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  • Conclusion: With both the NSW and commonwealth parliaments passing respective Modern Slavery Acts in 20181, there are now real implications and consequences for business leaders and their suppliers who ignore the risks of slavery within their supply chains.

    Unlike the California Transparency in Supply Chains Act 2010 which applies to tangible goods offered for sale, Australian firms will need to disclose their efforts to eradicate slavery and human trafficking from their supply chain of both goods and services. This means at least 2,100 public and private firms2 have until 1 July 2019 to ask explicitly of suppliers, whether local or foreign, off-premise Cloud or on-premise device manufacturer: What are you and your organisation doing with respect to modern slavery risks?

    For many organisations in Australia this will mean more than just adding new evaluation criteria to be applied to current and potential suppliers. Rather it requires providing an accurate attestation on the issue of modern slavery which will require lifting the hood on all manner of “as-a-Service” offerings. Thereby exposing aspects of service delivery that the majority of firms previously thought they no longer needed to concern themselves with, having “transferred” risks, such as those found in supply chains, to their vendor partners.

  • Conclusion: The current Business Relationship Managers mostly act as a service desk to manage the implementation of business stakeholders’ service requests. While this is an important business relationship function, the current incumbents are not engaging with business stakeholders’ strategic discussions that require the selection and implementation of new technology that can improve the business presence and performance in the market. As a result, Business Relationship Managers are not earning a “trusted advisor” status. The Business Relationship Manager’s job focus and skills should expand to promote the value of IT services that contribute to business value creation, measurement and communication. This should allow the IT organisation to become the service provider of choice.

  • Conclusion: Some ICT strategies are technology-centric while others are business-centric. The technology-centric strategies are usually developed without business stakeholders’ involvement resulting in limited business buy-in. Business-centric strategies are based on business strategies but have a short life-span. This is because market forces require business strategies to change frequently. IBRS recommends that ICT strategies be derived from business and IT guiding principles.
    The rationale is that guiding principles have a longer life-span than business strategies and can deliver the desired outcome such as:

    • leveraging new technology
    • involving business stakeholders in the development process
    • realising business value in a timely and cost-effective manner.
  • Conclusion: Public Cloud is not the solution to all IT organisations’ technology and services problems. This is because most IT organisations use a portfolio of environments such as legacy systems, in-house and outsourced services, customised IT service management tools and standard applications (e. g. email) that cannot be all retrofitted in a public Cloud architecture without major rework. As a result, hybrid Cloud has become the preferred direction because it allows the multiple environments to co-exist in a cost-effective manner. However, a convincing business case is needed to gain business and IT senior executives’ sponsorship to adopt hybrid Cloud. While Cloud migration benefits and risk mitigation are critical success factors, the deployment-hidden cost is a major contributor to failure. The objectives of this research note are to provide a framework1 to develop the business case and to ensure its cost includes the following:

    • Hybrid Cloud strategy development,
    • Risks identification and mitigation,
    • Go-to-market strategy, providers’ selection and contract negotiation, and
    • Ongoing governance to realise the desired business benefits. This can reach up to 7 % of the yearly cost.
  • Conclusion: Penalties and incentives are designed to ensure agreed critical service levels are achieved. Penalties are enforced whenever service levels are not met. Incentives are rewarded whenever agreed service levels are exceeded. However, there are cases whereby providers prefer to pay the penalty instead of improving the service level. For example, it is easier to pay a penalty of $10,000 instead of fixing a service issue that might cost $50,000. The purpose of this note is to prevent such situations from occurring and maintain the focus on meeting the service level in all circumstances.

    Related Articles:

    "Public Cloud Success requires Mature Governance" IBRS, 2014-01-30 00:00:00

    "Running IT-as-a-Service Part 31: Maximising relationship management ROI" IBRS, 2017-06-04 03:41:00

    "Running IT-as-a-Service Part 38: Successful hybrid Cloud requires multi-provider governance framework" IBRS, 2018-02-01 10:08:33

  • Conclusion:One strategy to implement IT-as-a-Service models is to outsource the IT delivery capability to multiple service providers. However, the IT organisation remains accountable for the success of the outsourced arrangements. This requires the IT organisation to have a mature procurement and service provider governance function. The rationale is to acquire services and negotiate contracts that go beyond meeting the traditional IT needs to provide business innovation, performance improvement, cost reduction and risks mitigation covering IT and business vulnerabilities.

  • Conclusion: Paying for Infrastructure as a Service (IaaS) which is kept on-premises, but paid for on an Opex model rather than as a Capex outlay, is often positioned as ‘Cloud-like’. There can be use cases and specific workloads where this model makes sense and does give some advantages to the organisation.

    However, on-premises management of an organisation’s own Cloud can be lacking in the degree of flexibility and pace of innovation that can be achieved when compared to some of the larger and more successful public Cloud offerings such as Amazon Web Services or Microsoft Azure.

    Organisations need to weigh up specific use cases and workloads and determine the optimal balance of when to use ‘on-premises’ Cloud versus public Cloud.

  • In this interview, Dr Wissam Raffoul outlines a practical and effective approach to migrating to an As-a-Service model. 

  • Conclusion: While IaaS and PaaS adoption has been increasing, most IT organisations are hesitant to migrate their legacy systems to public SaaS. This is primarily due to the applications being highly customised resulting in a significant effort being required to retrofit existing systems to migrate them to public SaaS architecture in the Cloud.

  • Conclusion: There are distinct differences between traditional outsourcing, managed services and as-a-service contracts. Traditional outsourcing and managed services are input-based contracts with a fixed price based on the number of the supplier team members delivering the service, service levels that do not reflect business operations and significant financial penalties when exiting for convenience.

    As-a-service contracts are outcome-based contracts, priced on a consumption basis, measured by service levels that reflect end-user experience and no exit fees.

    IT organisations should analyse the advantages and disadvantages of each alternative whilst formulating their sourcing and Cloud migration strategies.

  • Conclusion: One of IT organisations’ objectives must be to reduce the total service cost of legacy applications by migrating them to a Cloud environment. However, achievement of the desired success largely lies in limiting the scope variations of Application-as-a-Service contracts and controlling the hidden cost drivers. This requires leveraging the lessons learnt in containing outsourcing cost and establishing flexible contracts in the legacy environment. Failure to do so may extend the legacy system lifetime and leave IT organisations with no alternative but to absorb the increased cost of application management on an ongoing basis.

  • Conclusion: The Total Cost of Ownership (TCO) was created two decades ago to provide visibility of the total cost of IT assets. It was targeted at IT organisations running an in-house mode of operations. While TCO can provide a good understanding of the internal IT asset cost, it could not estimate the cost per service because the IT budget was never based on service delivery. As a result, it was neither adequate to buy external services nor sufficient to assess the value that an IT organisation can bring to the business lines. IT organisations should adopt the Total Cost of Service (TCS) model to accurately estimate services’ internal costs, benchmark the external services cost and justify the services costs in terms of business imperatives.

  • Conclusion: While the increased adoption of public IaaS1 can reduce cost and simplify technology procurement challenges, IaaS does not meet all IT organisations’ sourcing requirements such as legacy applications maintenance and IT service management. Hence, IT organisations are left with no alternative but to use multiple service providers to satisfy all their needs. This will increase clients’ governance cost of service providers and extend the duration of external services acquisition. As a result, a service broker model has emerged to provide one single point of accountability to all sourcing deliverables, simplify go-to-market strategies and fulfil the Cloud migration requirements in a cost-effective manner. IT organisations should assess the applicability of this model to their environment.

  • Conclusion: Forward thinking IT organisations wishing to create a service differentiation should analyse their value activities to construct a “uniqueness capability”. The outcome should convince business lines that IT services can generate business value at a competitive price. The value chain firstly requires to address service delivery processes by constructing the IT value chain1 , secondly to realise cost advantage2 and thirdly to create service differentiation (this note).

  • Conclusion: Cost advantage can be achieved by firstly, estimating the existing services costs. Secondly, use cost effective external services. Thirdly, integrate services. Fourthly, retain cost advantage. This can be achieved by removing duplicated activities and influencing cost drivers.

  • Conclusion: Many IT organisations are perceived by their business units as high cost/low quality service providers. Much of this perception is due to the IT group’s inability to successfully articulate service value, demonstrate cost competitiveness, and create internal service differentiation. IT organisations should construct service value chain models to diagnose the IT organisation’s deficiencies, improve image, and link to vendors’ value chains. This can be achieved by disaggregating the business of IT into its strategic activities (e. g. service definition and communication, customer service). This will result in understanding the cost behaviour and identifying existing and potential differentiation sources such as accelerating the release of business products to market and improving IT and business lines interaction.

  • Conclusion: While technology is becoming increasingly critical to business transformation, IT organisations are becoming less important to business stakeholders. This is because enterprise architecture practice’s main focus remains on back-office systems and on initiatives that do not necessarily contribute to business performance improvement and business cost reduction initiatives. IT organisations should revive the enterprise architecture practice by delivering IT-as-a-Service with an outward focus targeting business, information, applications, and infrastructure domains. This will increase IT organisations’ credibility to become key players in business transformation projects.

  • Conclusion: IT organisations should not be treating software releases to support the digital transformation as “business as usual”, because they may overlook the demand for extra-company IT management process integration, rapid application deployment, and speedy problem resolution. IT organisations should recreate their “release to production” processes to address the new applications’ unique requirements for appropriate security, resilient architecture, and elevated service level standards.

  • Conclusion: IT organisations establishing business relationship management to excel at coordinating business and IT strategic matters should assess the current maturity of this role. The rationale is to allow IT to deliver solutions that improve business performance, reduce the cost of doing business and mitigate business risks.

  • Conclusion: The Service Catalogue required by the ITIL framework has undergone several variations during the last 20 years. The rationale was to address the emerging service trends in in-house and outsourced modes of operations. However, while the original service catalogues’ objectives were achieved, they are inadequate in acquiring hybrid Cloud core services (e. g. storage) that should be delivered under outcome-based service contracts.

  • Many IT organisations are trying to change their perceived image from high-cost / low quality to value-added service providers. However, many of the adopted approaches revolve around improving just few processes (e.g. problem management). While these processes are important, they are insufficient to produce the desired effect for IT groups to deliver value-added services. 

    In this IBRS Master Advisory Presentation (MAP), IBRS outlines the high-level issues, surrounding Running IT as a Service from both business and technology viewpoints.This MAP is designed to guide and stimulate discussions between business and technology groups and point the way for more detailed activity. It also provides links to further reading to support these follow-up activities.

    The MAP is provided as a set of presentation slides,  and as a script and executive briefing document.

  • Conclusion: There is debate within the IT industry whether or not DevOps can replace ITIL1. From ITIL perspective, many IT organisations, especially in Australia, have been implementing ITIL processes since 1994 with significant investment in technology and professional services. Hence, it is impractical to just drop ITIL and adopt DevOps. This is because firstly, DevOps covers only Release Management which is only one process of the 26 processes of ITIL v3 and secondly, DevOps in not different from mature2 ITIL Release Management. In this light, existing ITIL organisations embarking on digital transformation should plan to mature Release Management to match DevOps principles. DevOps3 sites need to leverage the lessons learnt from ITIL implementation to enjoy a smooth business transformation as fixing only the software release process without integrating this with the remaining 25 ITIL processes is insufficient to raise the overall IT performance to the level needed by the digital world. This research outlines that ITIL and DevOps can co-exist in the same organisation once brought to the right maturity level.

  • Conclusion: Since 1994 many Australian IT organisations have been implementing Configuration Management practices. However, it has been done with limited success when assessed against the key objectives of Configuration Management process and its associated database (CMDB) in terms of service availability and configuration items interdependencies. IT organisations should review their Configuration Management plans in view of the latest public Cloud offerings and adopt a phased implementation approach.

  • Conclusion: One IT-as-a-Service strategy remains to migrate legacy systems to SaaS to reduce cost, improve service level and achieve excellence in end user experience. However, large-scale ERP SaaS migrations are still not imminent, primarily due to the significant ERP customisation made by Australian organisations during the last twenty years, which prevent the use of standard SaaS architecture without re-engineering the business processes. However, it is worth noting that there are third party ERP maintenance and support services, which used in the short term may result in up-to 50 % reduction in the current yearly maintenance and support cost.

  • Conclusion: With the local availability of VMware’s Infrastructure as a Service (vCloud Air), all Australian VMware customers should consider it for self-service dev/test environments, virtual desktops, and more importantly DR as a Service (DRaaS). Savvy CIOs will use low risk, low cost practical experiments to develop in-house skills and experience while delivering new capabilities to the business that leads to real adoption of IaaS over the next 18 months.

    The risk to CIOs who do not start adopting IaaS is that IT staff and/or business units embark on their own projects in an uncontrolled fashion leading to IT fragmentation and loss of control over the IT strategy.

  • Conclusion: IT organisations adopting IT-as-a-Service strategies tend to acquire the best of breed services from the market instead of building them in-house. This leads to increased adoption of multi-sourced services, whereby reliable governance processes are critical success factors to realise the desired business benefits in a timely and cost-effective manner.

  • Conclusion: in the publication ‘Running-IT-as-a-Service part 4’, IBRS defined how Service Value Agreements can be constructed by correlating business performance metrics with IT service levels. This note describes how Service Value Agreements can be constructed by aligning IT service levels with business service levels and processes. As a result, meeting or exceeding SLA targets will demonstrate the IT organisation’s contribution to business performance improvement and cost reduction undertakings.

  • Conclusion: IT organisations adopting IT-as-a-Service practices are often challenged by limited resources to meet service demands, especially in the IT Operations space. IT operations groups should develop supply/demand models that link to business priorities and ensure funds allocation. These models will enable IT organisations to meet client necessities, clear workload backlogs, and set the foundation for effective resource management methods.

  • Conclusion: with the increased adoption of SaaS for business systems (e. g. ERP), new SaaS providers continue to appear in the market. While those providers are offering easy-to-use products and low start-up costs compared to running in-house business systems services, there is a risk that some service providers might cease to do business. As a result, SaaS clients will be at risk recovering services on time and without data loss. To address this issue, several escrow services have been evolving. IT organisations wishing to migrate critical services to public SaaS should explore escrow1 services. Unfortunately, escrow service costs have to-date been fully absorbed by the buyer. In this light, IT organisations should incorporate the escrow services cost into the SaaS migration business case.

  • Conclusion: Running IT-as-a-Service requires offering broad IT services tied to external-value that goes beyond meeting or exceeding SLA targets. This is because the majority of existing SLAs are IT centric and vaguely relate to business value. Much of this issue is related to IT Groups’ lack of business analysis skills and IT ad hoc methods to comprehend business strategic requirements. As a result, business lines perceive IT as a support function instead of being a strategic business partner.

  • Conclusion: To reduce Service Desk costs and improve resources scheduling, some IT organisations are exploring the potential of Virtual Service Desk Agents to either improve self-service and/or reach to the right subject matter expert at the right time. However self-service success depends on the quality of information available to the virtual agents. It is critical for the virtual agent tool to be enabled by a mature service management engine that describes the service’s known errors and their resolution alternatives. Failure to do so will leave the virtual agent with no alternative but to call the live agents, thereby making the investment in virtual agent technology questionable.

  • Conclusion: IT organisations developing IT policies in isolation from business units1 will face challenges to tie policies to business drivers and limit policies acceptance rate. IT organisations should formulate policies by involving business units at an early stage in policy scope discussion. IT best practices2 should be leveraged to develop reliable and practical policies. The resources needed to develop the new policies should come from both sides and a business benefits realisation plan should jointly be developed and tracked.

  • Conclusion: Business-centric IT strategies are critical to run IT-as-a-Service1 because they attempt to integrate IT with business strategies. The rationale is to support business operations by implementing new technologies that reduce business risks, create business opportunities and achieve high levels of customer satisfaction.

    Business-centric IT strategies focus on addressing the business critical issues by implementing new IT solutions in a timely and cost-effective manner. The proposed IT solutions should provide capabilities that address the current and emerging market forces such as consumerisation, mobility, social media and Cloud. This will signal to business lines that IT is being modernised to meet consumers’ exigent needs.

    It is critical for business-centric IT strategies to be developed within two months to accelerate IT-as-a-Service transitioning.

  • Conclusion: To improve business performance and/or reduce the cost of doing business, forward-thinking IT organisations are trying to run IT as a Service. However, they are challenged by long software implementation timescales, fragmented delivery processes and insufficient skilled resources to meet business demands.

    To address these challenges, IT organisations should emulate the commercial practices related to delivering quality IT solutions at reasonable costs.

  • Conclusion: IT organisations' lack of IaaS usage planning will most likely increase consumption cost. As a result, IT organisations should work closely with business units to understand usage patterns and track monthly usage against forecasts. This will more likely ensure that IaaS usage levels remain within budget. This note provides the usage management framework. Part 2 planned for release in August 2014 will provide User Management maturity self-assessment approach.

  • Conclusion: While many IT organisations believe that using public IaaS (e.g. AWS, Microsoft Azure, Google) to host business applications is a cost-effective strategy, they still require to manage the hosted environment themselves or select an external service provider to manage it for them. Towards this, it is critical to understand the current service management maturity level prior to choosing an in-house or outsourced solution. This note provides a self-assessment service management maturity model to create a solid foundation for selecting sourcing options. IBRS recommend that IT organisations with maturity level 3 or higher retain the service management function in-house, whereas, IT organisations below maturity level 3 should outsource the service management function.

  • While IBM is planning to invest A$1.4 million to grow its global datacentre facilities, its focus remains on private cloud with no serious public cloud offerings, As a result, IT organisations under traditional outsourcing contracts with IBM should examine the feasibility and cost-effectiveness of third party public cloud alternatives prior to renewing the existing outsourcing contracts.1

  • Conclusion: 80% of traditional outsourcing contracts established in Australia during the last 25 years were renewed with the same service provider. However, with the emergence of public Cloud, IT organisations should examine the feasibility and cost-effectiveness of migrating to public Cloud prior to renewing the existing outsourcing contracts.

  • Conclusion: Software as a Service (SaaS) is gaining mainstream acceptance as a viable sourcing strategy for enterprise applications in both the public and private sector. IDC predicts that by 2015 24% of all new business software purchases will be of service-enabled software with SaaS delivery being 13.1% of worldwide software spending1.SaaS is being considered by many organisations as a means of achieving faster delivery times, cost reductions and access to innovative capability. In addition, organisations can exploit the SaaS model during the acquisition phase to reduce risk, improve business change management and test activities if they are prepared to move away from more traditional approaches and deal with organisation cultural issues. This paper focuses on the early stages of the acquisition process prior to contract finalisation.

  • Conclusion: When selecting Software as a Service (SaaS) solutions, IT managers should demand evidenced from SaaS providers as the levels of service that can be expected using a formal framework. Including IBRS’s SaaSability questionnaire in requests for information will help to ensure that all parties understand their roles and responsibilities.

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