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Analysis of MF
1. A REPORT
ON
Customer Segmentation Analysis of Managed
Services: A case study of Oracle Solution
Services India (SSI)
BY
Vishesh Kumar
(Enrollment No. 10BSP1181)
Name of the organisation:
ORACLE SOLUTION SERVICES INDIA
2. A REPORT
ON
Customer Segmentation Analysis of Managed
Services: A case study of Oracle Solution
Services India (SSI)
By
Vishesh Kumar
(Enrollment No.-10BSP1181)
ORACLE SOLUTION SERVICES INDIA
A report submitted in partial fulfilment of the requirements of
PGPM Program of
IBS Bangalore
Distribution List:
Faculty guide Company guide
Dr. Ashish Dash Mr. Suresh Seetharaman
Date of Submission: 01-12-2012
3. Authorisation
I hereby authorise that the project entitled ―Customer Segmentation Analysis of Managed Services:
A case study of Oracle Solution Services India‖ conducted at Oracle Solution Services India
Pvt.Ltd. is a record work carried out by me during the academic year 2011 under the guidance of
my faculty guide, Dr Ashish Dash, faculty for economics at IBS-B, Bangalore and my company
guide Mr. Suresh Seetharaman. I also declare that this project is the result of my effort and has not
been submitted to any other university or institution for the award of any degree, or personal favour
whatsoever. I also declare that all the details and analysis provided in the report hold true and to the
best of my knowledge.
Place – Bangalore
Date – 10th May, 2011
4. Acknowledgement
I hereby take this wonderful opportunity to thank all those people who have helped me in one way
or the other in successful completion of the project. The guidance and support of these people have
been immense and invaluable throughout the project.
I extend my heartiest gratitude to Mr. Tarakesh Tummapudi and Mr. Anand Huchappa, of Oracle
Solution Services India Pvt. Ltd. for giving me the best opportunity to work as an intern in such an
esteemed organisation.
I also thank my company guide Mr. Suresh Seetharaman for his valuable inputs at various stages
which has proved to be really useful in structuring and carrying out the project.
I would specially thank my faculty guide Dr. Ashish Dash, faculty of economics at IBS-B for all
the encouragement and indispensable feedback.
I also take this opportunity to thank all the people who have been directly or indirectly related to
this project and have helped me in some way or another.
5. CONTENT
1. Executive Summary
2. Managed Service Industry Analysis
a. Global Market
b. Indian Market
3. Managed Services Benefits & Challenges
4. Competitor Analysis
a. HP
b. IBM
c. HCL
d. Wipro Infotech
e. Rolta TUSC
f. TCS
g. Accenture
h. Dell
5. KYC Analysis
6. Appendix A (Delivery Models)
7. Appendix B (Pricing Model)
8. Appendix C (Major Deals)
9. Appendix D (MS Applications & Technology Updated Data)
6. Executive Summary
This report is the result of the research and survey conducted by me, Vishesh Kumar
(Enrolment No. 10BSP1188) while working as an intern in Oracle Solutions Services India
Pvt. Ltd. situated in Bangalore.
Oracle SSI is a premier offshore consulting division of Oracle Corporation. Customer
engagement happens through Oracle’s local service organization to deliver services &
solutions to Oracle customers across the EMEA, APAC & North America (limited coverage)
regions.
Title of Project: Customer Segmentation Analysis of Managed Services: A case study of
Oracle Solution Services India(SSI).
Objective: In-depth analysis of managed services industry and competitor analysis. Analysis
of the OSSI customers. Recommend a better bidding process for OSSI.
Background
This report is based on the secondary data collected from the internet. First part of this report
contains the analysis of market opportunities for managed services both in global context and
in Indian market. The second part contains the analysis of the managed services provided by
some of the key players such as:
• Dell • TCS
• HP • Accenture
• IBM • Wipro Infotech
• HCL • Rolta TUSC
The third part of the report contains findings about oracles customers segment and the SWOT
analysis of oracle managed services along with recommendation for a better bidding process.
In order to make this report I have collected secondary data from latest published reports by
some of the prominent information technology research and advisory firms. I have also
prepared a questionnaire to collect primary data on oracles internal customers.
Findings & Conclusion
On completion of my tenure of 14 weeks of work at OSSI I found that global market for
managed services is showing a huge potential and is growing at almost 30% compounded
annual growth rate, the research also indicates that Indian managed services market is huge
and is growing at a tremendous rate and is expected to reach US$3.8 billion by 2013.
After analyzing all the data I concluded that Oracle needs to curve out their niche market in
the managed services industry and should focus on retaining their existing customers as they
are offering only limited services.
I would like to recommend OSSI that they should focus on improving their bidding process
and strengthening their resource pool in order to get a large share in the exponentially
growing managed services market.
7. INTRODUCTION
This report is based on the research I have done in the managed services industry while
working as an intern in Oracle Solution Services India Pvt. Ltd. (henceforth used as Oracle
SSI) starting from 1st March 2011 up to 30th April 2011. During my period of work in Oracle
SSI a lot of important topics have been covered and a lot of secondary data has been collected
on the managed services industry. The findings of the research are given.
Included in the report are some analysis of the industry like who are the top players in terms
of revenue, what are the services offered by them. The report is also closed with references.
I hope that this report serves well to all the readers who need information on the Managed
services industry.
8. Company and Industry Information
Oracle SSI:
Oracle SSI is a premier offshore consulting division of Oracle Corporation. More than 1000
consultants focus entirely on Oracle Applications & Technology at SSI. The team brings to
fore its experience of having executed more than 1200 engagements across 35 countries & 15
industry domains. Customer engagement happens through Oracle’s local service organization
(maintaining the single point of accountability) to deliver services & solutions to Oracle
customers across the EMEA, APAC & North America (limited coverage) regions.
Services are offered for all stages of the solution lifecycle, from design, implementation,
maintenance, optimization to upgrades. Applications covered include Oracle E-Business
Suite, Siebel, Oracle Retail, PeopleSoft, JD Edwards, OTM, Demantra & Agile. Technology
services and skills cover integration and SOA, security services, J2EE, rapid applications
development, content and collaboration, business intelligence, data warehousing,
architecture, upgrades and migration, and so on.
Co-located with the Oracle’s product development & support teams, Oracle SSI leverages
access to various Oracle teams to build industry solutions, best practices & services that help
customers best leverage their Oracle investments.
Industry Definition
Managed Services: According to Wikipedia ―Managed services are the practice of
transferring day-to-day related management responsibility as a strategic method for improved
effective and efficient operations. It’s a remote management of information technology to
support a business customer’s processes. A managed service typically contains the following
characteristics: remote provisioning and trouble management, remote monitoring of all
solution elements, detailed service-level agreements, and contracts that extend beyond one
year.‖
9. Managed Services Industry Analysis
Global Market
Ovum, a consulting firm that specializes in telecom and software consulting, released a study
projecting that the global market for managed services will deliver revenues of $66 billion by
2012.
The study, which collected data from more than 1,300 enterprise managed service users in 14
countries, projects that managed IP-based services will see a compound annual growth rate of
18% over the next four years.
Overall, the study finds that the managed services generating the most interest among
corporate users are managed metro Ethernet, managed IP, VPNs, managed VoIP and
managed security.
IP VPN services are the largest global managed services market, with revenues totaling $17
billion, the study finds. While the study projects VPN services to remain the most widely
deployed managed service in 2012, it also says that VoIP will experience the fastest growth
over the next four years with a 39% compound annual growth rate (CAGR).
Other studies have also shown a fast-growing market for managed security services. Data
published by business research and consulting firm Frost & Sullivan, for instance, projects
that the managed security services will exceed $6 billion by 2011.
In addition to its findings on global managed services growth, the study also projects that
North America has overtaken Europe as the largest overall market for managed services, and
that the Asia-Pacific managed services market will see 27% CAGR that the study says will be
driven mostly by growth in India and China.1
Fig: Global Managed Services Growth Rates.
Source: ―Next-Generation Managed Services: Winning Strategies for Network Service Providers,‖ Cisco IBSG, October
2008. Additional analysis provided by Datamonitor; IDC; Frost & Sullivan; Forrester Research; and Gartner, Inc.
1
Study conducted by Ovum Consulting firm that specializes in telecom and software consulting.
10. Indian Market
The IT managed services market in India is growing at a CAGR of 22.8%, according to IT
market research specialist Springboard Research's newly released report 'Indian Managed IT
Services Market'.
The market is expected to reach US$3.8 billion in 2013 from US$1.6 billion in 2009, and this
growth is higher than the growth rate of the overall IT services market.
The report says that Wipro Infotech has the highest market share, and HCL Infosystems
leads in user satisfaction.
By 2013, the highest growth will be recorded by managed application services that are
predicted to grow at a CAGR of 26.2%.2
The worldwide recession and the competitive market have made the companies realize the
importance of making the optimum use of their IT infrastructure and finding innovative ways
to reduce the cost. In addition, as the companies grow, they have to deploy complex
applications to function efficiently; and deployment of such applications leads to issues like
security, business continuity, disaster recovery, controlling and monitoring etc. In midst of all
these companies also have to ensure that they provide quality services to their users. The
Managed Services providers (MSPs) have come as blessing for the companies to take care of
all the above mentioned issues and problems.
The Indian managed services market is huge and is growing at a tremendous pace. Some of
the current trends in the Indian market are:3
Managed Application Services: It has gained prominence as applications have
become more complex and mission critical; as a result proactive and 24x7 monitoring
of applications for performance, capacity and availability have become extremely
important.
Integrated Application Support Services: It involves all the end-to-end application
support, and different lines of support services.
Application Maintenance Support Services: It includes end user support, code
maintenance and bug fixation, data conversion and migration, specialized reports,
application interfacing, integration etc.
Managed Security Services: All the companies have become extremely security
conscious but instead of hiring people on their own, they seem to prefer to outsource
to the security management services providers who are clearly the domain experts.
Managed Load Balancing Services: Major Telecom and IT companies are slowly
outsourcing their load balancing (which ensures that the work is equally divided
between the servers) services.
Managed VoIP Services: Many companies prefer to outsource the deployment and
maintenance their new VoIP solution, as well as the maintenance of their existing
telephony solutions.
Managed Data Center Services: It involves the management of servers, storage and
network services of companies. It also covers all IT infrastructure components of the
data center including virtualization, automation and integration.
2
Findings are based on Springboard's latest research titled “Indian Managed IT Services Market”(April 2010),
which was conducted on 187 CIOs and IT budget decision makers in enterprises large and small in India.
3
Managed Services-The Cost Effective Model for Enterprises :
http://voicendata.ciol.com/content/ContributoryArticles/110060101.asp
11. Managed Storage and Backup Services: It involves all backup of the applications
and data, and different storage requirements of the companies.
Infrastructure Support Services: It includes operating system management, hot
fixes and security patches, disaster recovery planning, testing and verification,
security management end user support etc.
Managed Services Benefits & Challenges
The usage of managed services, undoubtedly, limits the risks related to economic and
technological investments of the companies. As the businesses look for ways to reduce cost
but continue with the best of class services, the dependency on MSPs is bound to increase.
The importance of MSPs will increase in this cost conscious market as they offer cost
effective bundled solutions that are customized to the companies' needs and requirements,
and as they provide services to manage and monitor all the mission critical aspects required
for the growth and survival of the businesses.
There are several reasons why outsourcing IT-related functions to MSPs has become an
essential component of business growth and development:
Enables the company to focus on its core competency
It reduces IT support costs by enhancing efficiency levels
Quick access to highly-trained and on-call IT professionals
Availability of 24/7 support
Remote access to the company's computing environment which allows the IT
personnel to quickly resolve issues
Constant analysis and monitoring of IT-related problems
MSPs set strict SLAs (Service Level Agreements) so companies are assured that
systems are always functioning well
There are definite challenges and limiting factors that are hindering the growth of managed
services in India. Traditionally, the Indian companies are bit hesitant about outsourcing their
mission critical operations to others. So the main challenge for the MSPs would be
convincing these hesitant customers that managed services would be secured, best of the class
quality and would ensure a faster ROI. In addition, defining or creating service definitions,
determining the appropriate pricing and migrating existing customers to the new managed
services model are some challenges in the Indian market.
13. Competitor Analysis
HP Services for Oracle Solutions:4
Service Offerings Overview
HP performs a detailed assessment of your current E-
Business Suite, PeopleSoft, JD Edwards or Siebel
Application architecture assessment environment and the architectural considerations
associated with a future move.
During system installation, HP configures
recommended kernel or registry parameters that are
Application configuration optimization specific to E-Business Suite, PeopleSoft, JD Edwards,
or Siebel rollout, then reviews configuration files for
database, the application suite, and associated third-
party applications.
During peak utilization, HP measures performance and
makes observations regarding current configuration,
Application systems performance analysis followed by high level recommendations for
parameters and capacity requirements for E-Business
Suite, PeopleSoft, JD Edwards, or Siebel
implementation.
Based on a repeatable load test provided by client, HP
Application systems performance tuning tunes client’s E-Business Suite, PeopleSoft, JD
Edwards, or Siebel environment to optimize
performance.
HP helps configure and deploy a basic E-Business
Suite, PeopleSoft, JD Edwards, or Siebel application
Application jumpstart and migration services with demo database. HP can also help with certain
maintenance upgrades and database or operating
system migrations.
HP can help to install, migrate, upgrade, or optimize
Oracle database. With its specific content knowledge
Oracle database services around Oracle database, RAC, and grid solutions,
backed by HP server and storage expertise, HP
Services offers the experience need to optimize client’s
solution.
HP offers services to help build a Service Oriented
Oracle middleware services Architecture (SOA) built on Oracle middleware.
4
http://h71028.www7.hp.com/enterprise/downloads/HP%20Services%20for%20Oracle%20Solutions.pdf
14. IBM Application Services for Oracle:5
Provides cost-effective management of Oracle E-Business Suite
Simplifying IT management with the help of on demand solutions and services
Optimizing solution capabilities with the help of professional services
Offering a choice of delivery models to support unique needs
Reducing cost and complexity with the help of automation
Provides cost-effective management of Oracle E-Business Suite
The Applications on Demand service gives the flexibility to deploy Oracle EBS on IBM’s
infrastructure or to have IBM’s experts manage the application on existing assets. Engaging IBM
means that key IT talent is freed up to focus on strategic initiatives such as building your company’s
core business and sustaining competitive advantage.
Simplifying IT management with the help of on demand solutions and services
Clients can access Oracle E-Business Suite without running and maintaining the application in-house.
Applications on Demand delivers reliable and scalable access to expert managed services without the
overhead of retaining full-time staff. Applications on Demand offers IBM Application Services for
Oracle – Onsite to deliver applications management for Oracle E-Business Suite running on your
infrastructure and IBM Application Services for Oracle - Full Service for an end-to-end managed
service, including managed infrastructure.
Optimizing solution capabilities with the help of professional services
IBM Professional Services for Oracle allow our clients to tap into an experienced pool of certified
professionals for help with:
• Performance testing
• New implementations or new functionality
• Upgrades
• Project management
• New development, customizations, interfaces
• Offshore services
• Integration services
Reducing cost and complexity with the help of automation
IBM automations for Oracle include:
• Oracle environment creation/refresh
• Oracle object migration
• Oracle patch application
5
http://www-935.ibm.com/services/us/imc/pdf/app_services_oracle.pdf
15. HCL Technologies Ltd:6
HCL's Oracle Universe (OU) is a 2500+ strong integrated services group developing high
value solutions in Oracle, PeopleSoft, Siebel, JD Edwards, Hyperion, Agile, Oracle
Transportation Management, Stellent, and other Oracle Edge applications and technology
products. Our dedicated CoEs in CRM, SCM, ERP, HCM and Technology develop
technology-based business optimization solutions on Package Applications, Fusion
Middleware, and Business Intelligence & Data Warehousing.
HCL's OU provides service delivery excellence through proven solution accelerators and
proprietary tools, built to support the Oracle product suite. In addition to professional
services, OU provides Product Engineering on Oracle Applications and Fusion Middleware,
building connectors for Oracle's Content Management products, and testing services for
Oracle product suites.
Wipro Infotech :
Wipro’s Application Management Services focus on application management and production
support of enterprise applications. Application management service offerings are aimed at
ensuring interoperability, performance and availability of the enterprise application and its
ecosystem.
6
http://www.hcltech.com/enterprise-application-services/oracle/
16. Wipro’s ORACLE Application Support and Database Administration
ORACLE Application Services
ORACLE Core DBA
ORACLE Applications DBA
ORACLE Apps techno-functional Support
Upgrade/Migration Services
Audit Services
Consulting
Portfolio Analysis
Backup and Recovery Solution, and Validation
Database consolidation
Capacity planning
ORACLE RAC, standby, replication for business continuity and disaster recovery planning
ORACLE Application Helpdesk
Rolta TUSC Managed Services7:
Rolta TUSC provides expert-level support for all Oracle Database, middle-tier, Unix OS,
Linux, E-Business Suite, and SQL Server system needs.
Rolta TUSC Managed Services covers:
Database (Oracle, SQL Server)
Oracle E-Business Suite (technical and functional)
Middle-tier and Operating System
Oracle Applications Implementation and Support (includes E-Business Suite):
Oracle E-Business Suite (EBS) provides global, integrated business applications that drive
business performance.
SOLUTION OVERVIEW
Rolta TUSC provides full lifecycle implementation and support services for core EBS
application modules, including:
Financial
Supply Chain Management
Distribution
Human Resource Management Systems
Customer Relationship Management
7
http://www.tusc.com/oracle/mservices/service.html
17. Tata Consultancy Services Offerings8:
Expertise spans across Oracle Enterprise Applications (Oracle E-Business Suite, PeopleSoft,
JD Edwards, Retek, and Siebel) and Technologies (Database and Fusion Middleware such as
Application Server, Development Tools, Analytics, Integration, and Security). Our extensive
industry experience, comprehensive knowledge, and strong partnership have enabled us to
manage and execute complex end-to-end enterprise solutions based on Oracle platforms,
involving diverse technologies, across multiple geographies, always on time and within
budget.
8
Oracle Enterprise Solutions A4_Web250607.pdf
18. Accenture’s Services for Oracle Solutions:
Accenture has Oracle applications-specific delivery centers across the globe—giving our
clients a great deal of flexibility in implementing and operating Oracle applications.
Accenture centers in Chicago, India, Malaga, Manila, Mauritius, Montreal, Sao Paulo and the
United Kingdom provide Oracle E-Business Suite capabilities; centers in Almere (the
Netherlands), Atlanta, Cincinnati, India, Manila, Mauritius, Paris, Reston, Sao Paulo, and
Toronto provide PeopleSoft and JD Edwards capabilities; centers in Bratislava, India,
London, Manila, Mauritius, Riga, Sao Paulo and Toronto offer Siebel capabilities; and
centers in India and Manila offer Oracle Retail capabilities.
Accenture SOA Reference Based on Oracle’s Fusion Middleware platform, this
Architecture for Oracle solution includes a set of definitions, frameworks, best
practices, decision trees, and code to help design and build a
service-oriented architecture (SOA)—helping reduce
technical architecture challenges, design and development
time, and delivery risk.
Accenture Midtier Retail This solution provides an implementation and hosting
Proposition for Oracle approach based on software products from Oracle Retail,
covering merchandising, planning, financials, human
resources, store systems, supplier collaboration, and
customer interaction, and geared specifically for the middle
market.
Accenture HR Online Support Helping companies to achieve high performance through HR
Center leveraging Oracle Fusion.
Accenture Loyalty Solutions Accenture has a long history of helping develop and deliver
Oracle’s Siebel Customer Relationship Management
(CRM) family of products. Accenture takes a scientific,
data-driven approach to analyzing clients’ loyalty drivers
and executing full-circle lifetime loyalty management.
Accenture Delivery Tools Accenture Delivery Tools for Oracle Applications is a set of
tools that can be used to support the entire Oracle project
lifecycle.
19. Services offered for Oracle Application by competitors:
ORACLE Wipro HCL Dell Rolta HP TCS
Application Infotech TUSC
Support and
Database
Administration
ORACLE
Application
Services
ORACLE Core
DBA
ORACLE
Applications DBA
ORACLE Apps
techno-functional
Support
PeopleSoft Human
Resource
Management
System
Oracle E-Business
ERP Applications
Siebel CRM
JD Edwards SCM
Upgrade/Migration
Services
Audit Services
Consulting
Portfolio Analysis
Backup and
Recovery Solution,
and Validation
Database
consolidation
Capacity planning
ORACLE RAC,
standby, replication
for business
continuity and
disaster recovery
planning
ORACLE
Application
Helpdesk
Oracle Edge
Applications
20. Oracle’s Solution & Service Map:
Services/Features Software Software User Optimal Performance Software Best
Fixing Operation Guidance Usage monitoring Update practices
sDBA: Remote
Monitoring
sDBA: Application
DBA
sDBA: FMW
Administration
sDBA: Health
Checks
sDBA: Hosting
sHD: Service Desk
sHD: Functional
Help Desk
sHD: IT
Operations
Consulting
ESAS: CEMLI
Support
ESAS: Bespoke
Application
Support
TCS: Testing
AMS: Application
Management
Service
22. Delivery Models of Competitors
IBM delivery models to support unique needs9:
IBM Full Service All applications management and infrastructure to deliver applications on
demand
IBM OnSite Expert remote managed services of applications running on your
infrastructure
IBM Development A fully patched development environment in as little as ten days
IBM Enhancements Application enhancements with fixed pricing based on deliverables, not
hours
IBM Professional Expert implementations, upgrades and project help
Services
IBM offers different delivery models to suit your applications management needs.
Full Service is an end-to-end enterprise solution delivering applications management
and infrastructure support services—servers, storage, networking, monitoring,
security, 24x7 break/fix support and data center for a predictable monthly fee.
OnSite is a remote applications management service for Oracle EBS instances
running on client-managed infrastructure and is available for a predictable monthly
fee. OnSite allows clients to benefit from IBM’s application management expertise
and leverage existing investments in client infrastructure. OnSite represents the
fastest, least-expensive means to access experienced applications management talent,
tools and automations to eliminate patch management challenges and support Oracle
E-Business Suite in a scalable 24x7 model.
Development offers a fully installed Oracle environment deployed in as little as ten
days, within a ―pay-as-you-go,‖ utility-like model. Development represents all of the
benefits of having your own solution center at a fraction of the cost of having to build
one. Development helps IT organizations reduce operational expenses by accelerating
projects and deferring long-term investments in assets that are only required
temporarily.
Enhancements is a set of fixed-priced application enhancements, such as reports,
modifications, customizations or interfaces, for Oracle E-Business Suite.
Enhancements is delivered from a menu of fixed-priced, high-quality event based
deliverables. Enhancements shifts clients away from a focus on FTEs or hourly rates,
and provide predictable pricing.
Professional Services allow our clients to tap into an experienced pool of certified
professionals for help with:
• Performance testing • Offshore services
• New implementations or new functionality • Integration services
9
http://www-935.ibm.com/services/us/imc/pdf/app_services_oracle.pdf
23. • Upgrades
• Project management
• New development, customizations, interfaces
HCL’s Engagement Models: HCL is known to collaborate with forward – looking
customers through the following 3 engagement models:
Systems Integration- Focus on Complex implementation involving multiple
technologies with turnkey program management and partnerships across IT and Non
IT like IBMS, DC Build components.
Managed Services- ITIL driven Proactive Full or Discrete IT Managed Services
delivered in various models like RIM, complete onsite or hybrid. A strong pedigree of
Network & Managed security services in India we have today leadership positioning
in RIM with right Global partnerships available like Cisco Managed Service Partner,
HP, BMC, IBM and large skill pool of ITIL certifications.
Strategic Sourcing- Focus on transformation benefits to the customer in a
collaborative model to resolve common business problems using the right mix of
people, technology and process
HCL’s Oracle universe (OU)10:
HCL's Oracle Universe (OU) has a large customer base in the Americas, EMEA, APAC and
ANZ regions, helping over 190+ customers across various industries transform their
businesses.
10
http://www.hcltech.com/enterprise-application-services/oracle
24. Patni’s Consumption-based Flexible AMS Delivery Model
Most production support models impose a fixed cost upon IT budgets irrespective of the
volume of work delivered or the utilization rate of the production support team. Patni’s SAP
Application Management Services (AMS) offers enterprises a consumption-based model that
is more agile than existing support models. It significantly improves resource utilization and
ensures rapid cost structure transformation including a potential reduction of more than 30%
in application spend and significant enhancement in operational efficiencies.
Patni’s flexible support model creates variability of costs in sync with the organizations’
workload by proactively reacting to its business needs, and charges the customer for the
actual amount of service it consumes. This substantially improves utilization of resources and
reduces cost. The model also helps create better alignment with business needs with
substantial improvements in support and delivery practices and end-user satisfaction levels.
25. Managed Services Pricing Models11
The "Value-Pricing" Model The “Per Device” Pricing Model The "Tiered" or
“Gold/Silver/Bronze” Pricing
Model
The “Pick 5” Pricing Model The “Á La Carte” Pricing Model The “Monitoring Only” Pricing
Model
1. The "Value-Pricing" Model
This model tremendously benefits the MSP as well as the client. For the provider, it
allows the freedom to customize the monthly fee in each and every Service
Agreement for maximum profitability
Because a component of your sales presentation is based upon how much you can
potentially save the client when they enlist your services, when the sales process is
executed properly, you should be able to sign clients to Agreements worth much more
than other pricing models might allow. There are several variations to this model, but
the general concept is to provide a flat fee for all support rendered to the client each
month, which can include Remote Support, Onsite Support, Lab/Bench time, or all
three.
2. The “Per Device” Pricing Model
This pricing model is fairly simple, and many MSPs utilize it primarily for its
simplicity. The premise is to develop a flat fee for each type of device that is
supported in a client’s environment. For instance, a basic Per Device pricing model
might designate a flat fee of $49 per Desktop, $199 per Server, $29 per Network
Printer and $99 per Network managed.
The benefits of this pricing model include that it is very easy to quote and illustrate
costs for prospective clients, as well as the facility it affords the MSP to modify the
monthly service fee as the client adds additional devices in the future. Something to
think about when evaluating this model is that it can lend itself to selling Managed
Services based more upon price, rather than value. The experienced MSP will realize
this, and modify their sales presentation accordingly.
3. The "Tiered" or “Gold/Silver/Bronze” Pricing Model
This model may be the most popular among MSPs. The premise is to build several
bundled packages of services, with each increasingly more expensive package
providing more services to the potential client.
For instance, a ―Bronze‖ Managed Services package may include basic phone and
remote support, Patch Management and Virus and AdWare Removal for an entry
level price. Bumping up to the higher-priced ―Silver‖ Managed Services package may
include onsite visits, and the ―Gold‖ package may include Emergency After-Hours
Support, being the highest-priced package. This pricing model lends itself well to all
devices in the client’s environment. Additional Services to round out a full offering
with the ―Tiered‖ Pricing Model are usually made available á la carte.
11
http://blog.mspu.us/2010/07/6-different-managed-services-pricing-models.html
26. 4. The “Pick 5” Pricing Model
This Managed Services Pricing Model is an interesting combination of the ―Tiered‖
Pricing Model with an ―á la carte‖ twist. The basic premise here is to identify three or
more successively higher-priced categories with a specific list of services available in
each. The client gets their choice of picking a set number of services from the one
category they wish their Managed Services Agreement to cover. For instance, let’s
say you have categories named Basic, Advanced and Premium. In the Basic category
you have 8 services available to choose from, including Phone Support, Remote
Support, Patch Management, AdWare Management, License Management, Case
Management, Backup Management and Monitoring. The client would choose 5 of
these, and a Service Agreement would be created to support them.
For the Advanced Category, you might add limited After-Hours and Onsite Support
for a higher flat fee than the Basic category, allowing the client to choose from these
additional Services.
The Premium Category may include Emergency 24 Hour Support, 1 Hour Response
Time and Disaster Recovery of the Server(s) as additional options for a higher flat fee
than the Basic and Advanced Categories, and the client would now be able to choose
from these additional services to create their Managed Services support plan.
MSPs contemplating the implementation of this pricing model should carefully
choose the minimum required services available in each category to insure that they
are selected, in order to provide the best possible support for the client.
5. The “Á La Carte” Pricing Model
Possibly the most difficult pricing model to sell and maintain profitably, the ―Á La
Carte‖ model may be the least popular discussed here. The basic premise of this
pricing model is to allow the client to pick and choose the Managed Services they
would like from a large menu of individually priced services. The dangers inherent
with a pricing model of this type include giving the client too many decisions to
make, thereby slowing the sale. The more choices the client needs to make, the more
confused they might get, leading them to skip selecting services that they really need,
and/or choosing services that might not be so critical to their particular environment.
In addition, this pricing model may again skew the client’s perception of these
services to a cost, rather than a value perspective. To top it all off, putting together the
Managed Services Agreement for the ―Á La Carte‖ Pricing Model is the most time-
consuming of all models in this discussion.
27. 6. The “Monitoring Only” Pricing Model
Often seen in Medium to Enterprise engagements, and usually where the client has in-
House IT staff, the ―Monitoring Only‖ Pricing Model provides Network Monitoring
Services and Alerting to the MSP, the Client’s in-house IT staff, or both.
In this scenario, several different service levels can be employed, from a very basic
requirement to forward all alerts to the client’s in-house IT staff only, allowing them
to address and perform all incident management, to a scenario where the MSP
participates in basic incident resolution or even more advanced support.
MSP may also simply resell their chosen Vendor’s Network Monitoring Service to the client
in a larger environment, and have no direct or indirect responsibility after the sale.
Whichever Managed Services Pricing Model you choose, you should always have a
―Monitoring Only‖ service available to market to those clients who may not immediately opt
for a more robust Managed Services deliverable, but would say yes to a lower-cost
alternative. The MSP will then have their foot in the door, and can work over time to prove
the value of additional services.
28. SWOT Analysis of OSSI
Strength Opportunities
Oracle branding Tech stack getting complex
Some mature services (ESAS for eBS, Working with On-Demand
DBA, Testing, Hosting. Scope for creating value in solutions
Oracle install base Market untapped in many geographies
Oracle On-Demand has market presence. Upselling opportunities (extended
Global support infrastructure warranty, upgrade)
Access to Oracle development. SOA will result in software rearchitecture-
Global delivery model-geographic could create MS opportunities
coverage MS for acquired applications
Experience working across several
countries
Early access to new releases / products
Good people: interpersonal skills,
customer orientation
Good DBA
Weaknesses Threats
No differentiation Stiff competition
Oracle not seen as a player in this business Retaining people
Pricing to end customer need to be more Competition has a broader portfolio
competitive On Demand/ACS have overlapping charter
Need stronger business development focus Alliance channels encourage partners
Bid response turn around needs to be
better
Quality processes need strengthening
Need more senior resources in the team
Need for diverse & skill depth
Over years when software become stable,
customer either do not renew or ask very
low rates
SSI provides only a subset of portfolio
other competition provides
Customer will expect support for bespoke
& 3rd party applications from same
vendor
Customer hesitant to open up production
for remote support
Need to have formal SLAs
Complexity of knowledge transfer
29. KYC Analysis
After analyzing the data collected from the managed services managers of OSSI I concluded
the following facts about the customers of Oracle:
Why customers are coming to Oracle:
They have skill shortage (mainly on DBA).
Very Small In-house IT department.
They are taking EBS & Retail Apps which signifies that it’s difficult to find
substitutes on these Applications.
Why customers had left Oracle:
Staff Shortage in PSFT Technical/Function and DBA services.
Pricing on the high side for 24X7 shared services model.
The findings suggest that since oracle is providing services for very limited applications it
needs to put extra efforts on retaining and tapping that niche market by increasing its
resources and coming up with a better competitive pricing strategy to get new customers and
also to retain the old ones. They need to project themselves as the best service provider in this
category.
Bidding Plan Analysis:
After reviewing the existing bidding process I would recommend the following points to
OSSI to increase the effectiveness of their bidding:
Improve Focus Consider dedicated Bidding Lead Role (with backup)
Improve Bidding Process Reduce bid turnaround times
Improve Proposal templates to be more friendly , directly
customer facing, review terms & conditions to make them
more friendly
Build an integrated estimator that includes ESAS (eBS,
PSFT, Siebel, Retek), DBA Services, Hosting, Testing,
Service Desk, Tech Upgrade and Customization Upgrades
Review competitiveness of pricing
Build capability to deal directly with end customers in
countries where knowledge of managed services is lacking
