Conventional wisdom warns companies against outsourcing their core competencies and, at one time, management fell into this category. Now, however, especially with the rise of E-business, organizations require exceptional management to survive. Because this is not always available in-house, management service providers (MSP) are springing up to fill the need.

MSPs are an emerging type of vendor that lets customers outsource various aspects of information technology (IT) management. If an MSP can guarantee that an organization's network or applications will remain up and running, and downtime will be nearly or completely eliminated, an organization should seriously consider this option.

MSPs appeal, in particular, to small and mid-sized companies, as well as Ebusinesses, as an alternative to the expense of building their own management systems. While these businesses might require 24x7 availability, they do not have the resources to ensure this uptime by doing their own management. However, an MSP can do so, notifying the customer of potential problems or slowdowns.

In fact, some analysts predict that 50 to 70 percent of organizations will use a service provider to assist in building or hosting their E-commerce applications. In-house management costs are steep, and include management platforms and point products; management integration tools such as a central console; and staff to install, configure, test, and maintain systems. Businesses must also gauge the cost of downtime.

The cost savings attributed to MSPs can be substantial. Companies save not only the hefty price of the software itself, but the cost of internally hosting management software, which is estimated at three to nine times the cost of the software, plus ongoing staff costs.

Still, in turning to MSPs, IT managers give up some control and visibility into their infrastructure. Also, because the services might lack the functionality of traditional management platforms, flexibility is an issue; it becomes difficult to add new technologies and systems to the IT infrastructure. Therefore, if IT is critical to the organization, such as in the financial services and telecommunications industries, companies might want to retain management control.

According to one analyst, there are approximately 70 vendors in the management service provider category. These include Manage.com, Luminate.net, NetSolve, Envive Corp., StrataSource, and SiteLine. By the end of 2000, MSPs generated more than $90 million in revenue, and analysts predict $4 billion by 2005.

Major management solution providers are also beginning to offer MSP services, including Computer Associates and Hewlett-Packard; the latter has a new HP

OpenView service provider unit. Some vendors such as TriActive are changing their marketing message from application service provider (ASP) to MSP. And other management software vendors, such as BMC, are forging alliances with MSPs, and buying companies with point products.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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