Becoming an internal services provider

A big buzzword these days for network and communications teams is “internal services provider.” The idea is for the communications group to position itself as a provider of a range of services to the organization’s users, typically with a chargeback mechanism in place.

Why? One reason is to lay to rest the notion that outsourcers can provide higher-quality services at a lower cost. Typically, they can’t — they can do one or the other, but not both. (As the old consulting adage goes: You can have faster, better or cheaper — pick two.) If you want outsourcers to provide services that are both better and less expensive — well, good luck with that.

However, a communications team can’t make that argument if neither the quality nor the cost of the services they provide is measured and quantified. So one reason to restructure the communications team as an internal services provider is to put in place the metrics to demonstrate that services provided internally are either less expensive or better than those provided form outsourcers.

Another reason to move to an internal services provider model is to bridge the gap between business needs and telco service offerings. Carriers try hard to position themselves as partners, they often don’t understand how to translate a customer’s business requirements into the right mix of offerings, because they don’t understand the nuances of the customer’s business. That’s where the internal group comes in.

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Converting your team to an ISP is more challenging than it sounds, however. Only around 60 per cent of the folks I work with have done so (and those, with varying degrees of success). Here’s a quick road map for making the transition.

Start by defining your metrics. For example, what does “better” mean, in your organization? Higher user uptime? Shorter application response time? Faster circuit or service installation time? Make sure you fully understand your users’ needs and expectations — then quantify them. (Is a “prompt” installation measured in months, weeks, days or hours?) Similarly, how are you defining price? Unit cost per bandwidth? Overall per-user TCO?

Put in place the tools to measure price and performance — whether yours or the outsourcers. Some of my clients have built out such sophisticated cost models that they’re able to tell senior management exactly how much buying a company (or, say, opening a suite of Asia Pacific offices) will cost or save in telecom services, thus enabling business executives to factor the costs and benefits of IT into their business decisions. This also enables you to realistically assess whether an outsourcer might be able to do a better job, or deliver services more affordably — something it’s best to know up front.

Finally, implement a chargeback mechanism. The most common approach is per-employee chargeback (between a quarter and a third of my clients use this). Communications teams also use per-site, per-business-unit and per-desktop chargebacks, among others.

This just scratches the surface of what it takes to become an internal service provider, but hopefully it gives you a sense of why it’s a good idea.

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