A net gain from outsourcing?

DHS, Interior plan to use Networx for switch to managed network services

What to consider before making the move

Considering turning over management of your networks to a private-sector service provider? Five things to keep in mind:


Contract: It should be performance-based and spell out the specific outcomes. But be careful not to go overboard, said Paul Wohlleben, a partner with Grant Thornton LLP of Chicago. 'I know of one agency that had 100 metrics. That is over-management. You can't over-engineer the oversight. It is a bit of an art form.'


Penalties: Experts said they should be severe and include a seven-figure dollar amount for missing the metrics. Ed Meagher, Interior Department deputy CIO, said it has to be something other than a credit or slap on the wrist. 'It has to get the attention of senior management.'


Expectations: Jonathan Nguyen-Duy, group manager of business continuity services at Verizon Communications, said agencies should ask whether the provider is using the same services internally and will have dedicated resources for the agency.


Senior level buy-in: Meagher said managers should explain to their secretaries or deputy secretaries what would happen if the network failed and how bad the agency would look: 'Explain that this is not a short-term project, so be sure to get the commitment to complete the entire thing.' Chip Freund, director of Verizon's market development and enhanced managed services, said buy-in also must come from finance, human resources and procurement. 'If you don't get their buy-in, it will affect how you go about the daily tasks.'


Technology: Meagher said this is not really a big problem, since many Fortune 500 companies are doing it now. It is more a matter of deciding whether you will turn basic control of the entire network over to a vendor or act as a general contractor and turn over pieces of it, Wohlleben said.

'This is the right model and where everyone should go.' Scott Charbo, DHS CIO

Scott Charbo knows the future of his Homeland Security Department backbone. And the future is now'well, as soon as the Networx governmentwide acquisition contract is awarded and ready for agencies to use.

The DHS CIO said his agency is close to completing OneNet'a consolidation of six WANs. But he is waiting for the General Services Administration to award the two-part, $20 billion Networx contract in March and May so DHS can finish the job.

'OneNet is almost up,' he said after a conference sponsored by the Armed Forces Communications and Electronics Association's Bethesda, Md., chapter. 'At least 40 percent of the circuits have migrated. We still have to move the Coast Guard and parts of the Transportation Security Administration.'

Charbo, like many other CIOs and network administrators, is seriously considering how much of his network can be outsourced to a managed-services provider'likely through Networx'and how much will be addressed by the IT Infrastructure Line of Business initiative. 'This is the right model and where everyone should go,' Charbo said.

Agency and vendor experts recently said that handing over some or all of your network management responsibilities to a managed-services provider could provide cost savings, improved security and improved continuity of operations planning.

But experts warned that agency officials must detail their performance expectations to a specific level of granularity.

'You should ask the vendor, 'How much do you love me?' ' Interior Department deputy CIO Ed Meagher said at a breakfast on managed services for COOP in Washington sponsored by Federal Computer Week Events. 'You must come to an understanding based on what you are buying that they will be there when you need them, and you're not just one of several customers in line.'

Charbo, for instance, understands DHS' needs.

'We are in a dual, multiprotocol, label-switching environment,' he said. 'After Networx is awarded and we are using it, we will have everyone plug into the network and go.'

Meagher said Interior has similar challenges because it has so many disparate networks.

'We will be one of the first ones to move to Networx,' he said. 'It gives us the opportunity to stop buying circuits. We can all save big bucks across government.'

Interior currently manages its network centrally, but it is distributed to the bureaus in an ad hoc way, Meagher said.

Networx is a precursor to what the Office of Management and Budget wants to do with the IT Infrastructure LOB. OMB expects agencies to save $29 billion over 10 years by consolidating their infrastructures around the LOB initiative. The GSA-led task force will focus on desktop or seat management, initially by establishing a definition and cost baseline. Other areas, including data networks and data centers, are in the works for 2008.

But that doesn't mean agencies are not aggressively moving to managed networks.

Agencies' spending on network and communications services was $17.2 billion in 2006, and GSA expects it to grow at a 5 percent rate over the next four years.

Jim Williams, commissioner of GSA's Federal Acquisition Service, said the government's move to IP Version 6 and the agency's focus on mission-critical applications are the main reasons for this growth.

Williams suggested agencies look for areas that vendors could manage, such as firewalls, intrusion detection, vulnerability scanning and securing e-mail.

'Agencies should look at what the perimeter of their network is and where can attacks come into the network,' he said. 'Managed network services can be about delivering the right amount of services and helping you understand what is going on with your network and why, so you can focus your attention more quickly.'

Paul Wohlleben, a partner with Grant Thornton LLP of Chicago, said agencies either are moving to managed services or acting as their own contractors and outsourcing pieces of their networks.

'Managed services are growing, and the consolidation of agencies' IT infrastructures [is] a big part of this,' he said.

Wohlleben and others said the most important thing to consider when moving to managed services is ensuring that you set up a quality assurance program to oversee the contract (see box).

Meagher said agencies should lay out specific expectations and have severe'seven-figure'penalties if the provider doesn't meet them.

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