMEA, APAC and ANZ regions, helping over 190+ customers across various industries transform their businesses.

10 http://www.hcltech.com/enterprise-application-services/oracle

Patni’s Consumption-based Flexible AMS Delivery ModelMost production support models impose a fixed cost upon IT budgets irrespective of the volume of work delivered or the utilization rate of the production support team. Patni’s SAP Application Management Services (AMS) offers enterprises a consumption-based model that is more agile than existing support models. It significantly improves resource utilization and ensures rapid cost structure transformation including a potential reduction of more than 30% in application spend and significant enhancement in operational efficiencies.

Patni’s flexible support model creates variability of costs in sync with the organizations’ workload by proactively reacting to its business needs, and charges the customer for the actual amount of service it consumes. This substantially improves utilization of resources and reduces cost. The model also helps create better alignment with business needs with substantial improvements in support and delivery practices and end-user satisfaction levels.

Managed Services Pricing Models11

The "Value-Pricing" Model The “Per Device” Pricing Model The "Tiered" or “Gold/Silver/Bronze” Pricing

11 http://blog.mspu.us/2010/07/6-different-managed-services-pricing-models.html

ModelThe “Pick 5” Pricing Model The “Á La Carte” Pricing Model The “Monitoring Only” Pricing

Model

1. The "Value-Pricing" ModelThis model tremendously benefits the MSP as well as the client. For the provider, it allows the freedom to customize the monthly fee in each and every Service Agreement for maximum profitability

Because a component of your sales presentation is based upon how much you can potentially save the client when they enlist your services, when the sales process is executed properly, you should be able to sign clients to Agreements worth much more than other pricing models might allow. There are several variations to this model, but the general concept is to provide a flat fee for all support rendered to the client each month, which can include Remote Support, Onsite Support, Lab/Bench time, or all three.

2. The “Per Device” Pricing ModelThis pricing model is fairly simple, and many MSPs utilize it primarily for its simplicity. The premise is to develop a flat fee for each type of device that is supported in a client’s environment. For instance, a basic Per Device pricing model might designate a flat fee of $49 per Desktop, $199 per Server, $29 per Network Printer and $99 per Network managed.

The benefits of this pricing model include that it is very easy to quote and illustrate costs for prospective clients, as well as the facility it affords the MSP to modify the monthly service fee as the client adds additional devices in the future. Something to think about when evaluating this model is that it can lend itself to selling Managed Services based more upon price, rather than value. The experienced MSP will realize this, and modify their sales presentation accordingly.

3. The "Tiered" or “Gold/Silver/Bronze” Pricing ModelThis model may be the most popular among MSPs. The premise is to build several bundled packages of services, with each increasingly more expensive package providing more services to the potential client.

For instance, a “Bronze” Managed Services package may include basic phone and remote support, Patch Management and Virus and AdWare Removal for an entry level price. Bumping up to the higher-priced “Silver” Managed Services package may include onsite visits, and the “Gold” package may include Emergency After-Hours Support, being the highest-priced package. This pricing model lends itself well to all devices in the client’s environment. Additional Services to round out a full offering with the “Tiered” Pricing Model are usually made available á la carte.

4. The “Pick 5” Pricing ModelThis Managed Services Pricing Model is an interesting combination of the “Tiered” Pricing Model with an “á la carte” twist. The basic premise here is to identify three or more successively higher-priced categories with a specific list of services available in

each. The client gets their choice of picking a set number of services from the one category they wish their Managed Services Agreement to cover. For instance, let’s say you have categories named Basic, Advanced and Premium. In the Basic category you have 8 services available to choose from, including Phone Support, Remote Support, Patch Management, AdWare Management, License Management, Case Management, Backup Management and Monitoring. The client would choose 5 of these, and a Service Agreement would be created to support them.

For the Advanced Category, you might add limited After-Hours and Onsite Support for a higher flat fee than the Basic category, allowing the client to choose from these additional Services.

The Premium Category may include Emergency 24 Hour Support, 1 Hour Response Time and Disaster Recovery of the Server(s) as additional options for a higher flat fee than the Basic and Advanced Categories, and the client would now be able to choose from these additional services to create their Managed Services support plan.

MSPs contemplating the implementation of this pricing model should carefully choose the minimum required services available in each category to insure that they are selected, in order to provide the best possible support for the client.

5. The “Á La Carte” Pricing Model

Possibly the most difficult pricing model to sell and maintain profitably, the “Á La Carte” model may be the least popular discussed here. The basic premise of this pricing model is to allow the client to pick and choose the Managed Services they would like from a large menu of individually priced services. The dangers inherent with a pricing model of this type include giving the client too many decisions to make, thereby slowing the sale. The more choices the client needs to make, the more confused they might get, leading them to skip selecting services that they really need, and/or choosing services that might not be so critical to their particular environment. In addition, this pricing model may again skew the client’s perception of these services to a cost, rather than a value perspective. To top it all off, putting together the Managed Services Agreement for the “Á La Carte” Pricing Model is the most time-consuming of all models in this discussion.

6. The “Monitoring Only” Pricing Model

Often seen in Medium to Enterprise engagements, and usually where the client has in-House IT staff, the “Monitoring Only” Pricing Model provides Network Monitoring Services and Alerting to the MSP, the Client’s in-house IT staff, or both.

In this scenario, several different service levels can be employed, from a very basic requirement to forward all alerts to the client’s in-house IT staff only, allowing them to address and perform all incident management, to a scenario where the MSP participates in basic incident resolution or even more advanced support.

MSP may also simply resell their chosen Vendor’s Network Monitoring Service to the client in a larger environment, and have no direct or indirect responsibility after the sale.

Whichever Managed Services Pricing Model you choose, you should always have a “Monitoring Only” service available to market to those clients who may not immediately opt for a more robust Managed Services deliverable, but would say yes to a lower-cost alternative. The MSP will then have their foot in the door, and can work over time to prove the value of additional services.

SWOT Analysis of OSSI

Strength Oracle branding Some mature services (ESAS for eBS,

DBA, Testing, Hosting. Oracle install base Oracle On-Demand has market presence. Global support infrastructure Access to Oracle development. Global delivery model-geographic

coverage Experience working across several

countries Early access to new releases / products Good people: interpersonal skills,

customer orientation Good DBA

Opportunities Tech stack getting complex Working with On-Demand Scope for creating value in solutions Market untapped in many geographies Upselling opportunities (extended

warranty, upgrade) SOA will result in software rearchitecture-

could create MS opportunities MS for acquired applications

Weaknesses No differentiation Oracle not seen as a player in this business Pricing to end customer need to be more

competitive Need stronger business development focus Bid response turn around needs to be

better Quality processes need strengthening Need more senior resources in the team Need for diverse & skill depth Over years when software become stable,

customer either do not renew or ask very low rates

SSI provides only a subset of portfolio other competition provides

Customer will expect support for bespoke & 3rd party applications from same vendor

Customer hesitant to open up production for remote support

Need to have formal SLAs Complexity of knowledge transfer

Threats Stiff competition Retaining people Competition has a broader portfolio On Demand/ACS have overlapping charter Alliance channels encourage partners

KYC Analysis

After analyzing the data collected from the managed services managers of OSSI I concluded the following facts about the customers of Oracle:

Why customers are coming to Oracle:

They have skill shortage (mainly on DBA). Very Small In-house IT department. They are taking EBS & Retail Apps which signifies that it’s difficult to find

substitutes on these Applications.

Why customers had left Oracle:

Staff Shortage in PSFT Technical/Function and DBA services. Pricing on the high side for 24X7 shared services model.

The findings suggest that since oracle is providing services for very limited applications it needs to put extra efforts on retaining and tapping that niche market by increasing its resources and coming up with a better competitive pricing strategy to get new customers and also to retain the old ones. They need to project themselves as the best service provider in this category.

Bidding Plan Analysis:

After reviewing the existing bidding process I would recommend the following points to OSSI to increase the effectiveness of their bidding:

Improve Focus Consider dedicated Bidding Lead Role (with backup)

Improve Bidding Process Reduce bid turnaround times Improve Proposal templates to be more friendly , directly

customer facing, review terms & conditions to make them more friendly

Build an integrated estimator that includes ESAS (eBS, PSFT, Siebel, Retek), DBA Services, Hosting, Testing, Service Desk, Tech Upgrade and Customization Upgrades

Review competitiveness of pricing Build capability to deal directly with end customers in

countries where knowledge of managed services is lacking