In-House Or ISP?

As businesses pull away from utilizing traditional centralized IT services, they are looking to strategic partners to help deliver new value to their customers. Enter the integrated service provider (ISP). While there are numerous providers across all industries and markets, selection is often based on the provider’s business acumen in the space, suggesting that hardware is irrelevant and software is a byproduct of a business requirement, not the other way around.

Consider the realities of available resources

ISPs are growing, as many companies no longer want to own — nor can they take on — the additional day-to-day operations of complex solutions and provide value add services. Today, there are two or more vendors involved in the delivery of a premise-based solution, not to mention the many pieces of software involved in a given ecosystem.  With the IT expense reductions over the last four years, new systems, and lack of sunsetting legacy solutions, it is important to ask: What is the day two experience going to look like for my customer if I manage this in-house? While my technology team may have the expertise, do they have bandwidth to support an additional complex multi-vendor solution given the current situation?

These questions are more important than the statement that is made all too often, “We can do this cheaper in-house.”  Cheaper does not necessarily mean one has the resources to provide for the ongoing care and feeding of today’s complex business-to-consumer (B2C) and business-to-business (B2B) solutions. Often, teams focus on “the project” and forget about “production” or otherwise defined capital to expense in addition to the realities of a 24/7/365 mission critical system. Remember last year’s capital can be this year’s expense without budgetary relief for additional resources.

Are solutions brokers the answer?

So, as ISPs mature their service model in this expanding market and the lines of business look outside their own four walls for business value-added services, will a few large providers become de facto business solutions brokers in lieu of being defined as cloud and hosting providers?  While many are partnering today, the only viable solution will include a robust global network as part of the service.  Many carriers have already made (and continue to make) large investments in their own business and cloud services; so how will that impact the other large providers?

I expect that non-carrier providers will look to create strategic partnerships with carriers to help deliver their solutions around the globe. The questions then become:  Who holds the liability and the service level agreement (SLA) in tomorrow’s solution? Will a new insurance coverage model be developed and/or be required by new regulatory guidelines — i.e., an FDIC for your data and availability? Will the data center be subject to new audits?

As this trend continues to develop, you will see the syphoning of critical infrastructure and internal IT dollars flow to business solution brokers.  This may be the tipping point for new software licensing models that could very well help drive even more hardware into the provider facility and accelerate intercloud innovation to logically centralize disparate services and solutions.

Who do you think will come out on top: the HW/SW/Service providers, internal IT, or  the carriers?
The Networking Exchange Blog Team About NEB Team