ManagedHostingWhitepaper 2011 NL Web

7/30/2019 ManagedHostingWhitepaper 2011 NL Web

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Managed Hosting:Partnering and Best Practicesto Support Education Strategy


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Within education, Online Learning is playing both a centraland a critical role in the delivery o Teaching and Learning,

Research and Enterprise activities o university and college

organizations, and the overall experience o students and sta.

In the last ten years, Online Learning has become a

undamental element o an organizations educational strategy

which in turn is enabled by the underlying IT strategy. A

typical IT strategy will be made up o many elements including

architecture, applications portolio, and service catalogue. O

increasing importance is the consideration and development

o a sourcing sub-strategy or IT provision.

Traditionally, IT departments in education have been

conservative in their approach to providing inrastructure,

applications and services with an almost universal preerence

to utilize in house resources rather than third parties. There

have been exceptions in areas such as hardware support and

maintenance, but with increasing pressures on stang, skills

and budgets coupled with technology changes such as cloud

computing, the climate has, over the last three to ve years,

begun to change, albeit slowly. As a result, more and more

educational organizations are either using or considering

third party services to satisy both business and technology

objectives. Due to operational criticality, the drivers to use

such services are not necessarily coming rom within IT, but

rom across the organization.

In some respects, the education sector is catching upwith other sectors where the use o outsourcing and third

parties has been more prevalent. These other sectors, pro-

actively use third party services to meet business goals,

add value and optimize their resources. They are not seen

the education sector is

catching up with other

sectors where the use ooutsourcing and third parties

has been more prevalent.

Managed Hosting: Partnering and BestPractices to Support Education Strategy


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as a threat to in-house provision but rather, as complementaryresources and partners. The education sector can, and should, learn

rom the experience o other sectors where rapid technology changes

have led to better value provision o services. In turn, this can allow

organizations to ocus on improving the educational experience and

accountability while managing costs and indirectly strengthening their

image and reputation at the same time.

This paper looks at the managed hosting o Online Learning in

relation to other types o third party provisioning; reviews the areas

o benets and costs rom the perception o dierent decision makers

and users; and examines the elements o a successul commercial

relationship built on trust, transparency and mutual respect.

Hosting Services

Gartner denes outsourcing as a multiyear or annuity-based

contractual arrangement, whereby a company provisions services

on an ongoing basis at a specied level o competency. Outsourcing

involves a degree o transer o management responsibility or

the ongoing delivery o IT services to an external provider, with

perormance tied to service levels or outcomes. Outsourcing

encompasses the management o business processes, application

sotware and IT inrastructure (data center, desktop or network).

These three areas are commonly reerred to by client enterprises as

BPO, AO and IT inrastructure outsourcing.

Perormance o the provider is directly related to the provision o

services being tied to a combination o outcomes and service levels.An outsourcing agreement can include a range o services rom

product support and consulting to development and integration. As

a result, the external provider may acquire the physical assets and

employees o the business client.

With increasing

pressures on

stafng, skills

and budgets

coupled with

technology

changes

such as cloud

computing, the

climate has,

over the lastthree to fve

years, begun

to change.


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Hosting services, where the external provider utilizes their own

inrastructure, is seen as the most recent maniestation o the

outsourcing concept and is becoming increasingly common. It has

been acilitated by rapid technology developments such as cloud

computing and virtualization. These types o hosting services range

rom a public cloud to managed hosting:

(a) Managed or Dedicated Hosting:

Most suited to organizations who require:

Dedicated inrastructure with high up time guarantees

Stringent security measures

Scalable, resilient hardware

Around-the-clock support rom a dedicated team o technical

sta and account managers amiliar with application expertise

Comprehensive service-level agreements

The ability to customize and enhance their application

environment

Since these types o solutions are designed to meet individual

customer specications and requirements, they are suitable or

the mission-critical systems o most businesses and organizations.

They also oer institutions the opportunity to improve their risk

management particularly in relation to business continuity and

disaster recovery.

Additional benets o managed hosting can include the ability to

convert capital expenditures such as inrastructure, licenses and

upgrades to a known operating expenditure over a number o

years. Eectively, the organization is leasing instead o purchasing

hardware and sotware. In terms o support, many managed hosting

solutions ocus on a unctional area such as Online Learning

and include sta who understand the unctional application,

process fows and related databases, data storage, and how each

relates to the hardware inrastructure. They oten are amiliar with

relevant business processes and the need to integrate the hosted

application with other applications run by the client.

Over the

recent past,

outsourcing

has changed

to become

a new orm

o hostedsolution, with

considerable

overlap and

conusion

between the

dierent types

o hosting.


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(b) The Public Cloud: Always delivered on a shared

hardware inrastructure, resulting in lower costs and prices

ranging rom ree to utility pricing where clients only

pay or the resources used. Many public cloud oerings

make use o the latest virtualization technology with almost

instant scalability and dynamic provisioning. Thereore,its an attractive solution or hosting basic websites and

applications with seasonable or unpredictable loadings.

There is limited customization available and support

can be restricted to certain hours and types (i.e. e-mail

or web). Its also important to note that the inormation

security consequences o a shared inrastructure may

impact whether a public cloud can be used or sensitive

materials. It is clearly attractive when unds are limited

and convenience is important as long as the users ullyunderstand its limitations. As examples, some universities

and colleges leverage Microsot and Google technology

that can be described as public cloud solutions or e-mail

and collaboration. However, these solutions may come with

availability and security concerns as they relate to specic

institutional needs like service levels and data ownership.

(c) The Private Cloud: Enables a client to either

consolidate their own inrastructure or completely remove

it by leasing rom a third party. There are potential savings

in capital costs, energy usage and sustainability benets.

Its a solution built on dedicated hardware (sometimes

called dedicated virtualization) and is typically backed by

comprehensive service-level agreements with dedicated

account teams providing 24x7x365 support. The dedicated

servers run virtualization sotware to create multiple virtual

servers on a single physical server. Each virtual server exists

independently and works in the same way as a standard

physical server. As there is high utilization o processing power,

a leased private cloud inrastructure can combine resource and

budget optimization with rapid scalability that can result in

reliability and security that rivals a managed hosting solution.

Many public cloud oerings

make use o the latest

virtualization technology

with almost instant

scalability and dynamic

provisioning.


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Compared to managed hosting, private cloud managers are typically

less knowledgeable o a specic applications unctionality and related

processes, and with a private cloud, there is some degree o reliance on

the Internet-based web services. In certain types o contracts, the client

may have administration access to the servers (unlike managed hosting)

which introduces a dierent set o risks. There is no doubt, however, that

over the recent past outsourcing has changed to become a new orm o

hosted solution with considerable overlap and conusion between the

dierent types o hosting. The lines between public cloud, private cloud

and managed hosting solutions are becoming blurred as technology

changes, and moving orward, hybrid solutions could become the norm.

For most organizations in the uture, provision o the solutions or

inrastructure and applications will be rom a mix o sources with

managed hosting playing a crucial role or mission critical application

that need to scale quickly and continually change and/or enhance

unctionality. However, when considering a move to a managed

hosting solution, there are key dierentiators related to successul

outcomes and desired business benets. This is particularly true or

the managed hosting o mission-critical systems and applications.

It is assumed that an organization considering any orm o hosted solution

will have dened, documented and understood their inrastructure and

applications architectures as these are important inputs to a successul

hosted solution o any type.

Business Rational or Managed(Dedicated) Hosting

Organizations which are successul with alternative sourcing approaches,

like managed hosting, as part o an overall long term strategy, base their

decisions on:

Eective governance and proper planning

Sound commercial understanding and nancial arrangements

Transition management plus strong relationship management

Operational agility, eciency and ecacy

People and processes

Costs can be saved but cost-saving opportunities must be directly linked

to achieving business value and business objectives. It can be dicult or

The client mayhave a spike

in demand

or require

concurrent

eorts, such

as maintaining

the old

environment,

while building

or deploying

the newtechnology.


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It is assumed that an

organization considering

any orm o hosted

solution will have

dened, documented

and understood their

inrastructure and

applications architectures

organizations to recognize and quantiy the potential sources o savings

in their organization particularly where strong silo organizational

structures exist. However, in making a decision to use alternative

sourcing, the ocus should not be on cost alone, although it requently is

when compared with internal provision by the IT group.

A critical step in selecting an alternative provider includes thorough

analysis o the organizations reasons and requirements or managed

hosting. One needs to consider cost in the context o what is being

outsourced and why, together with the potential business benets o

innovation, transormation and competitive advantage. Consequently,

input will be required rom across the organization, particularly rom

Academic Management, Finance and IT.

These requirements need to be matched against the provision rom

the provider in terms o business value, the sources o saving and the

underlying principles o how the provider can help the organization

both save and realize business objectives. The provider should be able

to demonstrate experience and ability to deliver quality resources,

operational eciency, consistency and process maturity in relation to

critical success actors or the sector in question (i.e. Education). This

has equal relevance to any analysis o costs versus benets.

Equally it must be realized that there are tasks and competences

that must be in place internally within an organization, or rapidly

developed i the business value and cost savings o managed hostingare to be realized.

The Sources o Value and/or BusinessBenefts rom Managed Hosting

Independent research, by business schools, consultancies and research

organizations such as Gartner, has identied the elements o business

value and their characteristics that providers o IT services, including

outsourcing and managed hosting, can bring to an organization. The

sources o savings and business benets are as shown in Table 1. Value

rom the savings/benets occurs either because o signicant ongoing

investment made by the provider to develop and improve its service

oering or because the provider has the resources to tackle a shortall

or solve a problem.


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Intellectual Property The service

provider has developed specic

intellectual property (intellectualproperty (IP)) that is relevant to the

clients business issues. When applied

to the organizations challenge, the

oering yields signicant business

benets. It is not enough or the service

provider to claim a general base o

IP it must be directly applicable to the

clients problem.

Methodology The service provider has a

methodology that delivers a higher qualityand reliability or a best in class approach to

issues to reduce time and eort.

Specialized Expertise The service

provider has subject matter experts.

These key personnel have experience

and knowledge that are unavailable in

the enterprise.

Automation/Industrialization The

service provider has developed an

automated approach to a process thatdelivers eciency, ecacy, or agility.

Access to Resources The client may

have the talent or people to perorm

the work, but these personnel are

unavailable. Alternatively the client

may have a spike in demand or requireconcurrent eorts, such as maintaining

the old environment, while building or

deploying the new technology.

Faster Time-to-Market The client may

need to achieve results in a shorter time

and require aster implementation than

it can achieve with internal resources

only. Additionally the client may need

to achieve return on investment

opportunities more rapidly or ensurethat the optimization eort remains in

alignment with its overall strategy when

the project is nally done.

Access to Skills/Competencies

These competencies may be industry-

specic, process-specic, unctional or

technology-based.

Geographic Requirements The

enterprise has limited operational

skills, business knowledge or legalcompetencies in the geographic region

where it has the specic requirement.

Table 1: Gartner Research

Sources o Value/Business Beneft rom IT Services

Ref: Gartner Research: F. Karamouzis, 2009 Best Practices Saving Costs Through Outsourcing and IT Services


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In the rst our benets, value occurs because the provider has made

signicant investment in R&D to develop and improve the oering which

is continuing, and in turn this leads to a maturity o provision. In the other

our benets, the source o value is that the provider lls a gap or xes a

problem by substituting resources, rather than an extensive R&D cost.

Managed hosting providers typically list a range o specic benets that

embrace one or more o the ollowing:

High availability and perormance or a business-critical application

Reliability, resilience and scalability

Support 24x7x365

Rapid deployment o new applications and upgrades

Management o licensing

Appropriate service-level agreements

Tailored commercial proposals

Reduced client costs ranging rom property and equipment to energy

Secure access include access my multiple devices and remote access

Secure storage o data and inormation

Legal and proessional body compliance

While all these benets are true and tangible, it is absolutely critical that the

organization (client) understands the source o the value and the business

benets they need in relation to what they are buying.

Some orm o comprehensive straight-orward cost-benet analysis can

help, provided that the underlying model is relevant to the sector. Both client

and provider will need to be open with each other in creating a common

understanding o what determines the price and value o the hosting oer.

This is particularly true when making a comparison to the internal provider

where the later may not have sucient data to cover all the costs on a like

or like basis.

The Potential Sources o SavingIn order to ully understand the potential sources o actual savings within the

organization, Gartner recommends that the purchaser should pose ve key

questions both internally and to the service provider. These questions, shown

in Table 2, are designed to help organizations understand, clearly articulate and

document the sources o saving and show how they will be achieved.

9

It must be

realized that there

are tasks and

competences that

must be in place

internally within

an organization or

rapidly developed

i the business

value and cost

savings o

managed hosting

are to be realized.


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However, o equal importance is that the organization understands

why it is out sourcing with respect to business goals and objectives

as this sets the basis or all aspects o the operational relationship and

approach including governance, communications and building the

relationship with the supplier.

In a long-term sustainable commercial contract, both business risk and

business value change with time as strategic objectives change. This

is particularly true or mission-critical areas such as Online Learning

which are growing in usage and unctionality. In turn, this change

will cause increased usage o the underlying IT inrastructure. It is

thereore sensible that the relationship builds a joint vision or business

objectives in relation to changing costs and savings as well as taking

account o external actors such as exchange rates and infation.

Taking the Measure o the Partner/Service Provider

With managed hosting, the client should be looking or three inter-

related competencies rom the provider, each o which comprises a

number o overlapping capabilities:

1. Relationship Competency comprises capabilities that determine the

extent to which the provider is able and willing to align and meet the

clients requirements over time. These capabilities include planningand contracting, program management, governance, organizational

design, customer development and leadership.

2. Delivery Competency comprises capabilities that determine the

extent to which the provider responds to the clients need or day-

to-day operational services. These capabilities include governance,

leadership, program management, business management, sector

understanding, detailed application knowledge, communications and

behavior management.

3. Transormation Competency comprises competency thatdetermines the extent to which the provider can deliver innovation,

transormation and service improvement. These capabilities include

leadership, behavior management, program management, customer

development, process re-engineering and technology exploitation.

In order or both sides to

achieve their respective

objectives and goals once

a contract is signed, its

critical that the relationship

between client and

supplier is characterized

by high-quality relationship

management and an open

inormation exchange.


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Question 1: Efciency-Based Sources o SavingsWhat are the potential sources o savings through one or more key levers o operational eciency?

These triggers usually all into the ollowing categories:

Labor(Stafng)thenumberofstaffhoursataspeciedandconsistentlevelofquality;

achieving a lower cost o sta adds eciency

Locationcostofstaffhoursbasedonlocationataspeciedandconsistentlevelofquality

VolumeofTransactionstheunitsofwork

Question 2: Eectiveness-Based Sources o SavingsWhat are the sources o savings through process and/or delivery eectiveness?

These sources o eectiveness usually all into the ollowing categories:

Betterproductivitythatinvolvesexecutingtransactionsusingamoreeffectiveprocesstoimprove

quality, standardization or consolidation; economies o scale may aect ecacy as well

Fastertheabilitytoexecuteprocessesfasterorcompleteprocessautomation

Smarterreducethevolumeoftransactionsorunitsofworkthroughredesign,standardization,

consolidation or reconguration o the processes that results in some transormation.

Question 3: Agility-Based Sources o SavingsWhat are the sources o savings through agility?

These sources o agility usually all into the ollowing categories:

KnowledgeManagementandKnowledgeCreationinformationow,integrationand

interoperability underpinnings

Awarenesstherightinformationattherighttimewhichisbasedoninformationow

Adaptabilitytheabilitytoconfrontunexpectedchanges Flexibilitydealingwithexpectedchangesincludingstrongglobalgovernance

Question 4: Time Factors Evaluated in SavingsHow will savings vary over time?

All service providers should explain:

Whatthetotalsavingswillbeeachyear

Howthesavingswillgroworshrinkwithtime

Howtheywillpacesavingsyearoveryear

Question 5:Variables Aecting Savings

How will the source (eciency, eectiveness and agility) o savings vary over time?

All service providers should explain:

Howthemixofthesourceofsavingswillchange year on year

Whytheyexpectthischangetooccur

Ref: Gartner Research: F. Karamouzis, 2009 Best Practices Saving Costs Through Outsourcing and IT Services

Table 2: Gartner Research

Understanding the Sources o Savings


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The supplier provides evidence o these competencies and

capabilities with:

Baseline statistics, rom its client base plus veriable case

studies.

A demonstrated methodology or how the managed hosting

solution will be deployed, requently using specic Centers o

Excellence within the supplier organization.

Models, based on experience, or discussing suitable operational

governance o the managed hosting solution that minimizes

business risk or the individual client and ensures appropriate

communications.

Considerable emphasis needs to be placed on the three pre-

requisite areas o planning, delivery/service-level agreements and

commercial arrangements covering the lietime o the contract.

Internally, the client needs a consensus across the organization

and with the supplier about the business value and the potential

savings they are looking to achieve.

In order or both sides to achieve their respective objectives and

goals once a contract is signed, its critical that the relationship

between client and supplier is characterized by high-quality

relationship management and an open inormation exchange.

A simple decision making ramework or the partnership needs

to be in place which is consistent with the clients overall

governance and time rames. Escalation routes need to be

published and well understood.

A solid long-term managed hosting relationship needs two to tango

and is essentially built on trust irrespective o a ormal contract.

Conclusion

Online Learning is today a critical component o Teaching,

Learning, Research, and Enterprise strategies. Organizations must

ensure that the systems enabling Online Learning operate at peak

perormance and deliver business value to all stakeholders.

Tapping into

the expertise,

skills and IP o

the provider

as part o a

shared vision

allows theinstitution

to grow its

abilities to

manage

and develop

outsourcing.


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Managed hosting, particularly rom an application provider who

understands the educational processes and unctionality, can be an

important part not only o consistent delivery o the online application but o

a partner strategy. In the current economic climate, managed hosting oers

the potential or savings and the realization o business value.

However, or managed hosting to be successul, the client must not

just ocus on cost, but consider the providers ability to deliver quality

resources, operational eciency, consistency and process maturity. The

client must analyze business value, the sources o costs and savings

across the organization rather than to the immediate budget holder, and

understand the underlying principles o how the provider can help the

organization save money and realize business objectives.

There will be a range o organizational reasons or outsourcing via managed

hosting which generate requirements that the potential providers need

to demonstrate they can meet. Comparisons with the alternative internal

provision need to be comprehensive and consistent based on accepted cost

benet models pertinent to the Education sector.

As such, the steps to a successul managed hosting solution can be

summarized as:

Understanding the context o activity to be outsourced - what and why,

together with the capabilities to support the relationship with the provider

Selecting a suitable model and methodology rom planning to

operation

Establishing service-level agreements that relate as much to key sector

success actors as technology parameters

Dening the roles o the CIO, CFO and academic decision makers in

agreeing and communicating the business value; exploiting the providers

strengths; and ensuring the use o appropriate cost/benets models

Re-evaluating value over time by working closely with the provider to

identiy and manage changing business risks

Establishing eective and sustainable governance and relationships

Tapping into the expertise, skills and IP o the provider as part o a

shared vision that allows the institution to grow its abilities to manage

and develop outsourcing

In the uture, we

expect the cloud to

play a growing role in

delivering powerul

learning experiences

by connecting

students to real-

world research and

collaborative learning

experiences.


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Clearly, a positive rst experience into managed hosting will impact

the long-term organizational view o this orm o provision. However,

success depends on both the client and provider adopting the correc

role and an honest understanding o their relative levels o maturity

when it comes to considering all aspects o this type o provision.

Reliability, security, scalability, agility and availability are all reasons

cited or choosing managed hosting. However, organizations must

also consider lack o skilled personnel; more complex technology;

capital versus operational expenditure constraints; sustainability;

and business continuity as part o the equation. Ultimately, managed

hosting can only work because o trust in a relationship built on

delivering service.

The essence o managed hosting is providing a service based

on people as much as technology. A successully hosted online

environment is responsive to individual organizations needs and

preerences; allows an organization to concentrate scarce resources

on core activities; provides services not available by other means; and

grows with changing demands and requirements over time.

When it works, it is in a sense invisible and taken or granted but whe

it does not, it has ailed its basic promise. Consequently or long-

term success, apart rom the building o relationships, the relevant

commercial agreements must have rigor, clarity and fexibility. Thisapplies to all aspects rom pricing to service levels. Organizations new

to managed hosting should seek to learn rom the experience o thos

who have gone down this route, irrespective o sector.

Reliability, security, scalability,

agility and availability are all

reasons cited or choosing

managed hosting.

Reerences / Bibliography

GartnerResearch:BestPractices:SavingCoststhroughOutsourcingandITServices(F.Karamouzis,Feb2009)

RackspaceWhitePaper:ADecisionMakersGuidetoCloudComputingandManagedHosting(Autumn2009)

BlackboardResearch:InstitutionsWeighInonLMSHostinginHigherEducation(EduventuresNov2007)

JISC: The e-Revolution and Post compulsory Education: Using e- Business Models to Deliver Quality Education (edited by

J.BoysandP.Fordpublished2008)

MITSloanManagementReview:TakingtheMeasureofOutsourcingProviders:Feeny,LacityWillcocks(2005Springedition)


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About the Author

Tony Lewis is Director o TML Consultancy, a consultancy

business ocused on delivering value and benets rom

investment in inormation technology and inormation services.

Hehasover30yearsexperienceinboththeprivateandpublic

sectors as an Executive Director and senior manager. This is

built on a solid oundation o management consultancy and

engineering/scientic practice. He has a wealth o knowledge

and experience across a range o industries and organizations, in

the pragmatic application o ICT and related services, delivering

customer service and meeting organizational requirements

Tonys career began as a Civil Engineer and Scientist responsible or all aspects o environmental

datamonitoringandcollectionnetworksinaUKregionalWaterAuthority.Hethenmovedinto Management consultancy, Marketing and subsequently senior IT management in

the commercial ICT sector working or Fujitsu (ormerly ICL). He specialized in data and

inormation management particularly in Government, Health, the Utilities and Education. He

was subsequently approached to become Chie Inormation Ocer or a large enterprising

UKUniversitywherehespenteightyearswithresponsibilityforthedeliveryofIT,Libraryand

Learning services. In this same period he was Executive chairman o a sotware SME plus serving

on numerous boards, committees etc at regional, national level and international level. He was

part o the Vice Chancellors Change management team o six people who recommended

signicant changes in Governance, processes, Management and organization which subsequentlyhave been acted upon.

TonyestablishedhisownconsultancybusinessinOctober2009toutilizehisexperienceofIT,

Management Consultancy and Inormation services to achieve successul long lasting business

and organizational improvements or Corporations, SMEs and Public services with a particular

ocus on Education, Government and Health. As an innovative and progressive consultant, his

ocus is the pragmatic use o Inormation Technology, data & inormation to enable goals to be

met and valued services delivered.

To contact the author:Tony Lewis

TMLConsultancy

Telephone: 01744 614993

Mobile: 07771 943179

Email: [email protected]


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