Why Service Providers Need Network Analytics
Park Place: Professional Services
In previous blogs, we have explored a number of themes relating to the impact of digitalization on IT. Here, we turn our attention to specific industries within the IT sphere – service providers and vendors. These businesses, including managed service providers (MSPs), third-party maintenance providers (TPMs) and value-added resellers (VARs), are all experiencing increased demand, and this is forecast to continue for the next few years:
- Annual MSP growth is 11%, and by 2022 the market will be worth $258bn.
- Between 2017 and 2020, TPMs will experience growth of 35%.
- Against overall IT market growth of just 0.2% and 1.9% in 2016 and 2017, VARs in Europe experienced average growth of 9.44% during the same period.
However, these statistics only tell half the story. That a business can match this demand with growth of their own is not assured, and many such companies are at a crossroads in their business model. Why are these businesses at a crossroads, though? Why is it that these industries, which are facing so much potential business growth, also face such vulnerability and uncertainty? A business’ ability to maintain competitiveness and take advantage of the growth in demand is dependent upon how they overcome the vulnerabilities and uncertainties that hide within their existing business models.
Essentially, the demand for MSPs, TPMs and VARs is growing. However, the demand can only be met by those providers and resellers that move away from the traditionally reactive or incomplete service business model, and adapt to the new data paradigm that now determines business success. Quality and quantity of data will give businesses better insights and the ability to make better decisions, faster. Every decision and action must be steeped in data – in the age of data, there is no space for hunches or instinctive decisions. At the heart of this evolution is the ultimate source of data, the network.
Of course, MSPs, TPMs and VARs are all separate industries with their own peculiarities, but in this blog series I will be discussing the issues suffered and competitive advantages available in the areas commonly shared amongst these specific industries. It will be most productive to discuss the problems being faced in respect of what these businesses are seeking to achieve, because these are the circumstances in which such problems are found.
Reactive Break/Fix to Proactive Advisor
We will begin by considering the movement of these industries from reactive to proactive outlooks, and the contribution that network analytics can make to this process.
Prevent Issues from Becoming Business Problems
At the most basic level, across all IT environments and business models, is the desire to prevent issues from escalating into business problems. Service providers of all types have traditionally delivered remedial offerings under the break/fix model – something breaks, and they then fix it – but it is no longer enough to simply react to hardware issues. Regardless of how quickly vendors such as MSPs or TPMs may react to a reported fault, it is firstly human nature and secondly essential for business that customers will always want action faster.
It is important to remember that MTTR (mean time to repair) can be influenced by both customer and vendor. It might have taken the customer reporting the issue minutes, hours or even days to notice the problem, especially if there is no alerting system to flag such faults. Or, the vendor might take a while to source the appropriate replacements or engineers. Either way, time is money, and the longer a fault exists, the greater the impact on end-user experience – which affects the customer’s income and the vendor’s reputation.
Delivering a More Comprehensive Service
The key driver in this shift from reactive to proactive offerings has been the desire – and necessity – to deliver a more comprehensive service to the customer. This is reflected in the growth of VARs as described above, and the examples set by a number of TPMs that are branching out into service management. These businesses are beginning to harness analytical insights to maximize uptime and enhance their traditional hardware support. Even MSPs, which by definition are already providing services beyond traditional break/fix models, have not fully mastered this delivery yet and are looking to expand their own offerings. As individual sales and single-instance project work is declining, half of businesses expect their managed services to undergo high growth and comprise ¾ or more of total annual revenue in 2018, with another 45% expecting it to comprise half or more.
Tellingly, however, the percentage of MSPs citing the desire to upsell to existing customers doubled from 30% in 2012 to 60% in 2016. This means that nearly half of MSPs do not yet have plans for comprehensive service provision, leaving a huge gap in a market worth billions of dollars per year. Businesses cannot afford to leave such gaps in a world that demands continuous, complete and always-on service. With the current growth in these industries, if one vendor cannot provide all that a customer is looking for, then there is sure to be another vendor coming along who can.
The service-level agreement (SLA) is at the heart of the services relationship between provider and their customer. Effective utilization of network analytics will not only give providers and customers understanding of networks at the component level, but also at a services level. True analytics means enabling the right people to see both the cogs that make up a business service, as well as the impact these cogs have on business outcomes.
Alongside MTTR, businesses will then be able to measure MTRS (mean time to restore service), which is arguably a better measurement for issues relating to availability and change management, because it encompasses all aspects of service restoration and not just a single element. Without a service-level approach, providers might see an alert or fault and feel it needs to be fixed immediately on behalf of their customer. This could stretch resources, especially if the provider is catering for large numbers of other customers, all with their own alerts. However, understanding the effect this fault has on service provision can help providers make a more measured and appropriate assessment of when fixes and repairs can be made.
An emphasis upon service management is becoming ever more important as customers no longer look just for a provider, but also a business partner. This is as beneficial to the vendor as it is to the customer – the vendor creates a source of recurring revenue, and the customer receives service tailored to their business’ needs. Not only can network monitoring platforms provide customers with the full scope of their network infrastructure, but network analytics solutions enable vendors to offer opportunities for future planning, such as capacity optimization. These opportunities would not be possible without an overview of exactly how the network’s operation impacts on the business. Such functionality can only help vendors demonstrate their commitment to and secure a long term relationship with their customers. It is as much an investment in the customer’s future as it is for the vendor itself.
How Network Analytics Can Help Service Providers Unite the Big Data Ecosystem
In the first part of this article, we considered the desire of infrastructure managed service providers, third-party maintenance providers and value-added resellers to speed up their offerings. As competition grows, it is natural that the speed of delivery becomes an ever more important differentiator in sales. The ultimate ambition for providers in this respect is to move from reactive break/fix models to a proactive offering. Having discussed the reasons for this emphasis, we will now will look into an important way in which network analytics will help service providers achieve this goal.
Uniting the Big Data Ecosystem for Service Providers
Data is everywhere. Data is the currency on which digitalization runs – it is ever growing in quantity and quality, across all parts of the network. More and more devices become available all the time, all collecting ever greater volumes of data. At the same time, new technologies are always developing that can harvest and harness this data for the benefit of the business. Service providers cannot expect to increase their efficiency without it.
Why is this so important to MSPs, TPMs and VARs? The key point to remember is that data quantity and quality will directly impact customer experience, and there is no greater driving force for business success than excellent customer experience. We already know how fierce the competition is amongst the service provider industries, and in this environment, every advantage becomes crucial in the race to stay ahead of the competition.
There is data available in every part of the network, and all of it can be used to gain an advantage. Taking on increasing responsibility for their customers’ IT services, MSPs, TPMs and VARs are well positioned to take advantage of this fact, as a revenue source of its own and as a means of becoming more familiar with the workings of their customers’ businesses. Further, each of these industries will already likely have a familiarity with the appropriate technology requirements, because of their break/fix backgrounds. With readily available, high quality data, these vendors can switch from hardware break/fix and replacement to a solutions-oriented delivery. This importance applies to consultancy as well. Does the network data suggest the business is growing? No problem – the vendor has already spotted this for the customer, and can advise accordingly.
At the foundation of any big data project must be a comprehensive monitoring solution that is able to integrate easily with other tools, such as application and log monitors. Utilizing APIs will enable the vendor to unite their toolsets, and the customer can work in an open environment with the vendor’s offering and whichever other tools they may desire to use. No two customers are the same, and so it is critically important for vendors to deliver a flexible offering that plays well with others. This maximizes data collection and customer satisfaction – competition is so great that an unhappy customer will always have other options available. Therefore, data can easily be pulled from all available sources without the creation of silos, so ensuring the quantity and consistency of data.
Holistic Network Analytics and Management
Customer experience depends on service delivery, which can only be guaranteed when the network is performing at its best. Through utilizing the insights provided by network analytics to maximize network uptime, vendors can help customers achieve their business goals – when the network performs, so does the business.
Every business is different, of course, and MSPs, TPMs and VARs all operate differently. However, each requires its full business functionality and potential to pull in the same direction. A comprehensive network analytics system can link the tools already in play, and the enhance provision for the hardware and assets that they cater for. A move to service provision will not remove the physical aspect of digitalization – the devices and components that make up customers’ networks will continue to need maintenance. The diversity of equipment needs a unified management hub, and network management and monitoring connects all of the dots. Hardware maintenance will not go away, and the data analytics available from insightful network analytics will increase equipment efficiency.
Digitalizing and enhancing service and maintenance operations with unified, all-in-one network monitoring increases efficiencies and therefore customer service and value. Monitoring the entire IT suite enables vendors to introduce greater automation that might help fix issues without needing to dispatch an IT or network engineer. It also provides the foundation for the next generation of technologies that aim to augment engineering performance – machine learning. Data will only increase, and machine learning algorithms are designed to meet this challenge.
Presently, machine learning is still a developing, rather than a mature, technology. However, even at the most basic level, machine learning is already helping service provider vendors save money and increase efficiency through automation of chat assistance. For example, SupportBots LLC estimates their machine learning-fed chatbots can save MSPs more than $600 per month for each technician answering customer tickets.
Even amongst those service providers that already boast predictive maintenance solutions, hardware expenditure has often been considered nonstrategic and therefore an easy target for cost-cutting and downgraded significance. However, with the growth in the value of data, the network is now recognized for its overall importance to business revenue – all IT investment will now impact revenue. As a result, leaders of both service vendors and customers are searching for solutions to increase network uptime and productivity.
A holistic approach to asset maintenance and overall business operations are both necessary if vendors and their customers are to gain the full value of big data. This is especially crucial for TPMs, which traditionally have only supplied hardware maintenance. It is also only possible with a comprehensive strategy for maintaining and enhancing the underlying network. Without network-layer insight provided by network analytics, vendors will be unable to deliver the service demanded by customers and the growth demanded by the C-suite.
Stay Competitive in the Face of OEMs
One of the biggest threats to service providers comes from the original equipment manufacturers (OEMs) themselves. A common technique employed by OEMs is the ‘fear, uncertainty, doubt’ (FUD) method of discrediting the service provider’s offerings. This revolves around varied tactics that question a service provider’s qualification to offer support, compatibility or configuration, amongst others. There are truths in some of these questions – the OEM built the equipment to begin with, after all. Further, many hardware providers are attempting to use their existing scale and IT knowledge to move beyond their original hardware offering to compete with service providers that might utilize the same product families. Telcos, for example, are particularly active in this area, and are looking to grow beyond basic voice and data services.
In the face of competition that questions the very legitimacy of a vendor’s offering, a fully integrated network monitoring and management is all the more necessary for proactively monitoring devices, components and ports across a network. A vendor that can actively demonstrate its ability to manage, monitor and enhance equipment not just from one OEM but many – and across the entire IT suite – will maintain an edge over the OEMs and independent software vendors (ISVs) that might focus on just one product family.
In the age of the customer, it has become essential that software offers an intuitive user experience. It is now possible for many IT employees, who may not necessarily be considered technical experts, to assist with the collection and processing of data from their networks. This development further reduces the necessity of relying upon the OEM or ISV for functionality, because access to data analytics is now more democratized. Utilizing and offering network software that is more intuitive and requires less technical knowledge gives service providers the opportunity to empower their customers like never before. Technical and hiring costs will drop, too, with fewer required network engineers.
The lines between sales, marketing and customer success are blurred. In the accelerating business world, growth is so dependent upon the seamless collaboration of people, channels and technology that there can be no distinct separation between each. The same applies to the IT data that forms the foundation of all growth. Service providers that can offer a unified IT service will hold an advantage over competitors with less complete solutions – and by ensuring everything remains connected and performing, network analytics software is at the heart of this unity.
 Managed Services Market 2017 – Global forecast to 2022 (2017)
 Gartner, Market Guide for Data Center and Network Third-Party Hardware Maintenance (2017)
 IT Europa, Solution VARs in Europe – The Top 1000 (2017)
 Comptia, 5th Annual Trends in Managed Services (2017)
 Comptia, 5th Annual Trends in Managed Services (2017)