How to choose a network provider (carefully)

These days, many IT managers are worrying about what companies to send their hard-earned outsourcing dollars to. One network analyst is suggesting that, when it comes to network services providers, now might not be the best time to start outsourcing or switch providers, and, if you must, be very, very cautious.

Info-Tech Research Group released recently a research note, “Three Reasons Not to Outsource Enterprise Network Services.” It was inspired by the downtown in the economy, according to senior research analyst John Stehlman, who said, “I’m not trying to start a war between enterprises and vendors, but it’s important to be very cautious these days.

“Two years ago, enterprises didn’t have to be so concerned about the resources of the providers that they were going with. Now, they have to be concerned not only with the past performance, but the present and the next two or three years before you go with them,” said Stehlman.

The providers have to give certain service levels, but these could turn out to be the wrong amount. “Enterprise sizes are changing,” according to Stehlman. “They’re closing offices and cutting personnel, and that impacts the amount of technology required.”

He recommends keeping things in-house or sticking with the service provider currently in place if there haven’t been any service problems. “It probably makes sense to stay with whichever vendor you’ve been with,” Stehlman said. That way, you’re not risking it with a new, possible unstable company.

Sometimes, however, a change might be necessary. “If your structure is antiquated, (going with fresh network infrastructure) might be a good way to transition to a new state,” said Mark Schrutt, director of outsourcing services with IDC Canada Ltd. This would also be a good way of staying relevant and up-to-date so as to come out of the recession thriving.

Stehlman recommends making sure that this is the case by carefully studying the business needs (and, if applicable, the past contract and performance) and before finally laying out the criteria for a contract that is as recession-proof as possible.

“You want to go with a service provider that is among the most financially strong,” he said.

On the cost side of things, said Schrutt, it’s a good idea to make the pricing model fit the situation. If a company has been relatively stable (even through the first throes of this recession), then you can use a more flat-rate pricing scheme.

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If circumstances are prone to change, Schrutt suggests raising the cost per usage, which may be more expensive in the short term, but will bring the total cost down.

Service level agreements and the actual contract are very important, as vendors might be less inclined to provide restitution when they’re cash-strapped and stressed. Drawing up the right agreement is key, and should include penalties written into the contract.

“You need to make sure that service violations will have penalties attached to them. You’ll never get the money lost in a service loss back, so you need to make sure that they can guarantee that they will get involved (in fixing the problem) as quickly as possible,” said Stehlman. “Don’t be afraid to make a new partnership, but tread carefully.”

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