16 CIO Digest July 2008

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By Alan Drummer

Managed Services

DELEGATE IT HEADACHES WITH THE RIGHT PRESCRIPTION

Getting Strategic with

Pick a headache from your current IT department to-do list. Would it be solved faster if you out-tasked it to the right outside experts?

Pick a few more challenges—what if you could take them off your list and out-task them as managed services? Would your team gain time to work on more strategic IT projects—and therefore deliver greater value to your company?

This is an increasingly popular strategy. “I’ve seen rapid growth in managed service interest and adoption in the past few years, based on my own survey data,” says Jeff Kaplan, who runs the Managed Services Showplace at www.msp-showplace.com and is managing director of THINKstrategies, Inc. “The tech-nologies that enable managed services have recently come together: the rise of broad-band, remote monitoring and management, service level management and reporting, and the comfort people feel in using remote Web-based services.”

There are more choices in out-tasking now, Kaplan notes: “In the past, people thought they had to either do IT in-house or outsource the entire operation, which scared the daylights out of them. Then out-tasking emerged, allowing them to test a third-party provider with a limited task such as storage management. If they liked the results, they could expand the out-tasking.” This path, Kaplan says, can open up interesting options.

What are the options? CIO Digest talked with executives from three companies who out-task extensively. Why do they out-task? What are the benefi ts? What have they learned?

Be more profi tableThe most obvious driver for using out-tasking is to reduce cost and increase effi ciency and a good example is HDFC Bank Limited, based in India. Founded in 1994, HDFC Bank’s mission is to be a world-class Indian bank—and it seems to have more than succeeded. For the fi fth year in a row, it has topped 76 other Indian banks in a number of criteria to be judged as “India’s Best Bank” by Business Today.

Out-tasking helps the bank advance its competitive edge, according to G V Gopalakrishnan, the bank’s executive vice president for IT. “We have been growing at a consistent rate of about 33 percent on a CAGR (compounded annual growth rate) basis over the last few years and over 40

SOLUTIONS FEATURE

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percent in the last few quarters,” he says. “We out-task certain functions in IT so that we can focus more effectively on our core expertise.”

HDFC Bank contracts with Wipro for its facility management comprising branch setup, server maintenance, desktop maintenance, network, and helpdesk functions. The bank also contracts with third-party providers for all its applications, and customizes them if necessary. And it contracts with Symantec Managed Backup Services to oversee manage-ment of its Veritas NetBackup envi-ronment and to protect its data.

“This is more beneficial to us,” Gopalakrishnan says. “We don’t have to retain talent for these func-tions. And we can scale more easily. We have about 750 branches and will soon open another 417 branches to our network due to a merger, sub-ject to regulatory approvals. If we did not out-task our facility man-agement activities, then we would need to add a huge number of head count and it would be impossible to meet the strict deadlines.”

Instead of being caught up in a recruitment process, Gopalakrishnan notes his team has been able to concentrate on developing a clear out-tasking agreement with Wipro that specifies the total requirements for each branch. “It’s important to develop a strong governance model in advance, defining service level agreements and a strong monitor-ing process, review achievements, and constantly fine tune the process

and expected results,” he says.

The result is that “our senior management team is released from process requirements, such as setting up branch IT or fixing a network failure, and they can instead focus on more strategic business requirements, such as identifying new technology and solutions, deploying new applica-tions, and project managing all new initiatives. That has helped to achieve better business results.”

Half a world away in California’s Silicon Valley, Verigy Ltd. has an IT function similar to HDFC Bank’s in that it uses out-tasking exten-sively to enhance profitability. The Singapore-based company is a spin-off of Agilent Technologies, Inc. and designs, manufactures, and sells advanced semiconductor test systems. “We have 1,600 employ-ees, and just 15 of them are in IT,” says Todd Hauschildt, CIO. “We outsource all the rest of our IT. We

chose this business model carefully

because it helps us be profitable in a cyclical business. We spend more of our IT dollar on top people to make strategic IT decisions, and less of our dollar on the less expensive skill sets needed to implement those decisions. We gain in flexibility.”

Be more innovativeAnother reason to out-task is because it enables the core team to focus extensively on development and inno-vation. This is the case at Singapore-based Healthe Group. Over the past few years, Healthe has used IT tools to promote metric-driven management. As a result, it has almost doubled prof-itability in the 11 hospitals it owns in Australia. It has also developed and deployed a personalized health and wellness platform called Healthe

“It’s important to develop a strong governance model in advance, defining service level agreements and a strong monitoring process, and constantly fine tune the process.”—G V Gopalakrishnan, Executive VP for IT, HDFC Bank Limited

G V Gopalakrishnan, Executive Vice President, HDFC Bank Limited

HDFC Bank Limited ProfileHeadquarters: Mumbai, IndiaBranches: 750 (soon another 417)Business: Retail and customer wholesale bankingEmployees: 22,000URL: www.hdfcbank.com

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Headache Relief from Symantec Global Services

> Symantec Managed Services place resource-intensive IT operations under themanagement of experienced specialists, allowing IT organizations to optimizeexisting resources and focus on strategic IT projects.

> Symantec Managed Security Services leverage real-time threat monitoring,analysis, and remediation guidance to minimize the impact of security incidents on business operations and reduce overall IT risk.

> Symantec Residency Services enable enterprises and large enterprises toaugment the capabilities of their IT staffs with onsite resident consultantswho possess the skills to manage complex IT solutions.

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18 CIO Digest July 2008

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Analyst Top Tips

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Sean Hackett, IDC> Maintain control over the out-tasking

provider with a tactic such as a portal> Create metrics based on business

outcomes to measure performance> Keep a collaborative working relation-

ship with the out-tasking company

Me, which is built around shared digital medical re-cords. The re-cords provide clinical-level data to care

providers to aid in decision making, offering patients a consumer-friendly view of the same data to promote better understanding. And the records can be automatically translated on the fly into multiple languages—a feature that will support the rollout of the service to a number of countries, including China.

The IT features of Healthe Me give it a promising future as a man-aged service itself. “We’ve actually collapsed the whole stack of about 16 Oracle products into an engine that runs efficiently on a single server that costs about $15,000 USD retail,” says Alan Payne, chief innovation officer at Healthe. “One server can support

more than 20,000 users. Our applica-tion can be fully branded, and when I say ‘branded,’ I mean it can easily be adapted to the look and feel, content, and colors of the organization that licenses it. We can actually drop our stack onto any organization’s server and make it look as if it’s theirs in a matter of hours.”

To develop the service, Healthe out-tasked application support to Oracle Corporation, hosting to Verizon, and security to Symantec Corporation. “We treated these companies not as vendors, but as partners,” Payne explains. “From day one in development, we had senior architects from each company at the table helping us design the service.”

The end product is much stron-ger for it, Payne notes. “There are companies that are a lot better at do-ing certain things than we are, such as managing security. Why should I have to build up that competence? I think that’s why many CIOs now

look toward utility-based models. They can pick and choose the service they need and lock it into their own business architecture and vision. That allowed us to concentrate on our core delivery: what we feel is the world’s best state-of-the-art shared information platform for healthcare.”

Add brand valueA partnership with the right managed service provider can even add value to a brand, Payne observes. At Healthe, for instance, the main barriers to adoption of

Healthe Me are security and privacy. “Those are the first issues everyone asks about,” he says. “Our primary goal is to avoid data breaches. We’re playing to win, so in security we chose the best of the best.”

The company has Symantec Managed Security Services man-aging and monitoring its security infrastructure 24×7 from one of its four security operations centers worldwide and providing real-time response. “And we have had zero penetrations in the year and a half since deployment,” Payne says. “For our customers, the assurance that our system is managed and moni-tored by the world’s best security company has paid dividends for us.”

Close collaboration is a best practice when out-tasking, accord-ing to Sean Hackett, who follows the out-tasking industry as program manager for IT outsourcing and utility services at IDC. “There’s a tremendous opportunity when working with the managed service provider to partner with them and take advantage of their expertise,” Hackett says. “It would be a mistake to out-task only to reduce costs.”

Healthe is developing its col-laboration with Symantec further, Payne says. “Symantec proposed that we develop an electronic lock box that could be a secure reposi-

“Many CIOs now look towards utility‑based models. They can pick and choose the service they need and lock it into their own business architecture and vision.”

Healthe ProfileHeadquarters: SingaporeBusiness: Services and solutions designed to meet a full spectrum of health and wellness needsHospital Network: Largest network of privately-owned hospitals in AustraliaURL: www.healthe.com

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—Alan Payne, Chief Innovation Officer,

Healthe Group

Jeff Kaplan, THINKstrategies, Inc> Set a clear definition of roles and

responsibilities> Define service levels, response times,

and an escalation process> Meet on a regular basis to review reports

and discuss upgrades and new ways to collaborate

symantec.com/ciodigest 19

tory for other kinds of informa-tion. And it has potential business value beyond just protecting health records. We’re exploring those other possibilities with Symantec. This is how a business should be run.”

Minimize risksThe most basic reason to out-task is that it’s cost-prohibitive or not feasible to provide the service in-house. Many companies find this is true with the challenge of providing 24×7 security monitoring, and one of them was Healthe. It needed to make sure that Symantec Managed Security Services was effectively minimizing risks—and demonstrate that fact to stakeholders. So it hired an outside service to conduct pen-etration testing of Healthe Me.

“We didn’t know when they would test,” Payne recalls. “They performed 180 different types of attacks from 43 countries, everything from denial of service to security penetration. After four weeks of attempts, the only thing they found was the make of one of the firewalls. They got to its log-in screen based on that. It’s as far as they could go.” Healthe now has the brand promise of security that it needs to build its business.

Reduce costs, boost productivityYet another driver for using a man-aged service is to get tactical relief when a new kind of business chal-lenge appears—and get it without adding to headcount. That was the case at Verigy. As the company’s business grew, so did its email volume and cost. Its email service is outsourced, and Verigy is charged by the gigabyte for storage.

“We investigated email archiving solutions and chose Symantec Enterprise Vault,” says Verigy’s Hauschildt. As the new solution archives, it also compresses and deduplicates messages, and will reduce overall email storage by 40 to 60 percent.

“We’ll get twice as much email storage for the same cost,” Hauschildt notes. “We can double

the mailbox size quota for employ-ees. That makes everyone happier. It reduces the time they spend trying to delete messages and stay under quota. And because we out-task ad-ministration to Symantec Business Partner Cornerstone Technologies, we get these results without hiring anyone.”

Similarly, at HDFC Bank, “since we out-tasked data protection to Symantec, backup volume has grown exponentially, but costs have come down as a whole, and the number of backup staff has remained con-stant,” Gopalakrishnan says.

Get the best results from the best expertsThrough out-tasking you can tap outside expertise that is far deeper and broader than what you could develop in-house—and that brings its own benefits.

This is true at HDFC Bank. “By out-tasking our data protection from Symantec, we gain from having Veritas NetBackup and access to its development team,” says Gopalakrishnan. “They came in and simplified the backup architecture we have in place, saving us licensing costs. And through Symantec Residency Services, we have a Symantec backup expert on staff giving our team a valuable knowledge transfer.”

Healthe also gains a deeper ex-pertise in security by out-tasking to Symantec than it could ever develop in-house. For instance, as part of its Symantec Managed Security Services engagement, it receives Symantec DeepSight Alert Services and DeepSight Threat Management Services. These two services provide early warning and actionable information about relevant potential attacks, draw-ing from the Symantec Global Intelligence Network of more than 40,000 sensors deployed in more

than 180 countries, in addition to more than 120 million client, server, and gateway systems employing Symantec solutions. The alerts that Healthe receives prioritize which attacks are most relevant to its network, and help it separate routine traffic from pos-sible threats.

“The proof point of effectiveness is that there has not been a success-ful intrusion on our network in the year and a half since deployment,”

Payne says. “The DeepSight service

advises us when preventive steps should be taken, and Symantec and Verizon, our hosting provider, work together to take the steps that will protect us. If that wasn’t working well, I wouldn’t be in this interview.”

Results like these can make it easy for IT executives to start thinking about which IT headaches they’d like to out-task. n

Alan Drummer is Creative Director for Content at NAVAJO Company. His work has appeared in the Los Angeles Times, San Francisco Examiner, Create Maga-zine, and on The History Channel.

Todd Hauschildt, CIO, Verigy, Ltd

Verigy, Ltd. ProfileHeadquarters: SingaporeBusiness: Advanced test systems and solutions for the semiconductor industry Employees: 1,600URL: www.verigy.com

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