COLLECTIVE TECHNOLOGIES, an outsourcing company in Austin, Texas, and New York investment bank Morgan Stanley Dean Witter are in the preliminary stages of defining responsibilities for a hosted datacenter services arrangement under which Collective will remotely manage systems for the Wall Street company.
According to Edward Taylor, CEO of Collective, Morgan Stanley will retain control over its applications but will rely on Collective to help manage the datacenters where they reside. Morgan Stanley officials declined comment on the collaboration with Collective.
Remotely managing systems is becoming an increasingly successful business model for MSPs (managed service providers). In particular, remote management of datacenters is being pushed by MSPs as an alternative to the failed outsourcing efforts of ASPs (application service providers), which stumbled when it came to customization issues, industry observers said.
ASPs ran into problems because they "were expecting 2 percent to 3 percent of customization by customers," said Corey Ferengul, an analyst at Stamford, Conn.-based Meta Group. "They ended up with 8 [percent] to 10 [percent]. That triples their cost and triples their effort. [MSPs] are trying to learn from those past mistakes and are trying to plan for customization," Ferengul said.
Ferengul said MSPs including Nuclio, Totality, Inteq, and Perot Systems, and professional services giants EDS and Accenture are examining this services model. According to Ferengul, Collective's platform is based on the NetSaint shareware tool.
To help augment this latest model for service, Collective plans to manage customer sites from its own remote datacenter facilities in Boston and Chicago. These RMCs (remote management centers) will not house equipment or infrastructure, only Collective staff to fix the IT problems of various clients.
Collective's Taylor said that eventually the RMCs will be opened up to specific industries such as retail.
Collective's model has a particular appeal to financial services companies facing difficult economic conditions, including escalating customer debts, widespread layoffs, and a slowdown in consumer spending, which have forced them to seek cost-effective solutions, said Steve Schatt, an analyst at Giga Information Group, based in Cambridge, Mass.
"The fact that all these companies are suffering sharp revenue drops, I think that's going to speak louder than anything else," Schatt said. Morgan Stanley, in fact, recently announced that it was slashing 1,500 jobs to trim costs as market conditions worsen.
But even in these tough times, outsourcing vendors need to be careful about how much responsibility they assume. The array of ad hoc systems and devices from a company such as Morgan Stanley poses a unique challenge, Meta's Ferengul said.
"I'm concerned about the amount of development [Collective] is doing on their own," Ferengul said.
