Managed-Services Clients Opt For SubscriptionsManaged-Services Clients Opt For Subscriptions

The Memphis City Schools system is big, with 120,000 students and 175 schools, but its IT budget is tiny compared with most organizations that turn to IBM Global Services to manage their networks or applications. As the world's largest service provider looks downstream for more business, however, it's offering small and midsize customers more-flexible pricing on outsourcing engagements.

The largest school system in Tennessee and the 20th-largest in the United States is taking advantage of the offering: It will be the first customer for NetSolve Inc.'s ProWatch network-monitoring application implemented and hosted by IBM Global Services. IBM last week teamed with NetSolve to extend its ability to deliver managed services to clients that want to pay on a subscription basis.

The agreement with NetSolve came one week after IBM launched a similar partnership with SiteRock Corp., a provider of Web-performance-monitoring and management services. Both deals complement IBM's "E-sourcing" initiative, which expands the hosting services the vendor has offered for years by pairing application and infrastructure services with management and consulting services.

The Memphis school system has worked with IBM Global Services before, but only on implementation projects. One of them, a three-year effort to connect its classrooms and libraries via ATM fiber, is nearly complete. IBM also is helping Memphis City Schools build a wide area network that distributes information such as student enrollment and attendance to 200 individual school LANs. The school system will pay IBM and NetSolve about $1.8 million annually, spread over 12 months, to monitor and manage the network.

"Outsourcing network management was instrumental to building and rolling out our WAN," says Memphis City Schools IT director Linda Mainord. "This has to be up and running by the middle of August, and I have every possible resource tied to this rollout." That includes 122 IT workers. Mainord estimates her district will save more than $1 million during the next few years by renting network-management services rather than shelling out for software and people to run the network.

IBM's subscription service comes in response to more-demanding customers. Says Corey Ferengul, a Meta Group senior program director, "Organizations want more options in outsourcing, other than just turning over the keys to the kingdom."