As communication infrastructure and network services get more complex, small and mid-sized businesses that depend increasingly on IT to support their operations are investigating ways to simplify their technology management requirements. Many are taking a closer look at outsourcing these functions to either large service providers or smaller niche players.

Managed and professional network services are third-party delivered IT support services that span the enterprise wide area networking (WAN), local area networking (LAN) and customer premises equipment (CPE) environments. These services are often delivered through remote tools and automation capabilities.

The reasons for pursuing outsourcing options are many and varied.  The costs associated with buying the technologies that underpin current operations and prepare for emerging requirements can be expensive.  But perhaps the bigger impetus revolves around the lack of knowledge and in-house expertise to manage the array of network, integration, security, and business continuity issues.  Unless technology is part of your business, keeping up with critical trends in key infrastructure segments can be challenging.   

Right for fast-growing firms

While there is a consensus that outsourcing is a viable option for larger companies, some analysts believe this approach may not be as effective for companies under 50 employees.  A possible exception to this caveat, however, may be companies that are growing fast.

“Users at the lower end have not been as successful" with managed network services, says Brian Washburn, research director-network services at Current Analysis, a technology consulting firm that helps companies improve their competitive responsiveness.  He notes that cost is often a big deterrent for companies this size and unless a company is supporting multiple locations, is growing rapidly or has a very large single site, managed network services may not be the best option.

Jeff Jernigan, analyst with In-Stat, a technology market research firm, agrees and explains that according to end-user surveys, the best candidates for a managed service strategy are companies with employees from 50 to 999 employees.

“There are a number of reasons why, but for the most part, it centers on how increasing complexity and convergence are making it more difficult for these [small and mid-sized business] firms’ IT staffs to keep up with the capabilities of larger firms,” Jernigan says.

Web hosting and PBX management

According to In-Stat, the two most commonly outsourced network functions by small and medium sized businesses are Web hosting and PBX/phone system management, which are more mature than technology like WAN support or security functions.

While cost and loss of control of data are often cited as the biggest reasons for avoiding outsourcing, the benefits include the ability to access state-of-the-art technology, access to more qualified IT personnel, and the ability to focus on core business areas rather than IT support.

Service providers are still determining how best to support services for small and mid-sized business customers. Washburn notes that he has seen providers offer services like a managed firewall virtual private network (VPN) and not gain a lot of headway in the market. He has seen success when providers offer integrated solutions. For example, Washburn points out Microsoft and Comcast recently formed a relationship in which Comcast will offer a hosted Microsoft Exchange solution on top of its broadband offering.