An Alternative to Cost Cutting

Outsourcers can employ technology to gain a competitive advantage, rather than rely strictly on cost-cutting measures to do so.

That’s the message of Irfhan Rajani, chief executive officer of Apparent Networks Inc.

The software company’s flagship AppareNet product is designed to help organizations identify network bottlenecks that impede application performance.

Apparent Networks last week inked its first alliance with an outsourcer, ACS (Affiliated Computer Services Inc.). ACS purchased a global site license for AppareNet, an agreement valued at $5 million.

ACS will use AppareNet to run its own data centers more efficiently, Rajani said.

“But more importantly, they view this [software deployment] as the ability to provide a higher level of service and differentiate themselves in the marketplace,” he added.

“The outsourcing market is hotly contested –not just by the likes of Perot [Systems], and EDS, and SAIC, but there is a large number of Indian outsourcers as well.”

Rajani contended that outsourcers that can rapidly troubleshoot customers’ networks can stand out from the crowd. “They can use technology as an edge,” he said.

ACS already has begun to use AppareNet for existing customers and plans to deploy the software to support its recent outsourcing contract with Walt Disney Co. Future project bids will also involve AppareNet.

“The intent is for ACS to be using us for any new contracts they are trying to land,” Rajani said.

Apparent Networks’ deal with ACS is likely the first of several with outsourcing vendors. Rajani reported that his company is in discussions with a number of outsourcers.

“Fundamentally, the value proposition resonates for other outsourcers as well,” he said.

That value proposition boils down to three factors, Rajani said. First, using a diagnostic tool in the pre-deployment phase helps outsourcers get network installations right the first time.

Second, the tool lets vendors react quickly to customer issues, determining whether a problem resides in the application or network layer. The third factor is service differentiation.

“That becomes a revenue play as opposed to just a cost-savings play,” Rajani said of the latter consideration.

In addition to outsourcers, Apparent Networks also markets to storage vendors, systems integrators, and telecom service providers. All those companies need to make sure the network “plumbing is clean,” Rajani noted.

To that end, AppareNet discovers network bottlenecks such as network-interface-card problems and full/half duplex conflicts. “If networks are misconfigured … application performance tends to suffer,” Rajani said. “In large enterprise environments, inevitably there are networking issues.”

Roughly 40 percent of helpdesk calls about application performance turn out to be network-related, according to Rajani.

The ability to zero in on the network as the root cause of a problem can trim helpdesk costs. Rajani said the cost of a call grows 10 times as it escalates from tier 1 to tier 3 support.

But ultimately it is quality of service—and the resulting differentiation—that motivates outsourcing vendors, Rajani said.

Still, it remains to be seen whether outsourcers will flock to technology, instead of knee-jerk cost-cutting moves, to boost their competitive position.

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