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IT as a Service Broker – Adopting a Hybrid Delivery Model
The “cloud era” of information technology is upon us

The "cloud era" of information technology is upon us. Connectivity is pervasive and everyone and everything is connected. Readily available, low-cost, Internet-based services providing access to new capabilities and infinite amounts of information have given rise to a new set of experiences and expectations for technology users. Furthermore, a new generation is entering the workforce, one that has grown up with technology at their fingertips, one that expects immediate gratification and instant results and one that is ambivalent to traditional IT controls. These tech-savvy business users are mixing the technology experiences from their consumer lives with those of their profession to morph into a new "prosumer" workforce. And they are able to drive game-changing innovation without a dependence on IT intervention.

This is the reality of the cloud computing economy; it's the forcing function behind the creation of new goods and services, new business models, new routes to market, and new ways of engaging customers. Simply put, cloud services are the enablers for the next frontier in business and government, one where technology-enabled services are easily sourced and woven into the enterprise fabric. However, cloud sourcing can also introduce new levels of complexity and business risk without the appropriate levels of integration and governance. This has given rise to a new class of service provider - the cloud service broker.

Commercial cloud service brokerages shield the economic buyer of cloud services from the integration complexities, SLA enforcement and administrative oversight associated with multi-sourced services. Consultancies, value-added resellers, system integrators and cloud pure-plays are expanding their focus to move into the service brokerage area. Gartner predicts that by 2015, at least 20 percent of all cloud services will be consumed via hundreds of cloud service brokerages [1]. Unlike traditional outsourcers, managed service providers and as-a-service providers, all of which typically sell to the IT department, cloud service brokers are able to deal directly with the lines of business. These brokerages offer a new sourcing alternative for enterprises to obtain IT capabilities and will ultimately be in direct competition with the internal IT department.

Many IT organizations are taking a traditionalist approach to cloud, treating it as an evolution of technology - the merger of Internet services and utility computing to form cloud "computing." These organizations see cloud as a suite of technologies that are to be used by IT professionals to aid in their efforts to deliver capabilities to the business, better, faster and, cheaper. In this sense, cloud is often described as a place (the cloud) or a delivery alternative (Infrastructure as a Service, Platform as a Service and Software as a Service), and they view the cloud landscape through traditional outsourced and in-sourced lenses (i.e., Public Cloud = externally based IT services, or Private Cloud = internally provided IT services).

While there are IT innovations riding on the heels of the cloud disruption, the technology pendulum has actually swung toward the enterprise, where new classes of technology enabled services (enterprise services) create new avenues for business and government innovation.  The problem is that the traditional IT organization is not designed to embrace cloud in this manner.

IT organizations that focus on cloud exclusively as a technology evolution risk becoming marginalized and relegated to providing maintenance and support for innovation that is driven from the services sourced by the business.

Instead, IT leaders must take a more holistic approach to cloud by changing their operating model so they are able to source and recommend services that the enterprise values in an almost near, real-time manner, which is the experience that "prosumers" expect. This requires fundamental changes to the structure of IT itself. IT needs a business model that enables it to function as an intermediary and act as the central service broker for the enterprise. Re-orienting the organization around a service broker business model will enable faster adoption of services while mitigating business risk through a governed, balanced sourcing strategy.  .

New Model for IT
The typical IT operating model is, at its core, asset-oriented. This means that IT's primary mission is aggregating a collection of technology-related assets, including applications, databases, infrastructure and client services, to enable traditional business models, processes and functions.

This approach to IT has yielded an organization structure that is tribal in nature. Each IT tribe is aligned and organized around its respective technology domain - the network tribe, the system administration tribe, the datacenter operations tribe, the help desk tribe, the application development tribes, and so on. Each tribe has its own rituals, language, culture and tooling.

Today's reality is that commoditization is occurring up and down the IT technology stack. Infrastructure, application development and middleware platforms, and applications can be obtained from service providers that can provision capabilities in an on-demand manner, offering new sourcing alternatives to the IT teams working to get their projects completed in a timely manner.

The bigger disruption is that consumerization has occurred in the software arena, creating new experiences and expectations for how to access and use information. Readily available, easy-to-use services are often "good enough" to meet "prosumer" needs without waiting on an IT project lifecycle.

For the foreseeable future, the IT model will be hybrid, providing the ability to sustain traditional systems using a project-led engagement model, while at the same time enabling multi-sourcing and aggregation of services to meet the new expectations, business models and customer engagements driven by the "prosumer" business community.

The service broker model should be viewed as the enterprise model for the CIO and as such, must be designed around the IT products (a portfolio of services), a series of provider/consumer relationships and the value chains that enable them. While there is no cookie-cutter design for the hybrid model for all industries, agencies or market segments, there are some common characteristics that all will share.

This value chain model dissipates the walls between the IT tribes and forces them to work more collaboratively. The service becomes the organizing principle and the value chain becomes the catalyst that brings the IT tribes together. The creation of an IT business model, however, will demand new roles and require new tooling.

New Roles in IT
Service management roles have been well defined in Information Technology Infrastructure Library (ITIL) but have typically been manipulated to fit into the asset-oriented structure of the traditional IT organization.

It's important to revisit these roles in the context of the service broker model. Here are just a few of these roles in the context of the new model:

Many existing roles such as datacenter operations, IT service desk and application development will still be needed, but will likely require modification. These roles must exhibit new behaviors and shift from a project-driven, asset-centric orientation to a more versatile, rapid-fire, service-centric culture.

New Tooling
Traditional IT automation is oriented around the assets and processes of the different IT tribes. Because of this approach, there is no systems architecture for the function. Instead, IT has a collection of tools that are hard-wired together to keep systems operational, secured and supported on a daily basis. IT is also handicapped by the fact that information flowing throughout the IT automation ecosystem is locked in islands, only accessible to the highly trained tribal member who is most familiar with the tool. Therefore, it is virtually useless in helping shape enterprise decisions and outcomes.

The IT mechanization to support the service broker model must be deliberately designed. It must be architected to power the enterprise model (the value chain network) and the service lifecycle: how services are sourced, how they are consumed and how they are managed.

Here are just a few examples of automation required to power the service broker business model:

The automation of the service broker model should be an integrated ecosystem that streamlines the sourcing and provisioning of services from multiple providers and exposes information that can be used for advanced analytics to shape new business behaviors.

Cloud will drive significant changes to business models going forward. It's also a forcing function for IT structural change. IT organizations that continue to focus exclusively on the technology attributes of cloud will likely see innovation investments and resources shift to the business unit budgets. On the other hand, IT organizations that adopt a new structure and position themselves as the central service broker for the enterprise will be able to mitigate risk, optimize costs, measure deliverables in value terms, and be at the forefront of business innovation.

To move in this direction, transformation is required. While there are many ways to approach the activity, the focus must be on injecting shifts into the IT deliverables and engagement model, along with the roles and tools that power them. Recommended next steps for IT leaders include defining the set of services that their enterprise needs to execute its strategy, which becomes the basis for the service portfolio and sourcing strategies. In addition, they need to develop the basis for the organization model, which is a blueprint of the IT model organized around the service portfolio, laying out the value chains for the function. Last, IT executives need to architect the technology ecosystem required to power the service broker IT model.

Resources

  1. Gartner (Defining Cloud Services Brokerage: Taking Intermediation to the Next Level, October, 2010)

Additional Materials

About Keith Jahn
Keith Jahn is a technology strategist in the office of the CTO for HP Software. During his career as an IT practitioner, architect and strategist, he has successfully designed and implemented technology, automation and service management strategies and led several large scale transformation initiatives.

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