International Data Corporation
OneNetPlus.com Launches Internet-Centric Network and Desktop Outsourcing Services Business
IDC IDCFlash #20615 - October 1999
Table of Contents - Abstract
Will the launch of OneNetPlus.com help shift the locus for delivering network and desktop outsourcing services to the Internet?
Until recently, most network and desktop outsourcing services (NDOS) providers have leveraged the Internet by incorporating new capabilities, such as Web-based procurement management and asset tracking, into existing services. For the most part, the Internet has played a secondary role in the delivery of these offerings. With the launch of OneNetPlus.com, SMS is placing the Internet on center stage as a primary pipeline in delivering more comprehensive distributed IT infrastructure services. As providers find themselves under pressure to lower delivery costs, delivery of NDOS services may be gradually moving from a dedicated WAN-centric to an Internet-centric model. OneNetPlus.com's introduction of an Internet-centric NDOS business model should help to awaken many of the traditional NDOS providers to the rapidly changing dynamics in what many may have considered an industry in the shadow of ebusiness's glare.
Systems Management Specialists (SMS), an international outsourcing, systems integration, and computer services firm, has announced the formation of an Internet-centric network and desktop outsourcing services (NDOS) company called OneNetPlus.com. The new company will be headed by Russell West, formerly with Comdisco, who will oversee its operations, business development, and marketing efforts worldwide. OneNetPlus.com will initially provide customers with NDOS offerings designed to service customer IT infrastructures where core business activities are directly linked to the Internet.
To deliver an Internet-centric NDOS package, OneNetPlus.com has developed a comprehensive delivery service model that integrates NDOS capabilities with an ebusiness set of offerings. NDOS capabilities include managing desktops, associated servers, and network connectivity designed to meet the higher demands imposed by the Internet for improved responsiveness, availability, accessibility, and security. Services include essential design and reengineering of the corporate network and critical servers based on service-level agreements (SLAs), help desk, asset management, lease management, problem management, and change management. All corporate IT desktop services including help desk, OneNetPlus.com's DeskCare deskside services, and general IT services are provided and managed by a comprehensive enterprise support center called the Desktop Complex. Two core features of NDOS services are a desktop procurement system that is fully integrated with both IT operations and financial management and the integration of advanced tools, many of which are based on XML (extensible markup language).
Ebusiness services designed to support network and desktop infrastructures include virtual private networks (VPNs), Web connectivity, and high-availability services. Through its Office Anywhere service, OneNetPlus.com will provide support for a customer's mobile work force by enabling employees to access office systems 7 days a week, 24 hours a day (7 x 24) via a secure VPN. Where Web connectivity solutions are designed to include colocation and peering, high availability for hosted applications will be provided through redundant network connectivity, server fail-over technology, storage subsystem business continuity integration, database recovery, and comprehensive change management.
OneNetPlus.com Business Strategy
The roots of OneNetPlus.com can be found in its parent company, SMS. Founded in 1981 by Miguel Winder, SMS has grown to more than $100 million in annual revenue and 800 employees, as of 1998. Where SMS started in services such as application programming support for systems including IBM's 4300 mainframe, the company has evolved into an outsourcer of data center services with 7 x 24 help desk support.
As an independent business unit of SMS, which currently maintains a significant shareholder position in the new company, OneNetPlus.com is launching a set of services based on an Internet-centric network and desktop outsourcing services business model. This model is centered on providing holistic NDOS outsourcing solutions that are designed around the delivery of services both through the Internet and to customers whose own business models are built around ecommerce or ebusiness initiatives. Whereas holistic solutions will include complete management of the network and desktop with support for financing and technical support, these solutions also integrate the Internet through such services as Web-based procurement, financing, and asset tracking, as well as remote employee access via VPNs, secure and available Web access, and high availability for hosted applications.
As former executive vice president and chief technology officer of the Technology Services division of Comdisco Corp., Russell West has been chosen to lead this new venture. With an initial portfolio of about 10,000 managed desktop seats, which will be transferred from SMS, OneNetPlus.com is seeking to expand to approximately 250,000 outsourced seats within the next two to three years, with its primary market target midsized companies having from 1,000 to 2,000 employees. Although West brings with him a vast array of experience in network and desktop services, he and his cadre of experienced professionals, who have been chosen to lead this new company, will find that beyond the evident opportunities in the NDOS market, critical challenges may limit reaching these business objectives, such as competing with established NDOS vendors.
Initially, OneNetPlus.com can leverage the financial resources and knowledge offered by its major shareholder, SMS. The combination of these resources and OneNetPlus.com's business model will provide the company with the following opportunities:
· Providing one-stop shopping for NDOS customers. OneNetPlus.com's network and desktop outsourcing services portfolio will provide end-to-end solutions to many customers who are seeking to reduce the burdens and costs of maintaining their internal IT infrastructures. Whether it be desktop management, network connectivity, or server availability, customers are looking to NDOS vendors to support them in managing the vast array of technologies and services that customers deem either noncore competencies, such as asset management, or as mission-critical services, such as security or high availability. OneNetPlus.com's array of LAN/server services should meet these needs.
· Supporting an increasingly remote work force. Through the integration of VPNs into its network and desktop services, OneNetPlus.com can provide customers with the support for an ever-increasing population of workers needing remote access. Further, by providing these workers with 7 x 24 access to critical corporate intranets and databases that are secure from intrusion, the company can leverage opportunities to provide outsourced solutions to companies that typically have multiple locations and geographically dispersed work forces, particularly its target market.
· Supporting customer Internet initiatives. By positioning its NDOS solutions as Internet-centric, OneNetplus.com can service the expanding community of Internet-based businesses, whether they are pure-play Internet companies such as eBay and Amazon.com or traditional corporations with ecommerce initiatives. By integrating Web access and high-availability management of host applications into the traditional NDOS model, customers with Internet-based or focused businesses can receive the level of mission-critical network management they need to capitalize on the opportunities afforded them through the Internet.
As a newcomer to network and desktop outsourcing services markets, OneNetPlus.com is confronted with the following challenges:
· Competing with incumbent NDOS players. Launching a new business focused on network and desktop outsourcing services, even with an Internet focus, is very risky given the landscape of existing NDOS vendors. OneNetPlus.com's entrance into this market as, for the most part, a pure-play NDOS provider situates the company against some formidable pure-play rivals, such as ENTEX, GE Capital IT Solutions, and Comdisco.
Where ENTEX and GE Capital ITS shed their assembly and configuration businesses to concentrate more on providing network and desktop outsourcing services (see ENTEX Becomes a Pure-Play Services Firm by Selling Its Product Business to CompuCom, IDC 19310 , May 1999; and GE Capital ITS Outsources Products Configuration and Assembly Business to Tech Data, IDC 19419 , June 1999), Comdisco has shed its mainframe leasing business and launched a series of comprehensive NDOS offerings, including security management and a Web-based TCO tool system (see both Comdisco Nears the New Millennium: Making the Leap from Mainframe to Network and Desktop Services Provider, IDC 19192 , May 1999; and Will Web-Enabled TCO Tools and Single-Source Solutions Establish Comdisco as a Top-Tier Network and Desktop Outsourcing Services Provider? IDC #20436, October 1999).
Other vendors, such as IBM Global Services and EDS, have global capabilities and extensive networks of support and service professionals to use in defending and building their mid-tier customer bases. The combination of these pure-play and globally based providers creates some formidable barriers which OneNetPlus.com must overcome to establish itself as a mid-tier to top-tier NDOS player.
· Building global capability. Given that its target market includes companies with 1,000 to 2,000 employees and having multinational locations and needs, OneNetPlus.com must rapidly build global capability to support service delivery across such a customer infrastructure. This will require major capital investment to construct an array of network operations centers (NOCs) that have the geographic reach and range of service support needed to ensure the high availability and connectivity the company is hoping to deliver.
· Accessing capital for expansion. To move from servicing 10,000 desktops to servicing 250,000 desktop seats in just two or three years, OneNetPlus.com may need to expand its service staff to upwards of 4,000 professionals, depending on how efficient it is in utilizing its technological and human resources. (For more details on metrics of the key NDOS players, see Network and Desktop Outsourcing Services: A Market Analysis and Competitive Profiles of the Top 10 Providers, IDC #20017, September 1999). Included in this expansion will be certifying service professionals to support critical network and desktop technologies (such as Cisco's CCIE and Microsoft's MSCE certifications), establishing key partnerships with product manufacturers, and implementing extensive use of remote-based management systems, including management tools and remote device systems. Consequently, OneNetPlus.com must determine from which resources it will raise needed capital, debt, or equity. As a new venture and independent business unit focused on the Internet, raising cash through an initial public offering (IPO) should be seriously considered as a future growth strategy.
· Building customer trust. As in any industry, reputation is critical in building an installed base of loyal customers. OneNetPlus.com's obscurity as an NDOS provider and limited history in this market may preclude it from establishing critical wins needed to build customer trust. Although the transition of some SMS accounts to OneNetPlus.com may provide a platform from which to build a reputation as a major NDOS provider, OneNetPlus.com must seek to establish itself as a standalone business or risk subordinating its image to that of SMS, thus compromising the intent of the company.
Branding and Differentiation
The selection of ".com" as part of OneNetPlus.com's company name clearly communicates to customers and competitors a value proposition centered on the Internet. This branding strategy will help position the company as a business whose focus in delivering services is integrated with Internet technologies. The difficulty in utilizing the .com convention is in how customers and competitors interpret the meaning behind the name. Does the ".com" signal OneNetPlus.com's ability to delivery all services via the Internet, as do eBay and Amazon.com? Or is it a brick-and-mortar company with some Internet capability? Further, if its target market is Internet-centric businesses, then should it build its brand equity around becoming a virtual NDOS vendor? This last question needs serious consideration given that, with the launch of several new ventures, such as SystiNet, which are attempting to provide complete remote management of networks and desktops via the Internet, service delivery will eventually be provided through this type of transport technology. Clearly defining how customers perceive OneNetPlus.com will be critical in gaining mind share needed not only to build market share in the network and desktop outsourcing services sector, but also differentiate the company from its rivals, many of which are incorporating Web-centric service capabilities.
With the launch of OneNetPlus.com, the locus of delivering network and desktop outsourcing services is clearly shifting from providing service delivery through traditional channels of networks centered on LANs and WANs to the world of the Internet. Although other NDOS providers are already offering Web-based service capability, such as Inacom, Unisys, and Comdisco, the emergence of a standalone NDOS business with a branded Internet focus signals the need for traditional NDOS vendors to consider the impact of developing an Internet-based image around network and desktop outsourcing services.
The success of this model will depend on the quality of service and the cost savings customers will derive from having services delivered through the Internet. With the rapid advances in technology, the Internet is bound to lead the way as a primary service delivery vehicle in providing more mission-critical services, such as real-time network and desktop management. OneNetPlus.com's focus on the Internet should awaken some of the more staid companies, such as those just mentioned, that the window of opportunity in establishing first-mover advantages in this type of market is narrowing.
The launch of OneNetPlus.com should be taken by other NDOS providers as a message that the Internet must take center stage in delivering network and desktop outsourcing services. Though its obscurity in this market places it behind other major vendors, its Internet-centric business model and its branding strategy provide it with the necessary ingredients to leverage the extensive opportunities afforded by the Internet and open a path to becoming a top-tier NDOS provider. However, in achieving this objective, OneNetPlus.com must establish critical wins, invest heavily in building an efficient infrastructure, and deliver quality service above and beyond that of its rivals. Finally, determining whether it will become a Web-only service delivery NDOS provider will not only serve as a primary differentiator, but also prevent it from becoming just another network services player.
This document discusses whether the launch of OneNetPlus.com will help shift the locus for delivering network and desktop outsourcing services to the Internet.
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