Anyone involved with cloud in the early days of the market heard this naive and mildly annoying comment fairly frequently. While thankfully it’s largely disappeared, a new version of the “nothing new here” meme has appeared in enterprise cloud.
“Yes, we’re doing ITaaS – we’re already implemented ITIL and an ITSM strategy!”
For those unfamiliar the IT-as-a-Service (ITaaS) vision is for IT to become a modern service provider that offers and orchestrates both internal and external IT services instead of organizing around traditional technology silos. In this model, corporate IT offers a menu of SaaS, PaaS and IaaS options for business users via a centralized service catalog. Business users are free to pick and choose cloud services that corporate IT has vetted, or provide themselves. These users can make informed decisions based on service pricing and SLAs, and can in many cases can provision services on their own. While definitions differ, these are basically the core concepts.
IT has always provided services to business users, particularly in organizations with shared service organizations. While the idea of a service catalog with 3rd party cloud services may be new to some, at the end of the day IT always basically provided a set of IT services required by the business. To better align services with the business, many IT organizations have implemented ITIL and ITSM processes and associated KPIs and metrics for service improvement.
Unfortunately ITIL and ITSM have lulled many IT organizations into a false sense of security that they’re already well down the road of delivering ITaaS. Many have assumed that because they’ve adopted the ITIL framework for delivering IT services that cloud services will fold neatly in to their existing processes, and that inclusion of external cloud vendors doesn’t fundamentally change the model. Even those that have done a reasonable job of adopting ITIL and ITSM are finding that cloud-enabled ITaaS is a new, different animal. What’s new about the ITaaS model?
- Competition – yes, IT has always provided IT services to the business. But the decision around what services were provided, whether they be applications, infrastructure, network or other was determined largely by IT. Business users could choose their services, but it was like Henry Ford said of the Model T: “People can have the Model T in any color – so long as it’s black.” Facing new competition for budget from public cloud services, enterprise IT is now finding they need to offer colors. Designing and successfully implementing IT services, processes and KPIs will have a much higher degree of difficulty now that IT no longer has a captive buying audience.
- Customer knowledge – in the new ITaaS environment, IT needs to provide services that are market competitive. The first step in doing this is to “know thy customer”. This means deeply understanding customer needs and requirements, and delivering a compelling value proposition. Truly understanding customer needs is 90% of the job for sales and marketing employees, and most of them aren’t that good at it. What makes us think that IT is going to be better? This is why the seemingly straightforward task of defining a cloud service catalog is often a daunting challenge for corporate IT. Customers often don’t really know what they want or know the right questions to ask, and digging below the surface to truly understand needs is not a traditional core competence of corporate IT.
- Price transparency – with published service catalogs, SLAs, pricing and chargeback, buyers will now be comparison shoppers. Don’t like the list price for a Linux VM or a GB of storage on the internal private cloud? Check it out against Amazon AWS VPC pricing. While this oversimplifies things quite a bit and comparisons aren’t that straightforward, IT will now face questioning on internal pricing that it never did before. Pricing also is no longer a cost-plus exercise. Price internal private cloud services too high and developers will go the shadow IT route. Price too low and there may be capacity issues. Unfortunately ITIL and ITSM don’t necessarily help provide useful guidance in determining how to optimize price and other “marketing” levers CIOs now need to pull.
- Commoditization – in an ITaaS model IT needs to define the services in simple enough terms to enable user self-service for business users. This obviously requires drive towards simplification and standardization, not complexity. Needless to say this has not always been a strength of enterprise IT departments, despite the fact the fact that standardization can unlock tremendous value. Going through the exercise to determining how to standardize services can be deceptively hard, and enterprise IT has historically not been inclined to commoditize their own services.
- Co-opetition – the other concept that IT is going to quickly learn is co-opetition. IT will need to work with public cloud service providers to determine how the services will fit into the ITaaS service catalog from a brokerage, integration, security and governance perspective. These same public cloud vendors may be competing against internal IT provided applications and infrastructure services, especially around private clouds. Navigating the nuances of these types of relationships will be a new challenge for many IT organizations.
All of these factors have implications for organization design, processes, policies and skills that go far beyond what ITIL and ITSM strategies address. The first step CIOs need to take when considering ITaaS transformation an honest appraisal of how they’re going to compete and differentiate this new IT services market place. We’re definitely not in Kansas anymore…
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