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Conclusion: A Cloud strategy can take many forms. Whether you select a private Cloud, hybrid Cloud (on-premise with Cloud elements), native Cloud or a multiCloud implementation will impact the framework of your strategy. The success of your strategy will be driven by the motivation your organisation has to elect the move.
If your only motivation is the perceived cost model where you reduce capital in favour of operational expense, and potentially see savings based on usage, you are unlikely to succeed. The need to have a clear business strategy on why Cloud, what opportunities it may bring the business, and how to transition, manage and exit the Cloud is essential to see the true benefits.
Key to a successful strategy is to use an effective framework that allows your organisation to migrate to, operate and govern the engagement, and exit the engagement. A Cloud strategy is a commercial arrangement. Understanding the business benefits of entering into a Cloud contract engagement and being able to measure success factors is equally as important as the selection of providers for functionality and cost. It is important that you step into Cloud with your eyes wide open.
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Conclusion: IT organisations wishing to migrate to Cloud should adopt a pragmatic approach that strikes a balance between migration cost, Cloud risks and benefits. The bottom line is to avoid the hidden cost (e.g. scope changes), mitigate the migration risks (e.g. effective multi-Cloud management) and realise the benefits that contribute to business performance improvement. Effective governance of the overall Cloud migration is a critical success factor.
Conclusion: Cloud services have now been around for over a decade and since that time many of the services available have evolved in both scope and maturity. Most organisations now have a range of services in the Cloud and many have adopted a ‘Cloud first’ strategy for new solutions to business problems. However, this reactive approach runs the risk of not leveraging the full potential of Cloud services and creating fragmented infrastructure and applications which inhibit the rapid response to business problems and increase costs in the longer term. What is required is a deliberate strategy which maps out the transition to Cloud at infrastructure, platform and application levels and is integrated with enterprise IT. Given the scale, scope and risks of the strategy, executive and board alignment is critical as is the implementation of appropriate governance.
Conclusion: IT organisations challenged with predicting performance requirements of new digital applications should undertake end-to-end stress tests that can detect systems performance problems prior to production release. Test results should be used to define the final release dates, prepare corporate investment justifications for improving the application architecture and influence the ongoing capacity planning practices. Successful execution of the initial performance engineering exercises will result in sound deployment strategies and avoid media embarrassment. The specification of the stress tests should be clearly described in any request for proposals. The chosen vendors should have the capability to scale the new systems to the desired performance specification.
Conclusion: Delivering mature infrastructure services depends on many factors. For example, the service levels may vary significantly. Some organisations opt for non-stop operations, others seek basic service levels that allow up to one hour unscheduled downtime per month (or more). The key challenge facing IT organisations reviewing their infrastructure is to strike a balance between service level, cost, quality and risks. To address this requirement, IBRS has developed an Infrastructure Maturity Model1 to help organisations understand the service components dependencies before selecting an infrastructure alternative.
Conclusion: While release and change management processes have been contributing to good service availability during the last 20 years, the increased service architecture complexity caused by adopting multiple Cloud and digital services has demonstrated that release and change management methods used to date are inadequate for the new world. As a result, end users have been experiencing unscheduled downtime that has impacted their business operations and led to embarrassment in the media. This research publication provides guidance on how to raise the maturity of release and change management processes to address these critical issues.
Conclusion: The increased use of technical point-solutions has created the need for establishing an in-house core team of generalists capable of defining a coherent set of services that can improve the overall business performance. The key obstacle to building these strategic skills is the IT managers’ attitudes towards assigning work to existing staff. For example, IT managers tend to heavily exploit the existing skills of the technical staff to address specific requirements. Managers rarely give staff the chance to build new strategic skills that are beneficial to themselves and to their business.
Managers should strike a balance between strategic skill building and technical skill exploitation. This requires helping staff to acquire a deep understanding of the business operations, gain awareness of industry latest trends and offerings, and becoming capable of defining ICT solutions that can fix critical business problems.
Conclusion: Running IT-as-a-Service requires emulating vendors’ account management function by creating a business relationship manager (BRM) role. The role’s rationale is to provide strategic advice to business stakeholders and act as a single point of coordination between IT groups and business lines. BRM’s focus is to manage the relationship with business strategists and recommend IT solutions relevant to business performance improvement and cost reduction initiatives where applicable.
Conclusion: The success of digital transformation, hybrid Cloud deployment and multi-service providers’ governance largely depends on IT services being integrated and managed in a unified and standard way. Service integration and management (SIAM) is an approach to address this requirement. However, its full implementation is a massive undertaking covering delivery processes, organisational structure changes, service cost tracking, service skills and an effective deployment of end-to-end management tools. This note recommends a quick win approach that focuses on getting the service essentials fulfilled depending upon the status of external services used by an IT organisation.
Organisations that are resisting the shift to Cloud computing are often basing their decisions on common misconceptions around security, price and integration.
That’s a key finding in a recent report conducted by IBRS, The State of Enterprise Software Report 2019.
The Security Myth
Many of the organisations surveyed declared security as the primary reason for not moving to Cloud services.
Concern over the security of systems — and, critically, of the data they hold — was common in the early days of Cloud computing and it seems at least some of that legacy remains. But it’s a myth.
Dr Joe Sweeney, author of the report said cloud service providers exceed most organisations’ budget and capacity to manage complex cyber security risks.
That’s certainly the view of the Commonwealth Government, which is moving to Cloud-delivered enterprise solutions aggressively.
Conclusion: External Cloud services can realise cost reduction up to 50 % p. a. and promise no set-up or exit fees. While the ongoing cost reduction is realistic, there are significant other costs related to third-party services that should be considered to calculate the overall cost saving of Cloud migration. They are:
The purpose of this research note is to provide a step-by-step approach to determine the ongoing cost-saving opportunities needed for Cloud migration business case1 preparation.
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:
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:
Conclusion: IT organisations wishing to create value should initiate selling processes to define business needs, establish SLAs for mission-critical systems and provide IT solutions to key business issues. This will result in boosting IT staff confidence and managing business lines’ expectations more effectively.
"Importance of a balanced ICT investment portfolio" IBRS, 2018-09-04 13:42:25
"Running IT-as-a-Service Part 47: IT value creation accelerated approach – phase 1" IBRS, 2018-10-04 13:01:03
Conclusion: IT organisations wishing to create value are challenged by long implementation time-scales and inability to change the business perception of IT capability. To address these challenges, IT organisations should adopt an accelerated approach by deploying key processes within a six-month period, to demonstrate service quality and commitment to meet business needs in a rational fashion. Failure to do so will brand IT as a support function, and will make IT desire to earn strategic partner status virtually unachievable.
"Benefits management: Keeping it real" IBRS, 2018-07-05 03:02:17
"SNAPSHOT: Agile services spectrum" IBRS, 2018-05-04 19:10:01
Conclusion: IT organisations revisiting their service contracts as a result of mergers and acquisitions should establish a federated vendor management arrangement. The rationale is to ensure central consistency while retaining local autonomy to address tactical matters. For example, the central consistency demands leveraging the economy of scale to reduce cost, whilst the local autonomy allows the extension of services scope to cover local requirements without the need to change the local vendor management arrangements. However, the local autonomy should be governed by verifiable policies.
"Delivering IT-as-a-Service requires an Enterprise Architecture for IT" IBRS, 2017-09-02 01:42:22
"Mergers, Acquisitions and Divestitures: What does it mean to your business?" IBRS, 2017-01-01 10:35:33
"Running IT as a Service Part 1: Prerequisite Building Blocks" IBRS, 2014-10-01 18:33:12
"What to do when your vendor gets acquired" IBRS, 2003-07-28 00:00:00
Conclusion: Given that multi-Cloud is a combination of public/private Cloud and customised systems governed by in-house and/or outsourced arrangements, end-to-end service level management becomes a critical success factor. IT organisations should implement a complete set of service level practices covering people, processes and systems that allow IT organisations to efficiently deliver services in accordance with service level agreements (SLAs).
The SLAs should span across the full service lifecycle. Service level foundation requires defining the:
"Running IT-as-a-Service Part 38: Successful hybrid Cloud requires multi-provider governance framework" IBRS, 2018-02-01 10:08:33
"Running IT-as-a-Service Part 42: Incident and problem management integration is critical for hybrid Cloud" IBRS, 2018-06-01 04:14:55
Conclusion: During the last two decades, service desks delivery had the following shortcomings:
To address these shortcomings, IT organisations should transform to Service Desk-as-a-Service. It should be powered by self-service virtual agents that can identify most of the solutions without the need to connect with service desk officers. The charges should be based on the number of users instead of outages to encourage providers to address outages’ root causes. Online services covering reporting on issues and following up progress should be favoured over voice communication.
"Can IBRS identify what Service Desk software is most prevalent in Australia?" IBRS, 2017-04-30 11:16:50
"Running IT-as-a-Service Part 25: Understanding the cost drivers of Application-as-a-Service" IBRS, 2016-12-03 02:41:03
"Running IT-as-a-Service Part 43: Service level penalties and incentives for hybrid Cloud" IBRS, 2018-07-05 03:11:03
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.
"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
Conclusion: Traditional outsourcing and managed service contracts primarily focus on incident management service levels and give little attention to problem management. For example, incident management service level might be 95 per cent of Severity 2 outages resolved within four hours. In general, a temporary fix is sufficient to meet the incident management service levels. However, this might not prevent the outage from reoccurring because the outage root cause was not addressed. To address this issue, problem management root cause analysis must be used. This necessitates the integration of incident and problem management to govern multi-providers’ activities managing hybrid Cloud1.
Conclusion: Private Cloud1 managed by an as-a-Service contract has become the inevitable replacement of managed services arrangements. The main difference is that an as-a-Service contract is charged on consumption instead of on a fixed price basis and the service levels are tightly linked to end user experience and delivered at a lower price. However, unlike the common perception that Cloud migration is relatively easy, transitioning to private Cloud still requires thorough planning especially whenever the scope covers the full IT functions.
Conclusion: Business continuity and disaster recovery plans are largely developed in isolation. The result is ineffective recovery arrangements that do not meet the fundamental business needs. With the variety of Cloud service continuity solutions, IT organisations should initiate a unified business and IT continuity project to intimately involve business units in defining and deploying complete service recovery facilities, including mitigating the risks such as ransomware attacks and the lack of SaaS escrow1 services. This will tightly couple recovery services to business imperatives. The use of Cloud for service continuity (which was not available eight years ago) will reduce the overall cost of recovery.
Conclusion: Many IT organisations have adopted business transformation1 strategies to help their businesses increase revenue. However, while digital transformation has succeeded in making the communication with the enterprise more convenient (e. g. mobile applications), it has been difficult to substantiate digital transformation contribution to the financial performance improvement. As a result, justifying new software projects has become more difficult. It is recommended to shift the digital transformation focus from technology point solutions to building quality products and services that increase profit and elevate customer satisfaction. The success should be measured by increased sales instead of only technology charms.
Conclusion: Many Cloud service providers manage their own systems but do not take any responsibility for working with other providers in a multi-sourced environment. As a result, IT organisations wishing to maximise the benefits of hybrid Cloud should develop a governance framework to address technology integration issues, optimise the interaction among service providers managing the multiple Clouds and define policies to operate in a multi-sourced environment. This will ensure business operations remain unaffected by service providers’ potential disputes.
Conclusion: One strategy to implement IT-as-a-Service models is to focus on business efficiency improvement. This requires shifting focus from addressing IT internal issues (e. g. operating system upgrade) to improving business operations. It requires building IT skills and capabilities to leverage the emerging IT trends, technologies and services in the areas of artificial intelligence, analytics, Internet of Things, cognitive learning and multi-Cloud management.
Conclusion: One strategy to implement IT-as-a-Service models is to focus on efficiency improvement. This requires shifting focus from control to service improvement. The outcome will be end-user experience enrichment, cost reduction and business/IT operations synchronisation. Failure to do so will force IT to remain a utility provider offering insignificant innovation and playing a negligible role in business transformation.
Conclusion: The future of customer service will rely heavily on automating assistance with targeted empathy1.
Expect virtual digital assistants to heavily reduce the need for contact centre services and become the preferred choice as a CX channel.
Amazon’s $100 million investment2 fund to drive innovation in Alexa and its large installed base will advance Alexa and consumer digital assistant Echo capabilities rapidly3.
Treat Amazon Web Services’ (AWS) new “Connect” Contact Centre-as-a-Service (CCaaS) product as a complementary customer experience (CX) tool. Expect Connect to operate as a Trojan Horse for more complete AWS AI and CX solutions inside AWS customers’ operations.
Within two years it should be clear that AWS Connect has provided a significant point of inflection in the direction and functionality of global contact centre operations and the use of blended virtual digital assistants for voice navigation in CX. This is because in future, ecommerce or any customer service supported by separate or poorly integrated merchandising and buyer assistance platforms will be thoroughly unacceptable to end users4. A seamless fully blended CX56 will have become the (minimum) norm.
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: One strategy to implement IT-as-a-Service models is to build an in-house capability whereby the IT organisation is accountable for the full service delivery according to commercial practices. This requires the IT organisation to play the role of an internal service broker, expected to acquire external services and coordinate internal and external services delivery to meet the business needs. The service broker should at least be flexible, reliable and cost effective.
Conclusion: Preparing the modern business for Cloud requires a common computing and networking infrastructure with new Cloud architectures converging with data centres over a hybrid of both direct Cloud connections and traditional wide area networking.
Organisations must begin by conducting a “triage” of their applications into three networking categories: those in pure public Cloud deployment; a hybrid of public and private (“on-premises”) computing; and those that will never go to Cloud (such as legacy apps, or for regulatory or security requirements).
At Cloud-scale the network becomes a fabric that facilitates software-defined technologies1 (compute virtualisation, SD Storage, SD Networking and SD Security). Software-defined networking (SDN) abstracts network functions so that existing switches, routers and appliances can be made programmable to enhance their functions and reduce costs.
Eventually business IT processing will be delivered by SD Everything as all fundamental IT functions coalesce.
From today, businesses should be placing new emphasis on the “management” of their networking as both “virtual” and physical networks and plan to drastically reduce manual configuration and operation of networked IT as indicated below.
Conclusion: IBRS’ finding is that prominent Cloud marketplaces (CMPs) such as AWS Marketplace1, Microsoft Azure2, Google Cloud Platform3 and IBM Bluemix4 are gaining traction as alternatives to conventional enterprise ICT infrastructure and services sourcing.
Given the state of maturity of these marketplaces, they are currently only useful for quickly and conveniently locating and obtaining ICT infrastructure and microservices for use in low-risk small scale pilots or trials.
As wider take-up is underway with larger applications being adopted through AWS and Azure organisations should begin to prepare for a shift in the viability of enterprise-level solutions.
Our caution is that CMPs will not have profound impacts on enterprise ICT provision until both the IT and Procurement organisations within a business become satisfied that this approach has validity, value and is auditable5 and manageable.
Conclusion: Transitioning to hybrid Cloud might include migration from the current outsourcing contracts and some in-sourced activities to IT-as-a-Service models. The rationale is to accelerate efficiency gains realisation in a timely manner. One of the Procurement Manager’s options is to seek a service broker (e. g. prime contractor) to efficiently undertake the migration without disrupting the current business operations.
IT Procurement Managers should:
One of the migration critical success factors is a detailed transition plan covering the service provider selection and setting the foundation of a healthy relationship between both parties throughout the contract duration.
Conclusion: IT organisations initiating efficiency improvement programs should automate inter-process interaction, focus on measurement and refine inter-group communication. This will enhance service availability, reduce delivery cost and enrich end user experience.
Conclusion: IT organisations wishing to maximise the ROI of as-a-Service contracts must transform the relationship management role from contract focus (i. e. whereby the mindset is to create a win/lose scenario) to a value focus whereby business benefits are realised. This demands building advanced skills in negotiation, communication and consulting. It is also necessary to extend the Relationship Manager’s role to one which ensures as-a-Service policies are developed, security policies are adhered to and external providers’ deliverables are synchronised with those of internal service providers.
Conclusion: With the migration to complex hybrid sourcing strategies, traditional IT organisations based on ‘plan/build/run’ models will not be suitable for acquiring Cloud services in an increasingly changing market. This is due to a vague understanding of service total cost of ownership and limited contract negotiation and management skills. IT organisations wishing to rely on external services must evolve to ‘plan/procure/govern’ structure to emphasise strategic service planning and hire specialised service providers’ governance skills. This shift should ensure mutual trust and respect between parties, well-defined service levels and clear roles and responsibilities. IBRS estimates the cost of the governance structure and services to be 3 %-7 % of the annual contract value. This must be considered during the business case preparation.
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.
Conclusion: IT-as-a-Service is an initiative launched by IT organisations to fix an IT problem, whilst digital transformation is another initiative launched by business lines to fix a business problem. However, fixing both problems remains an enterprise’s critical issue. Hence, organisations wishing to remove the duplication between the two programs should unify both programs and ensure sufficient funds are available to implement the unified program in a timely and cost effective manner.
In this interview, Dr Wissam Raffoul outlines a practical and effective approach to migrating to an As-a-Service model.
Sydney-based IT analysis firm IBRS has launched maturity assessment and methodology tools to assist organisations with the task of SaaS migration.
In order to improve business performance, or reduce the cost of doing business, forward-thinking IT organisations are trying to run IT as a service (ITaaS), said Dr Wissam Raffoul from IBRS.
“There are many challenges; for example, long software implementation time lines, fragmented delivery processes, as well as insufficient skilled resources to meet business demands,” said Dr Raffoul.
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: Community Clouds can provide the expected value of using “Cloud”-based services in a shared environment that may be more economical than a closed private Cloud or privately owned and managed IT solutions. But economics may not be the driving factor. Identifying a common “customer” need or client base can be the main driver to getting similar organisations to agree to use shared resources or services.
The effort in getting organisations to recognise the opportunity to work together and to actually implement a community Cloud should not be underestimated. As in arranging car pooling, whilst the benefits may be clear, there is still the challenge of finding the other participants who all want to go to the same place, at the same time, and with agreed cost sharing. A “lead” organisation is necessary to help coordinate the required effort to create a Community Cloud.
Conclusion: The drive for digital disruption has forced many organisations to implement contact centres’ online chat facilities (or equivalent). The rationale is to instantly connect customers with service experts and to resolve inquiries at the first contact whenever possible. While customers enjoy the ability to initiate a chat anytime and from any device, the ability of service providers to resolve inquiries to customers’ satisfaction remains unfulfilled in many cases, especially in the telecommunication carriers industry. Organisations should realise that a digital transformation is not only about implementing online facilities; it requires significant business process re-engineering to improve end-user experience across all types of inquiries.
IBRS iQ is a database of Client inquiries and is designed to get you talking to our Advisors about these topics in the context of your organisation in order to provide tailored advice for your needs.
Conclusion: IT organisations driving their business transformation should mature their as-a-Service capability to deliver IT services at commercial standards in a timely and cost-effective manner. This should lead to effective delivery through the integration of business and IT processes.
Conclusion: Traditional disaster recovery plans do not mitigate risks against frequent software and hardware malfunction, nor do they integrate with business continuity plans. As a result, a production service may become unavailable for up to two days in certain cases (e. g. recovery from a database outage or data corruption). In the digital world, the business impact of such a failure will be significant as clients may place their orders with a competitor when they face an unavailable service for a prolonged period of time. IT organisations should deliver recovery-as-a-service that provides non-stop business operations.
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: The new digital business model for IT is based on selecting, composing, and leveraging a dynamic range of Cloud based external services. Under the new IT paradigm people will work the way they want, when and where they want and with all the tools with which they are familiar; collaborate using a wide range of low-cost commodity services; and use their own devices (and in some cases their own applications) while those responsible for information governance seamlessly maintain control over the organisation’s enterprise information, privacy and security.
Conclusion: Industry discussion regarding Cloud based IT business models, have found it easy to claim a level of expertise simply by publishing high level observations and unsubstantiated predictions. Unfortunately, while interesting, these observations and predictions have offered little assistance to IT executives looking to design a future IT service based on Cloud. Should an IT executive choose to change their business model, there has been little or no advice on how to proceed.
Several CIOs have expressed concern that research advocating downsizing is negatively impacting their credibility. Faced with a plethora of information and recommendations, many will struggle to maintain ongoing financial and cultural support from within their own organisations.
Conclusion: IT organisations driving their business transformation should mature their internal consulting function to connect with business units’ service quality expectations. This should lead to consistent delivery, facilitate knowledge sharing and realise business benefits.
Conclusion: Application developers and IT Managers have become enthusiastic adopters of Cloud due to the apparent large cost savings and short development time compared to using internal infrastructure when prototyping projects. However, they are often unaware of the cost impact of their choice of Cloud resources on the operational delivery of their ICT workloads.
Each Cloud service provider has its own sweet spot for particular ICT deployments, so users must be able to work out the best Cloud vendor and solution mix.
Best practice includes using the rapidly improving range of vendor-provided calculators, tutorials and tools as well as third party analysis resources, dashboards, price comparators and billing reconciliation services.
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: 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: 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: Advisor reviews of recent business cases evaluating Cloud contact centres (CC) show that any upgrade needs to be driven by a customer service business strategy (not just a technology refresh).
Cloud delivery has become the dominant technology for any new contact Centres for two main reasons:
Simplified contact centre acquisition and operation, and
The new paradigm supports a wide range of current and emerging business strategies by providing relatively direct and complete integration into related enterprise systems such as CRM, ERP and eCommerce platforms which are critical for service fulfilment and creating positive customer experiences (CX).
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: Microsoft is completing a unified communications and collaboration (UCC) product suite development journey begun more than a decade ago as it finally offers missing critical components with Cloud-delivered telephony. In doing so it risks alienating its current UCC partners (especially those in telephony).
UCC strategy, planning and deployment is incomplete, fragmented, or poorly organised in most enterprises due to a lack of curated planning for collaboration and imperfectly orchestrated adoption (especially in training and no mandated use of core UCC tools).
IBRS finds that SfB and similar UCC solutions are only worth the cost if inter-personal collaboration is properly implemented and realised consistently across a business based on a policy. For most businesses, this is a perfect time to review their communications and collaboration strategy because most have massively under-achieved their productivity potential and complete Cloud solutions are now becoming available.
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: 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: 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: the Department of Finance has produced a Cloud Policy that is linked to a paper about Cloud implementation that does not mention modern Cloud architecture, which in turn is linked to an architecture paper that does not mention Cloud.
Agencies looking to adopt Cloud services are advised to look for advice beyond the Australian Government’s Cloud Policy and its supporting documents.
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: the adoption of Cloud-based applications and data, the proliferation of mobile devices (i.e. Smartphones and Tablets) and the increased interest in BYOD is driving a radical change in end user computing. The old device-centric model, based on a stateful Windows desktop, is being replaced by an application-centric model where device state is transient. While this is not yet the end of the Windows desktop, the beginning of the end has arrived.
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: When moving from traditional on-premises IT to Cloud it is important to update the Business Leaders and Executive on the risks. Rather than try to quantify the absolute risks, as the first step in gaining acceptance, explain how the risks of Cloud compare with the current on-premises, or MSP, solution. Offer ideas on risk mitigation that might be necessary and liberally apply simple examples and analogies to aid comprehension.
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.
Many Australian IT organisations have been implementing Configuration Management practices since 1994. However, with limited success when assessed against the key objectives of Configuration Management process and its associated database (CMDB).
Conclusion: Once an organisation decides its on-premises IT infrastructure model must be transformed into a Hybrid Cloud model the important question becomes “how is this best achieved?” While Cloud Native applications and Dev/Test infrastructure are the typical first steps they do not address the Enterprise applications that are central to most enterprises.
An emerging transformational strategy is one based on Disaster Recovery as a Service (DRaaS). This is a low cost, low risk, incremental approach to transforming on-premises IT infrastructure into a Hybrid Cloud infrastructure. The DRaaS leaders in Australia will be VMware, Microsoft and AWS in that order.
Conclusion: Cloud migration should not be a quick and dirty job just to upload the current business systems with their inefficiencies, only to get rid of the in-house hardware ownership. It should be considered as an opportunity to clean IT and business inefficiencies at the same time. IT organisations wishing to migrate to public Cloud require a new methodology to avoid incurring unforeseen consumption cost and to address business processes overheads. Strategies are needed to measure code inefficiencies and develop a remedy roadmap whilst building the case for public Cloud. Only efficient code should be released to public Cloud unless there are other benefits which make the overall migration cost-effective. This will ensure IaaS usage remains within IT budget.
Organisations migrating to the Cloud and embracing flexible user-based computing have been tied up in knots with Microsoft’s archaic licensing models. On the end user computing side of things, a quick review of my notes on the nuances of Virtual Desktop Access (VDA) licensing and Remote Desktop Services (RDS) licensing are enough to give most people a brain aneurism.
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.
While hyper-scale vendors have been a little slow in opening data centres in the Australian market, the anecdotal evidence is the take-up is very strong:
Conclusion: When implementing enterprise Cloud services, a disciplined and locally distributed approach to user acceptance testing in combination with real-time dashboards for test management and defect management can be used as the centrepiece of a highly scalable quality assurance framework. An effective quality assurance process can go a long way to minimise risks, and to ensure a timely and successful rollout.
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: Determining the optimum licensing mix involves not only an understanding of Software Assurance, but also consultation with the organisation’s business strategy groups, as well as a firm understanding of potential structural changes, such as mergers, de-mergers, acquisitions, and growth strategies. Getting the wrong mix can result in overspend, or worse, an inability to adopt business strategies such as mobility, activity based working, or bring-your-own-device.
"Understanding and Optimising Microsoft Software Assurance: Part 1 – The Basics" IBRS, 2014-10-01 20:28:23
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: There are many different Hybrid Cloud approaches, each with different costs, risks and benefits. Organisations should evaluate the alternatives to find which is best aligned to their business requirements, then update IT governance processes to guide the organisation towards the chosen Hybrid Cloud strategy. Failure to align to the right Hybrid Cloud strategy will either result in the creation of new IT silos, which becomes a barrier to the business strategy, or will adopt an approach that stifles business innovation and agility.
Conclusion: Failure to embrace the SMACC stack (Social, Mobile, Analytics, Cloud and Consumerisation) will result in the wider organisation working around the internal ICT provider. Job losses in the ICT team and a reduction in wider corporate capability will result.
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, the lack of IaaS usage planning will most likely increase consumption cost. IBRS recommends that IT organisations undertake a self-assessment of their usage management practices prior to migration to public IaaS1.
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: A majority of organisations around the world and across Australia are implementing or trialling some form of Cloud service whether it be IaaS, PaaS or SaaS. While Cloud services offer many potential benefits to organisations they can increase complexity in a number of areas of IT service management. Organisations may implement a hybrid Cloud model and deliver some services using public or private Cloud.
Business areas may subscribe to Cloud services for the provision of application services with or without the participation of IT. Identifying and managing the schedule of change with a wide variety of providers can be complex but will provide the CIO and the organisation with a clear view of who, what, when, and how changes will be made, the risks involved and the mitigation actions required.
Conclusion: Amazon Web Services (AWS) dominates the IaaS market, witha commanding market share lead over all other vendors. Since there are no clear market forces that will change this in the next few years the question is who will become second and third?
Conclusion: Moving services to the Cloud is a part of nearly all organisational strategic plans. Organisations today are either starting to trial services with one provider, moving from the trial phase to include additional services or heavily focussed on Cloud as part of their service delivery model.
Based on the learnings from organisations that are heavily focussed on the Cloud, CIOs will only be successful if they can successfully develop their maturity to be a competent customer of Cloud services. Developing an objective view of your organisation maturity level and actively seeking learnings from organisations that have already undertaken the journey will assist CIOs in developing an appropriate, actionable plan for their organisation.
Conclusion: WhileI SaaS and PaaS adoption has been increasing during the last two years, most IT organisations are hesitant to migrate their legacy systems to public SaaS. This is primarily due to the applications being highly customised to support the current business mode of operations. As a result, migration to cloud requires significant effort to retrofit the existing systems in public SaaS architecture. One of the options to address the customisation obstacle is to adopt a rapid business process redesign approach.
Conclusion: The proliferation of mobile devices and increasingly mobile staff in the enterprise is driving demand for file sharing and synchronisation services. In the absence of a usable offering from the organisation, users are turning to the ad-hoc use of consumer grade services. This is often referred to as ‘The Dropbox Problem’.
Failure to provide a workable enterprise alternative will increase organization’s risk of data loss or leakage.
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: With the migration to complex hybrid sourcing strategies, traditional IT organisations based on ‘plan/build/run’ models won’t be suitable for acquiring public cloud services in an increasingly changing market. This is due to vague understanding of service total cost of ownership and limited contract negotiation skills. IT organisations wishing to rely on external services must evolve to ‘plan/procure/govern’ structure to emphasise strategic service planning and hire specialised service procurement skills. This paradigm shift requires CIOs to restructure IT procurement with a view to run it as-a-service to other IT groups and business lines.
Conclusion: The rapid adoption of SaaS by HR departments is a herald of the way IT departments will need to reinvent themselves. SaaS means that IT will not control everything, but there is an important role for influencing how the organisation adopts. IT needs to proactively develop relationships with business units in order to establish itself as a partner to business and create an environment which will ensure that advice is sought early, and not only when integration issues arise. This mind shift, from utility to partner, is critical but may not come naturally to the mindsets that have been so good at running traditional IT departments.
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