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Signet Banking Corp. moved fast and furiously into the world of distributed computing in 1994. That year, the $12.9 billion banking company's networking staff began to implement switched multimegabit data service networks to link some 100 file servers in its four service regions: Richmond, Va., suburban Washington, D.C., the tidewater area in Virginia and Baltimore. Then, suddenly, the rollout started to lose steam.
"When we started building the enterprise network in January 1994, we had six people building it so fast-buying routers, building the infrastructure-that we had nobody to watch the shop," recalls George Speidell, assistant vice president of distributed computing at Signet's engineering group. So Signet managers did what many in their shoes would have done: They awarded a two-year contract to Electronic Data Systems Corp. to manage the networks.
Signet pays EDS a fee based on the number of ports in the network, in this case 300, and EDS oversees the network. Speidell declined to disclose the amount of the fee.
Signet, Richmond, has joined a crowd of companies pushing the panic button-turning to outsourcers to handle network management chores. In fact, the network management outsourcing market in the United States is booming at a nearly 30 percent annual clip, according to G2 Research Inc., a Mountain View, Calif.-based research company.
Outsourcing Boom
Revenue from network management outsourcing should top $8.2 billion by the decade's end, up from nearly $3 billion this year, G2 Research estimates (see graph, page 44).
The trend shows no signs of abating. A 1994 study by researchers at Dataquest Inc., San Jose, Calif., showed that 14 percent of companies surveyed had outsourced an aspect of their network operations during the previous 12 months, and 21 percent expected to do so in the following 12 months. Rapidly changing technology has caused many to bite the bullet and sign on with an outsider.
But, for all the attraction, there is another side to the outsourcing coin. In hiring others to do the job, users must address some fundamental business issues, including cost, performance, control, security and staffing.
In addition, information systems and network managers choosing to outsource must decide the type of contractor to retain-and the field is getting crowded with players. Traditional systems integrators have added network offerings...