The key to business

transformation: Futureproofing your

Consumption based IT
services strategy
A strategic whitepaper for enterprise
decision makers

Co-authored By
Dechacca Ponnappa Industry Analyst ICT MENASA,
Frost & Sullivan
&
Mr. Nitin Mishra, SVP - Products & Services,
Netmagic.

Foreword
Enterprises of all kinds, from organisations across the industrial spectrum, to governments and entrepreneurs, all
are seeking to enter newer business models, drive innovative services and much more. IT being the core enabler
of businesses, has forced IT departments to drive tremendous business value from their IT investments. In the
past and at present, enterprises have engaged external service providers in traditional service delivery
arrangements to handle the ongoing IT operations through models such as staff augmentation, co-owned delivery
etc. The traditional models may not suffice to manage the present day expectations of customers and business
stake holders such as reduced time to market, cost optimisation, on demand services and much more.
Hence a new breed of next-generation enterprise and best in class service providers are fostering a
collaborative approach to bring in newer models of service delivery, laying down the foundation for Consumption
based IT that involve a mix of Usage based economies delivered through OpEx models.
Consumption based IT services model ensures that organisations see consistently strong results from their IT
investments that positively influence their business outcomes when the service providers are empowered with a
sense of ownership, incentivised to think big, innovate and outperform the buyers expectations when the IT
management is passed on to them. This is the win win model that this whitepaper intends to cover and how
enterprises can get more value from their Consumption based IT Services Provider.
Review the business needs in the below table and if the answers to any of these questions is yes, then this paper
helps to understand how newer models of Consumption based IT services can assist you to address your business
objective.
Exhibit 1:
Is your business facing these challenges?

Managing mission critical IT Infrastructure with higher

operational efficiency

Lowering IT budgets and increasing productivity

Fulfilling business needs, managing multiple user groups and

technology platform

Responding quickly to meet time to market demands

Operating in real time to meet 24-hour demand

Is your business in transition?

Needs to upgrade, refurbish, move, or relocate existing

infrastructure.

A merger, partnership, or acquisition is altering operations.

A need to increase the coverage range and level of service.

The revenue targets depend on implementing new technologies.

There is a need to expand into new markets

Is your business struggling to increase profitability?

Currently witnessing a dynamic business growth while

undergoing downsizing and hiring freezes

Agree that Consumption based IT is a good strategy for gaining

efficiencies and reducing costs

We prefer to dedicate resources to our core competencies and

mission critical processes rather than IT related activities

The evolution of the IT landscape and the advent of newer service delivery models

Current
complexity
challenges

The Road to
evolutionary
transformation

The complexity of internal IT can often force in house IT staff to spend most their time
reacting to problems rather than bringing in new business processes or provide
advanced functionalities to existing processes. The traditional customer/service
provider relationship assumed that the service provider was selling a product and
ongoing maintenance & management would be part of a do-it-yourself solution.
Todays networks are increasingly distributed so the IT assets being managed are
generally geographically remote from the IT centre and staff. The complexity and the
corresponding costs of monitoring and managing this expanding infrastructure is
increasing, and the costs of system down time are increasing. Also, management of IT is
not limited to just IT infrastructure, but is expected to deliver consumer-inspired user
experience. This raises a need for unified dashboards that replaces traditional
monitoring tools in order to monitor business services, applications and provide
analytical insights to react faster to problems.
Enterprise data centers are going through an evolutionary transformation. The advent
and proliferation of virtual infrastructure, is the anchor of this transformation. The
management of virtual infrastructure has become the next big obstacle for data center
managers. The integration of existing management tools is not mature enough to satisfy
the long-term demands of a highly dynamic, service-led data center. Virtualizationspecific management tools require integration with higher-level management or
orchestration frameworks. Lastly, the management across virtual infrastructure and
physical infrastructure that comprises of servers, storage, and networks is still not
integrated or automated. This integration is essential to achieving the dynamic, pooled
resource environment that is the solid foundation of IT service management and data
center transformation, in simple words Consumption based IT.

Over the last several years, private cloud solutions have grown in number, concerns over the public cloud have
diminished and hybrid cloud is partially going main stream
The questions that most of the IT leaders have are
Where does each application belong, where do you source new applications- in the private
cloud, public cloud, hybrid cloud or the organisations legacy environment
Which model can provide us the best performance, cost and flexibility
How can you design todays cloud in such a way that it will be compatible with the models that
will arrive in the next 2 years?
IT service management automation forms the underlying structure to private and public cloud architectures
effectively providing scale-out, dynamic data center transformation. This is a pre-requisite to provide endto-end provisioning of workload, server, hypervisor, network, and storage against a service delivery
objective. Once the service is commissioned, ongoing monitoring and management of the hosted
infrastructure must be conducted in an automated fashion. When sudden-demand conditions are detected,
there should be automated workload and resource balancing or tuning to return the workload or service to
expected service levels. The ultimate goal of data center transformation is using IT service automation to
dynamically allocate workloads across cloud virtual and physical resources based on business-level
objectives, achieving economies through usage based models.

Critical decision factors for Consumption IT oriented Managed Service Partners

The measure of the IT departments success is about the service quality delivery speed to the business
stake holders. For many organisations, this requires a transformation in how they operate and conduct
businesses. Enterprises therefore need to address the fundamental assumptions of how IT is
managed, delivered and consumed. But the most important decision centres on being able to give
importance to not just the right cloud model, but also on the ongoing support model to sustain the
solution deployed and provide the desired customer experiences. This creates a strong need for the
right managed services partner.

Consumption IT oriented Managed service provider as your IT Enabler and trusted partner for continued
business sustenance
Over the last two decades, the IT operations team has been struggling to provide
business team the required services on time. As business requirements
have mounted, generations of technology have been implemented side by side.
This resulted in data centers characterized by complex, static physical
configurations, incomplete virtualization efforts, and multiple silos of
management. But the emergence of better virtualization management tools,
converged infrastructure, multiple user operating systems, multiple workloads
platforms public, private, hybrid, and hosted data centers has opened the
potential to create Software Defined Data Center (SDDC) a comprehensive
abstraction of a complete data center.
Exhibit 2: The potential impact of SDDC
Integrated
architecture

Cloud computing

Single
Manageable
Domain

Workload-centric
architectures

Although SDDC is the vision that many enterprises today have, there are substantial challenges to achieve this
vision:
Skill gaps in the internal IT team to sort the challenges in this journey.
The significant challenge is the legacy mess consisting of applications that are
difficult to virtualise or whose owners want them to run on dedicated physical
servers only. This haphazard fashion of virtualized resources and legacy
applications has led enterprise data centers to in effect bifurcate their
management and architectures, leaving large fractions of their infrastructure
in two worlds the virtual and the physical.
Also, there is the emergence of new cloud based platforms that the
enterprises want to leverage in sync with their existing systems.

The result is
combination
of IT system
that has left a
hole in the
ability of
automated
service
provisioning.

This is the opportunity that Frost & Sullivan envisions for enterprises to engage a consumption IT
oriented managed service provider who can take ownership of your present state of IT systems across
plan-build-run continuum to transform it to a future scalable software defined data center, with
delivery models being a combination of OpEx driven, consumption based IT models

In the consumption IT oriented managed services model, the service provider takes complete ownership
across plan-build-run continuum of your IT strategy.
The enterprise has a choice to own or not own the IT assets, delegate the responsibility of a simple
router up to a business outcome to the service provider and hold the service provider responsible to
provision the required IT needed to achieve any new business decision.
The language that an enterprise can talk to the service provider can be about launch of a product /
grant access to a particular website for 24/7 demand /Opening a bank account and the IT infra as well as
the business process needed to achieve this outcome is taken care by the provider.
This ownership gives power to the service provider to think big, innovate and outperform at their own
right to help an enterprise win in the market place.

How does an enterprise benefit from Consumption based IT services?

Business benefits
Focus on Core Business:
Free up valuable internal resources, enable
them to work on more value-added work
Increase operational efficiency and scalability

Lower Total Cost of Ownership:

Ability to redirect cost to other strategic projects
Better visibility to IT costs with pay per use price
models

Enhanced service levels:

Ability to make the entire IT Infrastructure
accountable
Enhance service level visibility through
automation and proactive management

Faster Time to market:

Increased flexibility and responsiveness to your
business needs
Improved customer satisfaction since IT is
provisioned on demand to enable quick services

Leverage disruptive technologies faster:

Implement business productivity metrics:
Execute corporate strategy and top imperatives Allow IT to automate business processes
with newer technologies with access to
Able to measure IT downtime in terms of revenue
expertise
loss.
Stay ahead of competition with implementing
innovative projects with providers expertise

Technology benefits
Focus on Core Business:
Place workloads in platforms best suited for
them -public/private/hybrid/on premise helps
achieve cost reduction and strong foundation
for future IT architecture
Increase operational efficiency and scalability

Integration and management of legacy systems

Beat obstacles of process integration or
incompatibility with the providers expertise
Cost to run application decreases as more
application are added.(economies of scale)

More
transparency, flexibility and predictability
Transparent Consumption meter will lead to
transparent costs
Ability to quickly change solution portfolio
driven by changing business strategy
Cost of introducing new services for now and
future can be clearly outlined
Increase operational efficiency and scalability

Adherence to accurate sizing of infra rather than

experience based estimation
The enterprise pays only for the consumption and
hence accurate sizing of infra will be done
Vendor agnostic solutions that solve the business
need will be deployed rather than being biased by
specific vendors solutions

End to end management- legacy/new systems

The service provide will be willing to assume
risk and pain-share
The underlying legacy hardware or applications
will be given a vendor agnostic and a holistic
approach for management. The main objective
would be to achieve a business outcome rather
than just infra uptime
Outcome rather than just infra uptime and
scalability

End to end management- legacy/new systems

The variety of demand, seasonal peaks, trough and
events that trigger volume spikes are understood
Historical data of the pattern of IT demand will be
studied and taken to consideration to design your
future infra.

Coverage for compliance, security and

standardisation
Meeting regulatory compliance requirements
and adopting standardisation of processes
across global locations can be made simpler.
Security policies specific to your
industry/location/customer/any other stake
holders can be implemented faster.

Management of various delivery platforms in a single

window
Service provider can manage holistically all delivery
platforms spanning across public, private, on
premise and any other legacy systems on a single
window to deliver the business outcome as per
contract.
This concept creates an infinite data centre or a
borderless IT

The collaborative capabilities and behaviours of both enterprise and service provider of IT services will
determine the extent of success of the Consumption based IT services delivery. Establishing effective
governance mechanisms and managing change in a planned manner are also critical requirements for
success

Transformation Journey of managed services provider Transition from managed infra to managed
outcome, from fixed contracts to consumption based IT contracts

Software defined data

center-managed outcome
Multiple Platforms
management Public,
Private and Hybrid clouds
Core systems (servers,
storage, network)
Application integration

Virtualisation and
Orchestration management

Exhibit 3: Roadmap of managed services providers service catalogue from core infra management to software
defined data center. The commercial model roadmap has gained new flavours that have extended from fixed price
to consumption based pricing to gain-share.

Exhibit 4
Deliverable, Scope and workloads
are well defined
Fixed price

Repeatable services linked to

applications

Commoditized services centred

around users

Need a dramatic improvement in

processes and want a strategic
partner to lead this project

Time &
material
contracts
Application
based price
Transaction
based
pricing
User based
pricing
Performance
based
pricing

A varied range of services is

expected

Large work volume but requires

low per-unit effort

Common application maintenance,

testing, infrastructure and business
process services contracts

Gain-share

Service providers are moving from simple risk-free contracts to end to end ownership contracts as
shown in the exhibit above

 New application roll out cycle in the present is much faster than how it was in the future due to dynamic
business decisions. This calls for quick evaluation of numerous existing technologies to make right decisions.
Hiring skill sets to test and manage various new technologies can be very expensive and tedious.
Getting the legacy and new platforms in your enterprise to seamlessly connect and provide the service
quality that business expects in limited time can be expensive if provisioning and management is not
automated at every level.
Therefore a managed service provider transitioning to Consumption based IT services provider can help with
the end to end IT strategy plan, build scalable architectures and manage the daily operations. A managed
service provider is thus moving up the service catalogue from not just managing the core infrastructure, but
building an automated software defined architecture for your enterprise by leveraging the combination of
new cloud platforms and legacy systems, delivered through OpEx based models
Service providers are signing up managed services contracts in different types of outcome based commercial
models depending on the nature of processes that the enterprise runs. The commercial models in trend are per user/per device/per outcome based pricing which is directly related to consumption pattern.

While the right timing for your enterprise to involve a managed service provider may still be under internal
discussion, Frost & Sullivan believes that it may severely risk your enterprise in relative to peers who embrace it
early.

It is important to know that the foundation that was laid in the past is the present day legacy systems
that may be not be very flexible due to traditional architectures and the foundation that is laid for the
applications today will be the future. Hence, each additional step taken today has to be right

Profile of Netmagic as a service provider Strategic differentiators

a)

Thought leadership and transformation services: Providing organizations with thought leadership is a
critical anchor to Netmagics consumption driven IT managed services. Netmagic leverages its heritage
and extensive skills in data centre managed services to help organizations develop road maps and
blueprints that align their data centre architecture with business objectives. A key element of this
approach is Netmagics ability to assess, design, and implement these capabilities utilizing deep
knowledge in technology, process, and industry with the goal of ensuring effective transformation,
uninterrupted business operations, and operational excellence.

b)

Modularity via services catalogue: Netmagic provides its consumption driven managed infrastructure
services as a set of modular options such as colocation, managed hosting, cloud solutions and other
auxiliary services such as managed security, disaster recovery strategy in order to approach IT holistically.
Netmagic also offers to organizations the ability to select only those micro elements across managed
services, such as basic monitoring, security management, or cloud services , where in enterprises can align
their requirements at a more granular level with the goal of consuming just what they need and
optimizing their investments while minimizing their costs. Additionally, organizations can utilize services
that help localize their needs to specific geographies, where critical regulations might need to be met, as
well as personalize services that can support role-based needs as determined by individual users, such as
with the increased adoption of mobility and bring your own device (BYOD). Enterprises indicated that a
key reason for working with Netmagic is the flexibility of the contract and excellent after sales support.

c) Depth and breadth of capability: Netmagics services support a full range of multivendor IT
environments, including data center infrastructure (e.g., servers, storage, databases); workspace
environments that include traditional PCs and laptops as well as smart devices (e.g., mobile phones and
tablets); business continuity/disaster recovery (BC/DR); and a comprehensive set of network
environments. Netmagic has partnerships across technologies with multiple OEMs and also supports
platforms across IT spectrum (OS, Database, Network, Storage, Virtualisation, Web application servers,
security, SAP-basis, Mail platforms). Additionally, these capabilities align with emerging technologies and
address disruptive service delivery models involving cloud, mobility, social media, and analytics. Netmagic
will also act as the single point of contact (SPOC) for all customer requirements, thereby eliminating the
potential challenges that arise for customers that are managing disparate vendors.
d)

Industry specific expertise: Netmagics experience across various industries has given them the
perspective to provide infrastructure that is custom sized to your specific industry based on the workloads
that would be run. Also the future trends in the industry and other influential factors are kept in mind
while designing the enterprises data centre solution. What powers their efforts on this unique journey is
the faith and support entrusted by market leaders like Ratnakar Bank, Flipkart, India Infoline, Thomson
Reuters, H&R Johnson, Hungama, Yatra, Eureka Forbes, Mahindra Holidays, C-Edge and others. The
breadth of customers cuts across diverse industry verticals including banking and financial services,
Insurance, e-commerce, Healthcare, Manufacturing, Media & Entertainment, IT & ITeS, Logistics,
Hospitality, and Education.

e)

Global delivery and localisation: Netmagic provides organizations with a global footprint of data centres
by which it can ensure that services are provisioned with consistency of quality and integration of multiple
offices across geographies with standardisation of IT architectures. Services are localized to specific

geographies where local regulations often need to be met. The global data centers are built to provide
maximum uptime and business continuity.

Netmagics New Data Center in Mumbai

Global Scale Centre for Delivery of Consumption driven IT

Key Highlights of Mumbai Data center 5:

300,000 sq ft Data Center space in a 'state-of-the-art' facility, with space for more than 2,700 high-density
racks. Has full access to 20 MW of power (expandable to about 28 MW) and cooling facilities

Apart from multiple UPS, backed by batteries, there are gensets that can ensure 48 hours of nonstop power
on full load. The gensets are backed with four underground tanks in the premises that hold 200,000 litres of
diesel at any given time, to face any emergency

Being carrier neutral, Netmagic's DC5 has abundant network connectivity from all the major service
providers, resulting in adequate redundancy on this front. Add to this, 4 distinct fibre paths ensure reduced
latency and better network performance

Comprehensive physical and logical security arrangements: CCTV camera surveillance, entry barriers and
man-traps at DC floor, Access Card / Biometric authentication for entry, etc. besides others

The Global- Netmagic Advantage:

Built to the exacting global design standards of NTT Communications (the largest Data Center provider in the
world; managing over 140 Data Centers worldwide), defining a higher level of redundancy and uptime for its
IT and other deployed equipment

The latest in global Data Center technology in India, with no dearth of space for future business expansion

Benefit from Netmagic's expertise in serving the unique IT infrastructure needs of the Indian enterprises for
over 17 years and NTT Communications' globally benchmarked engineering and technological practices

Support for custom configurations of compute, storage, networking as well as power, cooling and type of
deployment (custom high density racks, caged rack, etc.)

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The Last Word:

Frost & Sullivan believes that A Consumption based IT Service Provider can provide more incremental
value in many forms than what an enterprise can achieve on their own since the solution deployment
approach will be holistic and will be subject to continuous improvisation through automation.

Critical success factors to business transformation is future proofing your managed service strategy
What it means?
If your enterprise has a heterogeneous mixture of multiple legacy systems that exhibit deep
seated reluctance to run new business models, the Managed service provider turned
Consumption based IT Service provider can take over to study the environment and bring the
best out of old systems along with new platforms, through optimal combination of CapEx OpEx
based models, to help you achieve the desired outcome. The solution can be a combination of on
premise, public, private and hybrid cloud technologies that will be provisioned on a single
management console.

This transformed service provider can manage your multi-vendor IT assets that spans across
multiple geographies to bring about standardisation and then automate IT provisioning to an
extent that every new business requirement can be addressed faster, eliminating manual
resource provisioning.

Evaluating multiple technologies from multiple vendors and integrating new technologies by your
self can create integration or performance gaps. However, a consumption based IT service
provider will wrap the most appropriate technology around each workload to provide unmatched
performance, security, or potentially both.

This consumption oriented MSP ownership concept will create a borderless IT .This ownership will
allow the MSP to not just build-run, but can be part of your strategic decision making to outline what
the technology implication would be to a business change.

This scenario is not to imply that the IT and security organizations can retire. On the contrary,
they are re-purposed to focus more on how IT and security technologies can be put to use in
support of strategic business initiatives. Also, they become liaisons with the MSP to ensure that
the needs of the business are understood and followed through by the MSP as he transcends to
becoming a Consumption based IT service provider

In a manner of speaking, the MSPs roles transform from extensively operational to leadership; and,
positively, the business directs more of its in-house talent into contributing to those aspects of the
business that differentiate itself in the marketplace.

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Appendix
About Frost & Sullivan

Frost & Sullivan is a leading global strategy consulting company, headquartered in the United States.
Established in 1961, in New York City, the company today has 43 offices across the globe. It has eight offices
in the MENASA Region, in Bengaluru, Chennai, Delhi, Kolkata, Mumbai, Pune, Bahrain and Dubai.

Frost & Sullivan has tracked the Information and Communication Technologies market globally. Coupled with
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Sullivan is well placed to assess the opportunity, analyze the customer segments and provide strategic
recommendations for array of business line.

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Sense, anticipate, and prioritize customer needs and preferences

Act on insights through improved product innovation, customer engagement, and communication

Establish a value proposition that is succinct, unique and defensible

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