What Can You Learn about Outsourcing Managed Network Services?

Driven by the financial needs, competitive managed service market, demanding business needs, and improved remote network management, the organizations are delegating control of the network including service management or carrier services to third party providers.

The possible advantages of implementing outsourced managed network services include reduced COO or cost of ownership, improved operational performance, abstracted management, and access to intellectual property or external expertise. Holistic outsourced models enable organizations to allocate better internal resources on the core business activities and strategic projects.

Nevertheless, relinquishing an end-to-end responsibility for network infrastructure without addressing systematically the service delivery model exposes an organization to significant operational, financial, and strategic risks. To mitigate such risks and maximize the results, the organizations must consider these best practices:

• Simplify the Process for the Provider and Service Termination Tower

Firstly, structure the contract with reduced bundling so particular services may be terminated without affecting others. For instance, in a recent project that involves an offshore provider, the contract is made with separate service towers. Secondly, retain the broad rights to terminate for cause and enable termination because of provider performance issues. Thirdly, establish particular termination processes during the contract negotiations and establish them into the agreement. Address all termination aspects explicitly including termination-relation charges, provider obligations after the termination, provider wind-down support, and transfer of the contracts, provider personnel, and assets.

It’s always best to negotiate the termination details while you have leverage as this will make the termination much easier with reduced costs and legal or operational difficulties. Waiting to negotiate such terms until you are seriously initiating or contemplating termination is too late for the reason that the provider will not cooperate well.

Knowing the well-defined processes of termination are in place with the service towers that may be peeled off makes the termination more credible and effective stick to use once the provider isn’t performing.

• Establish Clear SLAs with Defined Credits in the Contract

The SLAs must ramp up based on the duration of service issue, number of the defaults, and severity. In addition to that, they must have both non-financial and financial remedies requiring:

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• New customer references every 6 months.
• Performance improvement plans.
• Detailed remediation plans.
• Rapid processes for escalation to the senior or executive management levels of the provider.

To improve SLAs, the company should dedicate internal resources when monitoring provider performance, address default, and escalate chronic problems consistently with the use of the predefined processes to hold a provider accountable.

Migrating crucial IT network services and infrastructure to a completely outsourced environment is risky and complicated, but also it has the potential for efficiency benefits and significant cost. Migrating risks needs preparing and looking beyond sourcing even through developing a good sourcing strategy, flexible contract terms, negotiating strong, having the right provider management as well as continuous IT involvement. Through taking such steps, the organizations may help ensure managed service providers deliver real value to their customers and business.

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