As the global economy continues to fluctuate, businesses continue to struggle to find more efficient ways of keeping profits up and costs down. We talk to Marcus Hill, Head of the SI Channel for Virgin Media Business, about how this is affecting the relationship between the service provider, the network operator and the end-user
For providers of business and ICT services, the relationship with a network of partners and suppliers remains vital.
Marcus Hill, Head of the SI Channel for Virgin Media Business, believes recessionary pressures have brought about significant changes in the relationship between providers of outsourced and managed services and network operators.
“If you look at local and central government, as well as the private sector, there has been a huge emphasis on driving down costs, and on extracting maximum value from everything,” says Marcus. “This has led to things like infrastructure and SaaS (Software as a Service) effectively driving up the importance of the communications element that supports these services. The move to the adoption of managed services is all about unlocking cost savings, making connectivity a bigger part of an IT contract.”
A new approach
Marcus believes the nature of the relationship between the ICT service provider, their network partner and the end-user is having to change to accommodate these new dynamics.
“A new approach is needed,” he says. “For example, take the SLA (Service Level Agreement) between service provider and customer. An old school SLA would deal with things like network performance and was all about uptime, packet loss and jitter – all completely irrelevant to the modern customer. In the era of ‘everything as a service’, the relationship between provider and customer has to change, with a new sort of desktop SLA that’s all about service performance. The rewards are great for those able to make the transition to this more collaborative and customer-focused approach.”
Marcus believes that those who are still trying to apply traditional legacy solutionsto today’s problems will ultimately fail.
“If you’re still relying on old SDH (Synchronous Digital Hierarchy) networks for your solution’s connectivity, you’ll find them – reliable as they are – too limiting to support managed services,” he says. “That’s the technology perspective. But the commercial relationship is changing too. Cloud services are not bought with an annual subscription, but paid for according to use. The old dynamics need to be broken up and reconsidered. There’s also the operational side, where thinking has to move towards end-user benefits and away from a focus on the network.”
From old school to next gen
What must also change to support this new era of customer needs is the relationship between the service provider and the network provider. “Neither has all the answers,” says Marcus. “The service guys don’t know about business class communications, and the network guys don’t know about SaaS.”
Marcus believes that the time is rapidly approaching where a move from old school to next generation business practices and technologies is not so much an option as a necessity. “You can’t just go on doing things the way you did before and just label it differently,” he says. “It’s not an easy conversion to make, and not a cheap one since capital expenditure is required. But there are enormous gains to be had in the long term for those who make the move from old to new correctly.”
Marcus cites the provision of ICT services to the Government sector as just such an example of pain before gain. “There’s a big move in Government to cut all costs, including outsourcing and systems integration,” he says. “But ultimately all these departments are going to have to spend more, not less, on IT if value is to be realised and costs saved. As a service provider, you could end up facing a lot less competition. But not all players have the ability to make the required change. Just remember that better margins are in store so long as you realise that short-term spending is needed to achieve longer term returns.”