Patrick Buech is Head of Business Line Service Management at FNT Software.
Both operators of multi-tenant data centers and colocation providers face the challenge of sustaining success and remaining relevant in a highly competitive environment with dynamic product portfolios. The commoditization of space and power is driving them to differentiate through value-added services to not only gain new customers but to also increase customer retention. There is, in fact, an increasing market demand to become a full-service provider. This would entail providing a wide range of services from colocation - to managed hosting - to public, private, and hybrid cloud services. During his presentation on top 10 technology trends and their impact on IT and operations at this year’s Gartner ITxpo in Barcelona, Gartner analyst David J. Cappuccio recommended: "Change the perception of the data center to a provider that delivers services - not just iron".
Here, we see a product-oriented approach overtake the traditional project-focused perspective. Treating every service like an individual project is a practice that is becoming a relic of the past. As a result the product catalog becomes the service provider’s most valuable marketing asset while the service catalog showcases the actual services delivered to the customer.
Where the Value Relies On
Value no longer relies on location, data centers, technologies, or the identity of the service provider. On the user end of things, value lies in the service quality and associated delivery parameters. The product catalog gains more prominence in an era of ever-increasing digitization, as it serves to communicate and establish value to the end-user. Product catalogs help determine the types of products a service provider can sell. It acts as a menu – displaying types of products, specific variants, performance parameters, contractual terms, and pricing. Product catalogs also allow providers to quickly define new products, adjust existing ones, and respond to new offerings from competitors.
Service Design and Industrialization
During the age of industrialization, we saw how car manufactures perfected building extensive amounts of configurable cars in a highly standardized manner. There is a plan and defined process on how to create and deliver the ordered product based on the features that the end-user desires. So why can’t we adapt this approach to providing colocation services?
Here, an important question is raised: How does a service provider define a flexible catalog where products can be offered with efficient and fast delivery once a customer actually chooses their desired variant? To accomplish this, proper methodology for service design is mandatory. This will require adopting four industrial production principles:
- Variant management
- Variable vertical integration
Consider these the four pillars that your product catalog should adhere to. Standardization will create predictability and ease of maintenance. Modularization permits flexibility and organization. Variant management will ensure that your products can be offered in pre-defined variants to provide customers the possibility to tailor the service to their needs without influencing service delivery in a negative manner. Lastly, variable vertical integration will allow efficiency for production time and associated costs.
Such consistent methodology affords predictability to the service provider. This is even more important when combining classic IT practices with telecommunication services and DCIM solutions. The service provider becomes the service broker by assembling a catalog and combining both internal and external resources.
Combine these factors together and you will be able to create a catalog of service offerings (products) which can be delivered and produced in adherence to industrial production principles. This is possible because every designed product includes not only the parameters and variants but also all background technical information to assist in realizing the fulfillment of the service most efficiently. The service design needs to actually link the value proposition with the infrastructure underneath. As a result the product catalog moves center stage and drives the processes behind. In the telecommunication industry these concepts embody what is called a catalog-driven approach.
Track Returns on Investment
It’s no secret that creating and implementing a successful product catalog will also require a great investment of time and resources. It will be imperative to quantify the return on such an investment. The only way to tell whether or not the current catalog is yielding desired results is to measure it.
I’ve found that the best way to calculate the return on investment (ROI) in this case is to measure it by these three main factors:
- Reduction of cost via standardization and consolidation of products in a central catalogue (common reduction would be between 10 and 30%).
- Reduction in service delivery time.
- Reduction in time-to-market for new products.
The Paradigm Shift
Put simply, to become a real service provider, both multi-tenant data center operators and colocation providers need to emphasize service design, prioritize catalog management, and embrace the paradigm shift from an outdated, project-oriented approach to one that is product-oriented. Only then the provider becomes the service broker that can use an optimized product catalog to an advantage. This can be achieved and sustained through using consistent methodology. As a result, data centers and colocation providers will deliver high quality, value-added services - not just the infrastructure.
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