Dispatches From The IBM i MSP Frontier

November 10, 2014 Dan Burger

The managed service provider (MSP) business that serves the IBM i community is almost entirely IBM business partners with strong ties to the IBM i platform. Just a month ago, Doug Balog, general manager of IBM’s Power Systems business, told me there are more than 200 MSPs focused on i and there’s “a shift of i clients looking to go to MSPs.” Most of the MSP growth, he noted, comes from expanding business that the BPs established years ago.

If you are a frequent reader of IT Jungle, you know I like to check in from time to time with Doug Fulmer, a guy with a special interest in mostly small and sometimes midsize IBM i shops. He works for IBM business partner KS2 Technologies, which tends a herd of IBM i shops primarily in the midlands of Texas. Before settling down home on the range, Fulmer put in a good amount of time with IBM working with AS/400, iSeries, and System i customers, including those in the independent software vendor (ISV) community. He knows the territory as well as anyone even though the geographical boundaries are defined by the grazing land of long horn cattle.

During our conversation last week, we took aim at the MSP business. Fulmer says the MSP business is both good and bad. It depends on how you describe the MSP business.

“If an MSP is a company that provides hardware–a la the cloud–we have had zero, zip, nada interest from customers. If an MSP is a company that provides a cage that a customer can put their equipment in, off-site, with dependable, secure power and communications–something that lets them check the box on the auditor’s forms that they have an off-site emergency backup or secure production environment, what we would more likely call application hosting–we have had some success,” Fulmer notes.

There’s no place in the IBM i market Fulmer knows, where 80 percent of the customers run Power 720s, for Intel-style cloud computing. The costs KS2 would incur in power, space, communications lines, switching equipment and “helping hands” is too high, therefore, the charges to SMB customers would not make sense.

“All this crap about ‘standing up servers’ and such doesn’t work at all in our space. Our customers don’t need to stand up and tear down IBM i servers. They stand it up and it runs forever,” he says.

KS2 has been working on building its MSP business for three years. The company has approximately 80 customers, and all but about a dozen are running Power 720s.

What works for KS2 is providing companies a space for the companies’ production or CBU machines and offering shared access to KS2’s HMC and tape resources.

KS2 is having its best success providing the human resources to remotely manage existing systems for customers that don’t want to pay for internal staffing.

“We have eight or 10 customers trying to offload their IT staff and three of those are large and complex, so the amount of work is dominating our guys’ time,” Fulmer says. “The challenge is that, as a partner, you don’t want or can’t afford to hire a bunch of W2s for a workload that could vanish quickly. And you can’t find enough people that want to work as 1099s that are qualified to handle the kinds of things you find in some of these larger customers, or don’t know how to handle themselves in a professional manner. Or even understand how to dress for going to work.”

The customers that put their machines in the KS2 co-lo facility maintain their IT staffs. Fulmer says the decision to move infrastructure off-site is to gain a more secure site, with better power and communications. Two companies put their production machines in the KS2 co-lo and put their CBU machines in their own offices. Two other shops put their CBUs in the co-lo, where KS2 handles the tape management, and kept their production systems at their own sites, where their IT staffs take care of the operations.

The companies that are reducing staff to reduce costs keep their infrastructure on site rather than come to the co-lo because that saves them money as well.

But as MSPs pick up the workloads of companies that are eliminating staff, the MSP will be challenged.

“The MSP sees a revenue stream, but doesn’t think through all the day-to-day stuff that customer staffs are doing,” Fulmer notes. “When the MSP takes on the role, thinking that they will be monitoring for performance and a few messages, they completely forget all the other stuff that the customer is expecting. And because the shops are under a lot of pressure to cut costs, they cut education and cut staff because that’s what consultants tell them to do. Then it comes back to haunt them.”

There are a lot of things that MSPs have to think about, and we’ll just let Fulmer breathe in deep and tell us all about it, Texas-style:

“Customers aren’t asking us to handle any particular workloads. They are just asking us to take on their systems. Where it’s really hard is when there is a lot of Intel infrastructure surrounding the IBM i applications, which you can’t duplicate at the MSPs co-lo. Or if the customer is using a shared SAN with Intel. Things have become so complex and integrated, that this stuff is just hard and expensive. Or when there is a lot of inter-application communications going on which leads to problems when you move the 400 to a different subnet. It can also be a challenge when getting to the MSP machine requires a lot of VPN access or the customer has to pay for new communications lines that are expensive and take months for the carrier to put in. Another issue that arises from time to time is that the customer is way behind on their applications and not under maintenance. They might otherwise be a good candidate to have the MSP host their application, but the MSP has a Power7 machine and the customer can’t move beyond V5R3 or V5R4 because of application limitations. So then the MSP either goes off and has to buy an old Power5 system, with expensive maintenance, which makes the hosting cost more than just leaving things alone, or they have to propose that the customer get current on their software, which is usually too expensive.”

But here is the most important bit:

“You just have to be willing to go out and talk to customers. And you have to be willing to do it without a specific agenda. You might interest them in hosting their applications, or you might sell them a new system. Or you might sell them a used machine. You might host their machine in your co-lo. You might manage their machine at their place remotely for them. It’s not like this is anything new. You just try to help the customer solve whatever IT problem they have.”

That is good advice, no matter what your job is in the IBM i community.

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