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Managed Hosting:Partnering and Best Practicesto Support Education Strategy
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Within education, Online Learning is playing both a centraland a critical role in the delivery o Teaching and Learning,
Research and Enterprise activities o university and college
organizations, and the overall experience o students and sta.
In the last ten years, Online Learning has become a
undamental element o an organizations educational strategy
which in turn is enabled by the underlying IT strategy. A
typical IT strategy will be made up o many elements including
architecture, applications portolio, and service catalogue. O
increasing importance is the consideration and development
o a sourcing sub-strategy or IT provision.
Traditionally, IT departments in education have been
conservative in their approach to providing inrastructure,
applications and services with an almost universal preerence
to utilize in house resources rather than third parties. There
have been exceptions in areas such as hardware support and
maintenance, but with increasing pressures on stang, skills
and budgets coupled with technology changes such as cloud
computing, the climate has, over the last three to ve years,
begun to change, albeit slowly. As a result, more and more
educational organizations are either using or considering
third party services to satisy both business and technology
objectives. Due to operational criticality, the drivers to use
such services are not necessarily coming rom within IT, but
rom across the organization.
In some respects, the education sector is catching upwith other sectors where the use o outsourcing and third
parties has been more prevalent. These other sectors, pro-
actively use third party services to meet business goals,
add value and optimize their resources. They are not seen
the education sector is
catching up with other
sectors where the use ooutsourcing and third parties
has been more prevalent.
Managed Hosting: Partnering and BestPractices to Support Education Strategy
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3
as a threat to in-house provision but rather, as complementaryresources and partners. The education sector can, and should, learn
rom the experience o other sectors where rapid technology changes
have led to better value provision o services. In turn, this can allow
organizations to ocus on improving the educational experience and
accountability while managing costs and indirectly strengthening their
image and reputation at the same time.
This paper looks at the managed hosting o Online Learning in
relation to other types o third party provisioning; reviews the areas
o benets and costs rom the perception o dierent decision makers
and users; and examines the elements o a successul commercial
relationship built on trust, transparency and mutual respect.
Hosting Services
Gartner denes outsourcing as a multiyear or annuity-based
contractual arrangement, whereby a company provisions services
on an ongoing basis at a specied level o competency. Outsourcing
involves a degree o transer o management responsibility or
the ongoing delivery o IT services to an external provider, with
perormance tied to service levels or outcomes. Outsourcing
encompasses the management o business processes, application
sotware and IT inrastructure (data center, desktop or network).
These three areas are commonly reerred to by client enterprises as
BPO, AO and IT inrastructure outsourcing.
Perormance o the provider is directly related to the provision o
services being tied to a combination o outcomes and service levels.An outsourcing agreement can include a range o services rom
product support and consulting to development and integration. As
a result, the external provider may acquire the physical assets and
employees o the business client.
With increasing
pressures on
stafng, skills
and budgets
coupled with
technology
changes
such as cloud
computing, the
climate has,
over the lastthree to fve
years, begun
to change.
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Hosting services, where the external provider utilizes their own
inrastructure, is seen as the most recent maniestation o the
outsourcing concept and is becoming increasingly common. It has
been acilitated by rapid technology developments such as cloud
computing and virtualization. These types o hosting services range
rom a public cloud to managed hosting:
(a) Managed or Dedicated Hosting:
Most suited to organizations who require:
Dedicated inrastructure with high up time guarantees
Stringent security measures
Scalable, resilient hardware
Around-the-clock support rom a dedicated team o technical
sta and account managers amiliar with application expertise
Comprehensive service-level agreements
The ability to customize and enhance their application
environment
Since these types o solutions are designed to meet individual
customer specications and requirements, they are suitable or
the mission-critical systems o most businesses and organizations.
They also oer institutions the opportunity to improve their risk
management particularly in relation to business continuity and
disaster recovery.
Additional benets o managed hosting can include the ability to
convert capital expenditures such as inrastructure, licenses and
upgrades to a known operating expenditure over a number o
years. Eectively, the organization is leasing instead o purchasing
hardware and sotware. In terms o support, many managed hosting
solutions ocus on a unctional area such as Online Learning
and include sta who understand the unctional application,
process fows and related databases, data storage, and how each
relates to the hardware inrastructure. They oten are amiliar with
relevant business processes and the need to integrate the hosted
application with other applications run by the client.
Over the
recent past,
outsourcing
has changed
to become
a new orm
o hostedsolution, with
considerable
overlap and
conusion
between the
dierent types
o hosting.
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5
(b) The Public Cloud: Always delivered on a shared
hardware inrastructure, resulting in lower costs and prices
ranging rom ree to utility pricing where clients only
pay or the resources used. Many public cloud oerings
make use o the latest virtualization technology with almost
instant scalability and dynamic provisioning. Thereore,its an attractive solution or hosting basic websites and
applications with seasonable or unpredictable loadings.
There is limited customization available and support
can be restricted to certain hours and types (i.e. e-mail
or web). Its also important to note that the inormation
security consequences o a shared inrastructure may
impact whether a public cloud can be used or sensitive
materials. It is clearly attractive when unds are limited
and convenience is important as long as the users ullyunderstand its limitations. As examples, some universities
and colleges leverage Microsot and Google technology
that can be described as public cloud solutions or e-mail
and collaboration. However, these solutions may come with
availability and security concerns as they relate to specic
institutional needs like service levels and data ownership.
(c) The Private Cloud: Enables a client to either
consolidate their own inrastructure or completely remove
it by leasing rom a third party. There are potential savings
in capital costs, energy usage and sustainability benets.
Its a solution built on dedicated hardware (sometimes
called dedicated virtualization) and is typically backed by
comprehensive service-level agreements with dedicated
account teams providing 24x7x365 support. The dedicated
servers run virtualization sotware to create multiple virtual
servers on a single physical server. Each virtual server exists
independently and works in the same way as a standard
physical server. As there is high utilization o processing power,
a leased private cloud inrastructure can combine resource and
budget optimization with rapid scalability that can result in
reliability and security that rivals a managed hosting solution.
Many public cloud oerings
make use o the latest
virtualization technology
with almost instant
scalability and dynamic
provisioning.
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Compared to managed hosting, private cloud managers are typically
less knowledgeable o a specic applications unctionality and related
processes, and with a private cloud, there is some degree o reliance on
the Internet-based web services. In certain types o contracts, the client
may have administration access to the servers (unlike managed hosting)
which introduces a dierent set o risks. There is no doubt, however, that
over the recent past outsourcing has changed to become a new orm o
hosted solution with considerable overlap and conusion between the
dierent types o hosting. The lines between public cloud, private cloud
and managed hosting solutions are becoming blurred as technology
changes, and moving orward, hybrid solutions could become the norm.
For most organizations in the uture, provision o the solutions or
inrastructure and applications will be rom a mix o sources with
managed hosting playing a crucial role or mission critical application
that need to scale quickly and continually change and/or enhance
unctionality. However, when considering a move to a managed
hosting solution, there are key dierentiators related to successul
outcomes and desired business benets. This is particularly true or
the managed hosting o mission-critical systems and applications.
It is assumed that an organization considering any orm o hosted solution
will have dened, documented and understood their inrastructure and
applications architectures as these are important inputs to a successul
hosted solution o any type.
Business Rational or Managed(Dedicated) Hosting
Organizations which are successul with alternative sourcing approaches,
like managed hosting, as part o an overall long term strategy, base their
decisions on:
Eective governance and proper planning
Sound commercial understanding and nancial arrangements
Transition management plus strong relationship management
Operational agility, eciency and ecacy
People and processes
Costs can be saved but cost-saving opportunities must be directly linked
to achieving business value and business objectives. It can be dicult or
The client mayhave a spike
in demand
or require
concurrent
eorts, such
as maintaining
the old
environment,
while building
or deploying
the newtechnology.
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It is assumed that an
organization considering
any orm o hosted
solution will have
dened, documented
and understood their
inrastructure and
applications architectures
organizations to recognize and quantiy the potential sources o savings
in their organization particularly where strong silo organizational
structures exist. However, in making a decision to use alternative
sourcing, the ocus should not be on cost alone, although it requently is
when compared with internal provision by the IT group.
A critical step in selecting an alternative provider includes thorough
analysis o the organizations reasons and requirements or managed
hosting. One needs to consider cost in the context o what is being
outsourced and why, together with the potential business benets o
innovation, transormation and competitive advantage. Consequently,
input will be required rom across the organization, particularly rom
Academic Management, Finance and IT.
These requirements need to be matched against the provision rom
the provider in terms o business value, the sources o saving and the
underlying principles o how the provider can help the organization
both save and realize business objectives. The provider should be able
to demonstrate experience and ability to deliver quality resources,
operational eciency, consistency and process maturity in relation to
critical success actors or the sector in question (i.e. Education). This
has equal relevance to any analysis o costs versus benets.
Equally it must be realized that there are tasks and competences
that must be in place internally within an organization, or rapidly
developed i the business value and cost savings o managed hostingare to be realized.
The Sources o Value and/or BusinessBenefts rom Managed Hosting
Independent research, by business schools, consultancies and research
organizations such as Gartner, has identied the elements o business
value and their characteristics that providers o IT services, including
outsourcing and managed hosting, can bring to an organization. The
sources o savings and business benets are as shown in Table 1. Value
rom the savings/benets occurs either because o signicant ongoing
investment made by the provider to develop and improve its service
oering or because the provider has the resources to tackle a shortall
or solve a problem.
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Intellectual Property The service
provider has developed specic
intellectual property (intellectualproperty (IP)) that is relevant to the
clients business issues. When applied
to the organizations challenge, the
oering yields signicant business
benets. It is not enough or the service
provider to claim a general base o
IP it must be directly applicable to the
clients problem.
Methodology The service provider has a
methodology that delivers a higher qualityand reliability or a best in class approach to
issues to reduce time and eort.
Specialized Expertise The service
provider has subject matter experts.
These key personnel have experience
and knowledge that are unavailable in
the enterprise.
Automation/Industrialization The
service provider has developed an
automated approach to a process thatdelivers eciency, ecacy, or agility.
Access to Resources The client may
have the talent or people to perorm
the work, but these personnel are
unavailable. Alternatively the client
may have a spike in demand or requireconcurrent eorts, such as maintaining
the old environment, while building or
deploying the new technology.
Faster Time-to-Market The client may
need to achieve results in a shorter time
and require aster implementation than
it can achieve with internal resources
only. Additionally the client may need
to achieve return on investment
opportunities more rapidly or ensurethat the optimization eort remains in
alignment with its overall strategy when
the project is nally done.
Access to Skills/Competencies
These competencies may be industry-
specic, process-specic, unctional or
technology-based.
Geographic Requirements The
enterprise has limited operational
skills, business knowledge or legalcompetencies in the geographic region
where it has the specic requirement.
Table 1: Gartner Research
Sources o Value/Business Beneft rom IT Services
Ref: Gartner Research: F. Karamouzis, 2009 Best Practices Saving Costs Through Outsourcing and IT Services
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In the rst our benets, value occurs because the provider has made
signicant investment in R&D to develop and improve the oering which
is continuing, and in turn this leads to a maturity o provision. In the other
our benets, the source o value is that the provider lls a gap or xes a
problem by substituting resources, rather than an extensive R&D cost.
Managed hosting providers typically list a range o specic benets that
embrace one or more o the ollowing:
High availability and perormance or a business-critical application
Reliability, resilience and scalability
Support 24x7x365
Rapid deployment o new applications and upgrades
Management o licensing
Appropriate service-level agreements
Tailored commercial proposals
Reduced client costs ranging rom property and equipment to energy
Secure access include access my multiple devices and remote access
Secure storage o data and inormation
Legal and proessional body compliance
While all these benets are true and tangible, it is absolutely critical that the
organization (client) understands the source o the value and the business
benets they need in relation to what they are buying.
Some orm o comprehensive straight-orward cost-benet analysis can
help, provided that the underlying model is relevant to the sector. Both client
and provider will need to be open with each other in creating a common
understanding o what determines the price and value o the hosting oer.
This is particularly true when making a comparison to the internal provider
where the later may not have sucient data to cover all the costs on a like
or like basis.
The Potential Sources o SavingIn order to ully understand the potential sources o actual savings within the
organization, Gartner recommends that the purchaser should pose ve key
questions both internally and to the service provider. These questions, shown
in Table 2, are designed to help organizations understand, clearly articulate and
document the sources o saving and show how they will be achieved.
9
It must be
realized that there
are tasks and
competences that
must be in place
internally within
an organization or
rapidly developed
i the business
value and cost
savings o
managed hosting
are to be realized.
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However, o equal importance is that the organization understands
why it is out sourcing with respect to business goals and objectives
as this sets the basis or all aspects o the operational relationship and
approach including governance, communications and building the
relationship with the supplier.
In a long-term sustainable commercial contract, both business risk and
business value change with time as strategic objectives change. This
is particularly true or mission-critical areas such as Online Learning
which are growing in usage and unctionality. In turn, this change
will cause increased usage o the underlying IT inrastructure. It is
thereore sensible that the relationship builds a joint vision or business
objectives in relation to changing costs and savings as well as taking
account o external actors such as exchange rates and infation.
Taking the Measure o the Partner/Service Provider
With managed hosting, the client should be looking or three inter-
related competencies rom the provider, each o which comprises a
number o overlapping capabilities:
1. Relationship Competency comprises capabilities that determine the
extent to which the provider is able and willing to align and meet the
clients requirements over time. These capabilities include planningand contracting, program management, governance, organizational
design, customer development and leadership.
2. Delivery Competency comprises capabilities that determine the
extent to which the provider responds to the clients need or day-
to-day operational services. These capabilities include governance,
leadership, program management, business management, sector
understanding, detailed application knowledge, communications and
behavior management.
3. Transormation Competency comprises competency thatdetermines the extent to which the provider can deliver innovation,
transormation and service improvement. These capabilities include
leadership, behavior management, program management, customer
development, process re-engineering and technology exploitation.
In order or both sides to
achieve their respective
objectives and goals once
a contract is signed, its
critical that the relationship
between client and
supplier is characterized
by high-quality relationship
management and an open
inormation exchange.
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Question 1: Efciency-Based Sources o SavingsWhat are the potential sources o savings through one or more key levers o operational eciency?
These triggers usually all into the ollowing categories:
Labor(Stafng)thenumberofstaffhoursataspeciedandconsistentlevelofquality;
achieving a lower cost o sta adds eciency
Locationcostofstaffhoursbasedonlocationataspeciedandconsistentlevelofquality
VolumeofTransactionstheunitsofwork
Question 2: Eectiveness-Based Sources o SavingsWhat are the sources o savings through process and/or delivery eectiveness?
These sources o eectiveness usually all into the ollowing categories:
Betterproductivitythatinvolvesexecutingtransactionsusingamoreeffectiveprocesstoimprove
quality, standardization or consolidation; economies o scale may aect ecacy as well
Fastertheabilitytoexecuteprocessesfasterorcompleteprocessautomation
Smarterreducethevolumeoftransactionsorunitsofworkthroughredesign,standardization,
consolidation or reconguration o the processes that results in some transormation.
Question 3: Agility-Based Sources o SavingsWhat are the sources o savings through agility?
These sources o agility usually all into the ollowing categories:
KnowledgeManagementandKnowledgeCreationinformationow,integrationand
interoperability underpinnings
Awarenesstherightinformationattherighttimewhichisbasedoninformationow
Adaptabilitytheabilitytoconfrontunexpectedchanges Flexibilitydealingwithexpectedchangesincludingstrongglobalgovernance
Question 4: Time Factors Evaluated in SavingsHow will savings vary over time?
All service providers should explain:
Whatthetotalsavingswillbeeachyear
Howthesavingswillgroworshrinkwithtime
Howtheywillpacesavingsyearoveryear
Question 5:Variables Aecting Savings
How will the source (eciency, eectiveness and agility) o savings vary over time?
All service providers should explain:
Howthemixofthesourceofsavingswillchange year on year
Whytheyexpectthischangetooccur
Ref: Gartner Research: F. Karamouzis, 2009 Best Practices Saving Costs Through Outsourcing and IT Services
Table 2: Gartner Research
Understanding the Sources o Savings
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The supplier provides evidence o these competencies and
capabilities with:
Baseline statistics, rom its client base plus veriable case
studies.
A demonstrated methodology or how the managed hosting
solution will be deployed, requently using specic Centers o
Excellence within the supplier organization.
Models, based on experience, or discussing suitable operational
governance o the managed hosting solution that minimizes
business risk or the individual client and ensures appropriate
communications.
Considerable emphasis needs to be placed on the three pre-
requisite areas o planning, delivery/service-level agreements and
commercial arrangements covering the lietime o the contract.
Internally, the client needs a consensus across the organization
and with the supplier about the business value and the potential
savings they are looking to achieve.
In order or both sides to achieve their respective objectives and
goals once a contract is signed, its critical that the relationship
between client and supplier is characterized by high-quality
relationship management and an open inormation exchange.
A simple decision making ramework or the partnership needs
to be in place which is consistent with the clients overall
governance and time rames. Escalation routes need to be
published and well understood.
A solid long-term managed hosting relationship needs two to tango
and is essentially built on trust irrespective o a ormal contract.
Conclusion
Online Learning is today a critical component o Teaching,
Learning, Research, and Enterprise strategies. Organizations must
ensure that the systems enabling Online Learning operate at peak
perormance and deliver business value to all stakeholders.
Tapping into
the expertise,
skills and IP o
the provider
as part o a
shared vision
allows theinstitution
to grow its
abilities to
manage
and develop
outsourcing.
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Managed hosting, particularly rom an application provider who
understands the educational processes and unctionality, can be an
important part not only o consistent delivery o the online application but o
a partner strategy. In the current economic climate, managed hosting oers
the potential or savings and the realization o business value.
However, or managed hosting to be successul, the client must not
just ocus on cost, but consider the providers ability to deliver quality
resources, operational eciency, consistency and process maturity. The
client must analyze business value, the sources o costs and savings
across the organization rather than to the immediate budget holder, and
understand the underlying principles o how the provider can help the
organization save money and realize business objectives.
There will be a range o organizational reasons or outsourcing via managed
hosting which generate requirements that the potential providers need
to demonstrate they can meet. Comparisons with the alternative internal
provision need to be comprehensive and consistent based on accepted cost
benet models pertinent to the Education sector.
As such, the steps to a successul managed hosting solution can be
summarized as:
Understanding the context o activity to be outsourced - what and why,
together with the capabilities to support the relationship with the provider
Selecting a suitable model and methodology rom planning to
operation
Establishing service-level agreements that relate as much to key sector
success actors as technology parameters
Dening the roles o the CIO, CFO and academic decision makers in
agreeing and communicating the business value; exploiting the providers
strengths; and ensuring the use o appropriate cost/benets models
Re-evaluating value over time by working closely with the provider to
identiy and manage changing business risks
Establishing eective and sustainable governance and relationships
Tapping into the expertise, skills and IP o the provider as part o a
shared vision that allows the institution to grow its abilities to manage
and develop outsourcing
In the uture, we
expect the cloud to
play a growing role in
delivering powerul
learning experiences
by connecting
students to real-
world research and
collaborative learning
experiences.
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Clearly, a positive rst experience into managed hosting will impact
the long-term organizational view o this orm o provision. However,
success depends on both the client and provider adopting the correc
role and an honest understanding o their relative levels o maturity
when it comes to considering all aspects o this type o provision.
Reliability, security, scalability, agility and availability are all reasons
cited or choosing managed hosting. However, organizations must
also consider lack o skilled personnel; more complex technology;
capital versus operational expenditure constraints; sustainability;
and business continuity as part o the equation. Ultimately, managed
hosting can only work because o trust in a relationship built on
delivering service.
The essence o managed hosting is providing a service based
on people as much as technology. A successully hosted online
environment is responsive to individual organizations needs and
preerences; allows an organization to concentrate scarce resources
on core activities; provides services not available by other means; and
grows with changing demands and requirements over time.
When it works, it is in a sense invisible and taken or granted but whe
it does not, it has ailed its basic promise. Consequently or long-
term success, apart rom the building o relationships, the relevant
commercial agreements must have rigor, clarity and fexibility. Thisapplies to all aspects rom pricing to service levels. Organizations new
to managed hosting should seek to learn rom the experience o thos
who have gone down this route, irrespective o sector.
Reliability, security, scalability,
agility and availability are all
reasons cited or choosing
managed hosting.
Reerences / Bibliography
GartnerResearch:BestPractices:SavingCoststhroughOutsourcingandITServices(F.Karamouzis,Feb2009)
RackspaceWhitePaper:ADecisionMakersGuidetoCloudComputingandManagedHosting(Autumn2009)
BlackboardResearch:InstitutionsWeighInonLMSHostinginHigherEducation(EduventuresNov2007)
JISC: The e-Revolution and Post compulsory Education: Using e- Business Models to Deliver Quality Education (edited by
J.BoysandP.Fordpublished2008)
MITSloanManagementReview:TakingtheMeasureofOutsourcingProviders:Feeny,LacityWillcocks(2005Springedition)
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About the Author
Tony Lewis is Director o TML Consultancy, a consultancy
business ocused on delivering value and benets rom
investment in inormation technology and inormation services.
Hehasover30yearsexperienceinboththeprivateandpublic
sectors as an Executive Director and senior manager. This is
built on a solid oundation o management consultancy and
engineering/scientic practice. He has a wealth o knowledge
and experience across a range o industries and organizations, in
the pragmatic application o ICT and related services, delivering
customer service and meeting organizational requirements
Tonys career began as a Civil Engineer and Scientist responsible or all aspects o environmental
datamonitoringandcollectionnetworksinaUKregionalWaterAuthority.Hethenmovedinto Management consultancy, Marketing and subsequently senior IT management in
the commercial ICT sector working or Fujitsu (ormerly ICL). He specialized in data and
inormation management particularly in Government, Health, the Utilities and Education. He
was subsequently approached to become Chie Inormation Ocer or a large enterprising
UKUniversitywherehespenteightyearswithresponsibilityforthedeliveryofIT,Libraryand
Learning services. In this same period he was Executive chairman o a sotware SME plus serving
on numerous boards, committees etc at regional, national level and international level. He was
part o the Vice Chancellors Change management team o six people who recommended
signicant changes in Governance, processes, Management and organization which subsequentlyhave been acted upon.
TonyestablishedhisownconsultancybusinessinOctober2009toutilizehisexperienceofIT,
Management Consultancy and Inormation services to achieve successul long lasting business
and organizational improvements or Corporations, SMEs and Public services with a particular
ocus on Education, Government and Health. As an innovative and progressive consultant, his
ocus is the pragmatic use o Inormation Technology, data & inormation to enable goals to be
met and valued services delivered.
To contact the author:Tony Lewis
TMLConsultancy
Telephone: 01744 614993
Mobile: 07771 943179
Email: [email protected]
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