IT Goes Wild Wild West: Everything as a Service, Really?

By: Marco
May 23, 2013

Type “cloud services” or even “hosted solutions” into Google and the results are overwhelming. A search for “hosted voice” – a rather narrow piece of that market – yields 12 million results alone. If you narrow it tightly to “PBX hosted voice,” the results still top 1 million.

I wrote a blog a couple years ago about Managed Services becoming the new black in IT and it has. Thousands of new providers have emerged over the past two years and even long-time IT providers have shifted their business models to provide the same value proposition: Deliver everything as a service. From voice to networking to printing, you name it and you can find a company that delivers it as a service.

Really, everything as a service? It’s become the Wild Wild West and near impossible for even the knowledgeable business leader to navigate effectively.

The real issue, though, that I see as a CIO is this: Although everything can be delivered as a service, not everything should be. At least not yet.

Compromised Service
The appeal of receiving IT as a service is the ability to get rid of the equipment, pay for what you use and shift IT from a capital expenditure to an operating expense. That is true in many cases.

But businesses also can lose performance and actually pay more when receiving certain types of IT as a service. Here’s why:

IT as a service is commonly delivered over the Internet and that does not come with a Service Level Agreement. There are no quality standards for service delivered over the Internet because the Internet is public domain. No one owns it, so no one can control it.

Some might think that if they use a Virtual Private Network (VPN), they will get the same quality as they did when the servers were on their LAN.  A VPN just secures the traffic. It does not affect the Quality of the Service (QoS). So, the phone line may be secure. But it does not mean it meets any quality service QoS standards.

To ensure a level of quality, businesses need to buy a MPLS (Multiprotocol Labeling Switch) or another dedicated circuit to their service provider. Essentially, that brings back the wires that organizations tried to avoid. Not to mention, it increases the overall cost. A dedicated circuit can cost between $500 and $2,000, depending on the company’s size and needs.

What Works For You
Shifting everything off-premise is not always the answer. A company I know had been operating on a hosted platform for three years with challenges in service. After moving to an on premise PBX hosted solution, the company saw an ROI in 14 months.

Delivering IT as a service has a place in the market and is a viable strategy for small and medium sized businesses in many cases. The key is understanding what should be delivered as a service and what makes sense to keep in-house. Finding the answer for your business starts by asking:

  • What software does the business need?
    From your line of business software to CRM to accounting, list the software packages you need to operate.
  • What systems run my software?
    Connect with the software suppliers to determine what they’re using today – and plan to use moving forward. Many software vendors have moved or plan to move to the cloud-based model.
  • What hardware is needed?
    This also is often dictated by the software supplier. Some electronic medical record software commonly used by hospitals and clinics, for an example, is only compatible with certain types of hardware.

A business may have three key lines of software it depends on and that need to interact with one another. And they best solution all may not be hosted for all three. The challenge is creating an ecosystem that ties your business applications together and allows them to interact effectively. If you don’t have the necessary skills on staff to analyze, partner with a trusted non-biased IT company to assist.  Businesses cannot avoid breakdowns.

Topics: Managed IT Services