With Indian businesses now accepting the fact that IT can provide a strategic business

advantage, network management for India Inc has emerged as a new business segment for an industry that was reeling thanks to the slowdown. Srikanth R P and Rajneesh De report

Onward’s PArikh says government regulations are a major obstacle in the path of NMS in India

With networks complexity getting to be an growing problem with each passing day, and coupled with a shortage of qualified IT staff, Indian businesses have actively started outsourcing their needs to Network Management Service (NMS) providers. Coming at a time when the industry is reeling from the effects of the slowdown, the demand for network management services has provided a much needed market opportunity for Indian corporates.

Local system integrators, hosting service providers, data centre players, network consultants and connectivity service providers, etc, are all getting into the act and jumping on the bandwagon. Today, the NMS market is dominated by the likes of Wipro Net, Satyam Infoway, GTL (formerly known as Global Tele-Systems), Datacraft, Compaq, Microland, Ramco, CMS, HCL Comnet and Bangalore Labs. The bullish outlook of service providers is well supported by IDC figures which peg the network infrastructure services market at Rs 753 crore during fiscal 2000-01, growing at a healthy growth rate of 26 percent year-on-year. The market is expected to grow to Rs 947 crore in the current fiscal. It’s thus no wonder that most players are looking at NMS to contribute significantly to their revenues.

While cost is definitely a strong motivation for Indian businesses to outsource network management services, there are other compelling reasons too. Organisations without qualified staff and resources necessary to manage their networks find outsourcing an attractive option. Also, outsourcing can provide a significant competitive advantage. For instance, a company, which wants to rapidly expand its network often, finds itself at the crossroads when it discovers that it neither has the time nor the competency to manage its networks. In cases like this, the organisation may be better served by focusing on its core competency, leaving an outside party to design, implement and manage its network.

Agrees Shyam Bhethanabotla, executive vice president, GTL, “The Indian market currently shows a very strong trend towards outsourcing and looks like a market which will accelerate faster. With organisations realising the importance of connecting their people, suppliers and customers for achieving business objectives, this has resulted in an exponential demand for managing enterprise networks services such as LAN, WAN, VPNs, VoIP, intranets and extranets for deploying various applications.” GTL, which provides services like network design, planning and network re-engineering including value-added services like disaster management, is one of the biggest players in the NMS space today. GTL, as part of its strategy, is focusing on Indian companies who aim to expand their operations globally.

CMS’ Ramadorai says with 40 percent of all expenditure on networking spent on administration, NMS is the space to be in

Indian companies, who were till now traditionally serviced by in-house EDP departments, are now actively outsourcing their networking needs to NMS providers. Also, the concept of annual maintenance contracts has undergone a sea change with service providers moving away from traditional services like repairing a particular part of faulty equipment to fully managing complex networks. Take the case of Comsat Max, a leading player providing solutions in VSAT-based communications. The company, which for years sharpened its skills in the VSAT space, is now offering its technical expertise in providing network management services.

Explains Joyjit Chatterji, general manager sales and marketing, Comsat Max, “With years of experience in the VSAT space, we are in a position to provide customers a complete end managed digital network for data, voice and video transmission. We have brought a whole range of new possibilities to Indian corporates who now have access to unprecedented data networking services, total control of sales management, better customer service, financial control, inventory management, operations control, distribution and logistics management all leading to significant return on investment.” Looking at the exponential growth in the NMS space, Comsat Max has invested substantially in infrastructure and will be providing value-added services such as managed firewall services, security solutions and disaster recovery solutions. Going forward, Comsat Max is looking at earning 20 percent of its revenues from the NMS space.

Adds S Ramadorai, director, CMS Computers, “If you look at the overall networking business, 40 percent of the cost goes towards administration and maintenance. For us, the NMS business runs into crores of rupees and is a steady revenue earner for the company.” Today CMS is a major player in the NMS space and has a dominant position in the Indian banking scenario.

Indian corporates faced with cutthroat competition, along with an increasing need to get networked are now aggressively getting their branch offices networked. A key sector is the banking industry where large public sector banks forced on the back foot by nimble private players are setting up large networks. The significant part is that their purchase orders mention that the networks would have to be managed end-to-end by service providers. Adds R Srikrishna, general manager, HCL Comnet, “This is a clear indication that the concept of a network managed by specialist third parties is fast increasing, and being adopted by large banks and financial institutions. Today, the management solutions market is increasingly becoming the chosen route for New Economy organisations.”

As more and more players join the fray for offering NMS, players like HCL Comnet are adding value-added services to their basket of offerings to boost revenues. For example, HCL Comnet’s services start where bandwidth provider services end. Bandwidth service providers typically provision networks of say 64 Kbps to a customer. HCL Comnet’s service helps the customer on critical issues like monitoring of bandwidth, better application response time without increasing bandwidth, and identifying faults within the network. The company, like other competing players in the industry is extremely bullish on NMS and expects the division to grow over 100 percent in forthcoming years.

Comsat’s Chatterji is looking at the possibility of earning 20 percent of the company’s revenues through this space

Another key factor driving the NMS space is the lack of will on the part of corporates to keep on upgrading their technology infrastructure. Explains Muralidharan Pattabiraman, head, corporate business-communications services division, Wipro Net, “We keep on investing substantially in technology and in constantly upgrading our skill sets to address emerging issues in network management. This makes us an ideal choice when it comes to outsourcing network management needs.”

Though in its infancy, the NMS space is expected to accelerate faster than other markets in Asia Pacific. Pure-play players like Microland and Bangalore Labs are looking aggressively at tapping new emerging markets. Explains M S Rangaraj, director, marketing and new business unit, Innerframe (a division of Microland), “The potential in the Indian market is very high. The opportunity is in three markets banking and financial segment, call centre market and service providers, like courier services and FMCG companies.” The opportunity in the banking and financial services vertical is extremely good, as competition has forced banks to be interconnected between their operating entities. The same holds true for the call centre market, as international WAN connectivity in addition to local WAN connectivity is mission-critical, specifically for those who are multi-functional. In terms of services, Innerframe offers network-planning, deployment, managing equipment and performance review of the network.

Agrees L Prabhakar, associate vice president-managed services, Bangalore Labs, “Focus on measurable service levels and clear deliverables, optimum costs with best technical skills and management toolsets with complete responsibility for providing infrastructure support are some of the key reasons for outsourcing. And this trend is picking up fast.”

One more key driver for the NMS market is the large-scale adoption of Wide Area Networks among Indian enterprises. The changing telecom scenario with a large number of players and higher bandwidth availability at lower costs is driving increased adoption. For organisations grappling with the complexity of their expanding WAN networks, outsourcing work of network management to third parties offers a cost effective and efficient way. Though the concept is not new, adoption rates are currently increasing at a fast clip. Agrees Dipan Bhattacharyya, vice president, Satyam Infoway, “Network management concepts are not new in India. However the criticality and urgency of having a good management model is fast growing both in the private and public sector equally. Being in the early growth phase, the potential of the market is immense.” In terms of services, Satyam Infoway, in addition to the basic gamut of services, provides services like training internal staff on networking topics, process consulting and network management tools which enable Indian corporates to manage their networks themselves.

Badani of Datacraft says an NMS provider with a knowledge of problems can better tackle future ones, thus giving him the edge

Adds Shailendra Badoni, head-Support Services, Datacraft India, “Outsourcing is rapidly becoming the method of choice for building up a competitive advantage. Companies which are able to optimise the monitoring, management and maintenance of their networks though outsourcing as a discipline will gain a distinct advantage over competitors.”

Infrastructure is key

In terms of infrastructure, all major players have invested substantially for providing support. For example, HCL Comnet provides support to its customers through its Network Operating Centre (NOC). Through this facility, HCL Comnet provides end-to-end WAN management services. These services cover the entire life cycle of a network, all a part of implementing large complex networks working in close association with telcos. The same facility also boasts of remote management services that enable both Indian and foreign companies to outsource entire network management services. The company also offers a Web-enabled managed service provider concept, which offers management services to clients over the Internet. HCL Comnet delivers this using a distributed NOC that covers over ten locations in India and the US. Performance of customer websites is continuously monitored from these distributed NOCs and all critical data is fed into the global network centre at Noida for taking corrective action in case performance drops below defined levels.

Bangalore Labs too has invested substantially in setting up an International Management and Resource Centre (IMaRC), which is stated to be the first of its kind in India. IMaRC is a facility that can manage customer applications, operating systems, server platforms, databases, networking elements, connectivity, security and Internet performance all remotely on a 24 x 7 basis. The key advantage is the fact that the IMaRC management platform is vendor plural, enabling the company to pick and choose best of breed framework solutions from different solution vendors like HP Vantage Point, Aprisma Spectrum, Remedy ARS, Internet Security Systems and Checkpoint. Bangalore Labs proposes to set up a global network of IMaRCs, after the first one based out of Bangalore.

Satyam Infoway, with tremendous experience in data centres, is in an advantageous position to exploit this market opportunity. Currently Satyam Infoway’s network comprises of a meshed architecture with a presence in 53 cities. Along with the distinction of having the first TCP/IP based network in the country, the company has also earned the ISO 9001-2000 certification for a data centre, network management and customer care. With more and more international clients looking at quality certifications, the ISO 9001 certificate could prove to be a key differentiator between Satyam Infoway and its competitors.

Looking at the exponential growth in the networking business, companies like Ramco Systems with extensive experience in deploying and supporting ERP implementations have started looking at providing network management services in a big way. Explains Suresh Srinivasan, general manager, Enterprise Networking Solutions, Ramco Systems, “In 1993 when we commercially launched our ERP solution we found that there were not many system integrators or networking players who had experience in this space. What started as a small division is now a separate SBU with the potential to contribute significantly to the company’s revenues.” Today, the company has established itself in the Big League with major projects implemented for large clients like Bombay Stock Exchange, Indian Oil, Amara Raja Batteries, Ericsson, Coca-Cola, AirFreight, Hughes Escort, Oil & Natural Gas Commission and Tata Institute of Fundamental Research. In the last two years, the business has witnessed a CAGR of over 50 percent, confirming the potential of this segment.

Chinks in the network

Global’s Bhethanabotla says with the Indian market showing strong trends towards outsourcing, the potential is enormous

With network management service providers looking extremely optimistic, will the industry attain a maturity level, which could mean that companies could even spin off this business? Though infrastructure is a common complaint, industry analysts feel that there are other compelling reasons that must be resolved before the industry attains critical mass. Explains Srikrishna, “Networking management is an upcoming trend that necessitates substantial awareness generation. Though most CIOs are aware of basic terminology, they have to understand the benefits outsourcing offers. Another strong impediment in this area that concerns most CIOs is the security issue. The credibility factor has to be well established to succeed in this business.”

Satyen Parikh, a noted expert in networking solutions and area director, Indian subcontinent, Onward Novell India, puts forward a very valid point when he says: “Indian customers are used to a market wherein the solutions supplier used to bundle in services for free. But gradually, the Indian customer is realising that he has to pay for quality service. The market is currently in a transition phase with adoption rates increasing gradually.” Satyen also points out to issues like infrastructure, which has led to corporates insisting on having an onsite engineer rather than having their network monitored remotely. Also, as customers are unable to quantify the service levels they are getting for the price they are is paying, this can lead to a situation where smaller system integrators quoting low prices but with no proper experience bag the contract and muddy the name of the NMS sector. One more key obstacle is the government regulation of not permitting private networks to be interconnected. This is important, as remote management is an essential part of the business of NMS players.

Other major barriers include cost of third party NMS tool licenses. Third party licenses are very expensive, running into crores for a large organisation. This increases the cost of service to the end customer. In addition, lack of required skill sets is another obstacle. Explains Bhattacharya, “Wide Area Networking skills, unlike LAN operations is relatively less available in the Indian market. It takes an engineer 4-5 years in a large network operation to gain sufficient expertise in running a network on his own and many more years to manage it.” Also, technology management is still in the realms of infancy and relegated to the background. Most corporates even today don’t realise that having a well-managed technology infrastructure is an asset, which would give them a competitive advantage. One more noticeable trend is the hiving off of divisions implementing networking solutions into separate SBUs like that seen in the case of Ramco Systems. With more and more companies spinning off their IT divisions into separate IT companies or SBUs, third party business will not come to NMS players. Also, with the cost of labour being extremely low in India, corporates think twice before signing up for remote management services.

Onsite or offsite?

The resident engineer concept is still a preferred model for Indian corporates with remote management finding low acceptance. While traditionally customer data sensitive industries like banks, insurance companies and financial institutions want to have the comfort feeling of onsite secure control over their networks, players in the retail industry who typically have constraints on physical infrastructure like back end space usually prefer an offsite model.

In spite of all the obstacles, almost all the players involved are convinced that remote management will become the preferred model. Explains Parikh, “Though remote management is still not a preferred model for Indian corporates, things are bound to change for the better with miles and miles of optic fibre being laid out by companies like Reliance and Bharti. Ultimately the concept of onsite or offsite management will defuse and network operating centres would come up in a big way.” Bhattacharya of Satyam Infoway believes that since WAN installations have been growing, NMS is bound to grow at the same pace. In spite of the Indian market preferring a onsite engineer to the concept of remote management, companies like Datacraft are optimistic that the model would move to the latter as it offers greater margins. Explains Badoni, “The preferred model would move to the offline model simply because it offers centralised control. The NMS service provider armed with a history of problems will be able to provide solutions quickly.”

As seen in any industry, industry analysts believe that the Indian market following the global trend in this sector will see rapid consolidation. Most small service providers will either shut down or be acquired, a key reason being that most NMS providers are pure-play start-ups lacking credibility, financial stability and experience, all of which are pre-requisites for entering the NMS space. Going forward, in addition to addressing the domestic market, NMS providers are also hopeful that India because of its cost effectiveness could become a big market for delivering these services globally.