Outsourcing /

Getting a taste of management service

By Michael Martin
Network World, 10/09/00

ATLANTA - Network World recently broke bread and raised wine goblets with CEOs from three management service providers to glean their most candid insights about the emerging MSP market.

Our guests were John Igoe of SilverBack Technologies, Glyn Meek of TriActive and Santhana Krishnan of InteQ. While their companies are relatively young, all sport years of battle scars from such blue chips as IBM, Tivoli, Dell, Nortel and Hewlett-Packard.

The evening began inauspiciously with a lost taxi, only to deteriorate further when four members of the party arrived at one of two Fratelli di Napoli restaurants near Atlanta, while two others tapped their toes at the second one. But once dinner got rolling and wine began flowing, the conversation about network management began to crackle.

(l. to r.) Igoe, Meek and Krishnan

As Igoe, Krishnan and Meek dug into their calamari and bruschetta appetizers, they complained that few people understand the landscape of the fledgling MSP market. All three agreed that an MSP is a company that provides management services and information to enterprise customers.

InteQ's Krishnan likened the MSP model to a Reuters for the IT professional.

"Reuters provides real-time information, so people can make proactive decisions," he said. "That's exactly what we do."

Competitors?

But that doesn't necessarily mean all MSPs compete with one another.

"There's an MSP space," SilverBack's Igoe said, "but the problem is you guys (meaning the press, the guys picking up the tab) and the analysts haven't stratified it yet. And once you stratify it, you'll figure out who the competitors are."

For instance, while SilverBack, TriActive and InteQ provide enterprise management services, their bosses insist they are not direct competitors. The market is so new, they said, there's plenty of opportunity for everyone.

"I think we're all going to the same place," TriActive's Meek noted. "We're just getting there from slightly different angles."

Founded in spring 1999, SilverBack provides network management information to small and midsize businesses. TriActive, created in 1997, provides network management and systems management information to midsize businesses. InteQ is targeting firms with up to $1 billion in revenue, and is pursuing a more global strategy than SilverBack and TriActive.

In explaining InteQ's strategy, Krishnan made the mistake of drawing on a napkin.

"Look - he's using the napkin," Meek crowed. "I didn't know we were allowed to do that. I've got a laptop in my car."

One big challenge InteQ, TriActive and SilverBack face is selling the MSP model to IT professionals, many of whom may see these service providers as a threat to their jobs.

"That's one of the most sensitive parts of the whole thing," Igoe said. "You have to sit down with an IT professional who's trying to figure out if they can keep their job if they do business with you."

The way to sell the MSP service, Igoe said, is to show that it will help IT professionals do their jobs better rather than lead to unemployment.

"You have to present it as an empowering-type service, and they can buy as much or as little of it as they want," he explained.

Meek said there are bigger threats to IT professionals than MSPs, namely providers such as CenterBeam, which offer businesses a complete, managed IT package, including network components and PCs.

"[MSPs] just give IT staff tools to solve their problems, and we're not as much of a threat as if they outsourced the whole thing," he said.

As the entrees arrived with a fresh bottle of cabernet, talk turned to the relationships between MSPs and their software partners such as Hewlett-Packard, Tivoli and BMC.

"None of us has anything that's proprietary," TriActive's Meek noted, addressing his fellow CEOs. "Aren't you concerned the Tivolis and those guys are going to wake up?"

SilverBack's Igoe replied that the large software vendors would eventually get into the MSP game.

InteQ's Krishnan doesn't believe the software vendors will successfully enter the MSP market.

"They're not going to come out as service providers because they're already too late," he said.

While Igoe, Meek and Krishnan said they're satisfied with their software partners, they emphasized they're not tied down by these relationships.

"In our model we use the HP OpenView framework, and a bit of BMC and Remedy," Krishnan explained. "But tomorrow it could be different. The way we deliver our process is entirely our own, so we can plug and play. We just use these guys as selection and correlation engines. If Tivoli came out with a better engine, we could pull OpenView out."

If that's the case, Meek asked, couldn't MSPs build their own engines?

Igoe replied he doesn't want to get into the software business.

"We don't want to compete with BMC and those guys," he said. "I see those guys as providers."

But, noted Meek, if those providers enter the MSP market they'll become competitors.

Igoe said a book he'd read recently, called The Blur, summed up the competitive situation MSPs will face.

"The Blur talks about your competitors being your partners, your partners are your competitors, your customers are your enemies and your enemies are your customers," he said. "That's all we're talking about here."

Krishnan said he's not concerned about a large software company entering the MSP market, and even if one does, InteQ won't change the way it operates.

"From our view we're a service company," he said. "We'll never be a software company. We'll never replace [Computer Associates], or Tivoli, or HP."

Over port and cappuccino, the CEOs discussed what the future might hold for MSPs.

"Hey, you guys want to scare everybody?" Igoe asked, smiling. "Let's merge."

Playing along, Meek responded, "We can call it TriActive, because there's three of us."

"That's good," Igoe laughed.

"Not us," replied Krishnan.

As the Network World editors called a cab, the three CEOs huddled together and walked outside. We're not really sure what they discussed. But we made it clear that if a merger does occur, we feel entitled to a consulting fee.