Service providers chasing a smaller number of customers.
Although it provides services for some of the biggest names in corporate America, users are keeping a wary watch on enterprise MSP SevenSpace/ Nuclio Corp., which has spent the past month cutting workers and slashing services.
The cost-cutting measures have many questioning the financial health of the pure-play management service provider. But they also illustrate the challenges facing the remaining services players, each of which is vying to serve a shrinking number of budget-conscious users.
SevenSpace/Nuclio has shut down its only West Coast NOC (network operations center) in Irvine, Calif., and let go all but five employees at that site, according to several sources close to the company. The Irvine NOC, originally established by StrataSource Inc., another SevenSpace acquisition, had as many as 23 employees at one time.
SevenSpace/Nuclio also last month made a second round of cuts to staff, sources said. One source estimated that as many as 20 of the companys 100 employees were laid off.
"They have done some very aggressive cost cutting. Their burn rate was quite high before the layoffs," said a source familiar with the MSPs actions.
SevenSpace/Nuclio lost a handful of customers following the acquisitions due to its customers own cost-cutting moves.
For example, Dynegy Inc. earlier this year ended its relationship with SevenSpace/Nuclio to cut costs, although the company had no complaints about service, said John Jordan, senior director of e-solutions for Dynegy in Houston.
In addition to trimming staff and shuttering a NOC, SevenSpace/ Nuclio has taken to using Microsoft Certified Systems Engineers to manage Solaris systems with which they have little experience, according to several sources.
The MSP counters that its personnel have been "cross-trained."
Sources close to the MSP say SevenSpace/Nuclio also plans to shut down its Chicago call center and move those operations to a center in Chantilly, Va.
SevenSpace/Nuclio is making the cuts in an effort to "be as efficient as possible," said Brian Winter, vice president of marketing and alliances at SevenSpace/Nuclio in Chantilly. "The way to do that is to have consolidated operations and a single platform."
Thus far, customers report minor disruptions and service degradation. When the Irvine facility was closed "we were running into unfamiliarity with our issues because of new people coming into the mix," said David McMahon, help desk supervisor at Footlocker.com, in Wausau, Wis.
Brad Thompson, director of IT infrastructure at Relizon Co., in Dayton, Ohio, said hes found that the MSP, "at times had strong technical folks. Other times, weve questioned their depth."