Technology, IT Performance

How to manage cloud services sprawl via service integration

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Does this sound like you?  You are struggling to keep track of all your services, finding out who is using what service from what vendor, when each service is being used and the purpose of all. Add cloud to the mix, and you have mind-boggling complexity and a major challenge trying to manage multi-source environments.

While systems integration was once the big concern, today’s CIOs need to look to services integration. Companies today need to obtain services from multiple vendors so that they can get best-of-breed solutions, cost efficiencies and the flexibility needed to meet ever-changing and ever-more-demanding business needs.  

That means your IT department provides a service to the business, but that service might actually be composed of networking services from Verizon, infrastructure services from HP and application services from SAP. When something goes wrong, where is the problem located? Who’s responsible? To make all these services work together and meet security and compliance policies, you need a comprehensive strategy for service integration and management (SIAM, for short).  Otherwise, you’ll be left with the dreaded “supplier sprawl,” a huge challenge to IT in terms of governance, security, reliability and more.

But how does IT integrate these external services with existing services delivered by IT? And what if IT didn’t even source these services to begin with?

Supplier sprawl makes IT’s job more complex and can reflect eroding corporate confidence in IT. What’s required is the creation of a service integration layer that makes it possible to have a big-picture view and real-time visibility into the state of IT services in the organization. The IT department needs to establish a standard IT architecture and integration model for all services. This helps IT expedite the on-boarding of future suppliers and release of new services at reduced cost and complexity.

6 questions to get started

One of the first things you need to do is get a handle on the extent of supplier sprawl in your organization. You need software and services that help identify all the services—cloud and traditional alike—that are being used across the organization. Start by establishing ownership for service integration and management. For each major IT service provided for your businesses, determine who owns:

  • The procurement process for IT services?
  • The budget for that IT service?
  • The final decision on service level agreements?
  • Sign off on external supplier contracts?
  • Onboarding and integrating new IT services?
  • Researching new IT services?

 

Once you create your baseline, you can create a services integration program in-house, or you can look for an experienced vendor who can help you build the critical capabilities to become an IT service broker. 

 

Steps to follow in becoming an IT service broker

Creating an integrated, transparent IT service supply chain requires an organization to assess its strategic goals and portfolio of services carefully—and be able to rapidly institute change when it is required. First, you’ll need to define the future state of your organization starting with the business impact. Then, using the questions above, you should create a current-state assessment that establishes the gaps with the future state. You’ll need to establish a baseline so that you can measure progress toward your ideal future state. And, you should create a business case that spells out the quantified value and benefit of the future state. Then you need a comprehensive project and schedule to transform your organization.  This is where SIAM is an opportunity. A comprehensive service integration strategy with key performance measurements tracked throughout its execution gives you the chance to show how IT is providing business relevant, high performing services. It’s an opportunity for IT to reassert itself–to start acting as the organization’s service broker rather than just a service provider.

The new white paper, HP Service Integration and Management , serves as a guide to help any IT leader get closer to the ideal state and avoid the inevitable pitfalls of supplier sprawl.

For more on SIAM, visit www.hp.com/go/siam.

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Discussion
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jdobbs
Joel Dobbs 322 Points | Thu, 03/29/2012 - 15:30

A lot of interesting and in depth discussion.  Obviously a very hot topic!

 

All of this reminds me of an incident that occurred at a company I worked for during the peak of the infamous Internet bubble.  These were the early days of the web and websites proliferated like weeds in springs.  We commissioned an audit by our internal auditors to see just exactly how many externally hosted web sites we had that we didn’t know about (we suspected maybe five or six).  The auditors came back with 57!  Many of these had been put up by ad agencies, marketing folks including product managers, and assorted others.  We were, to put it mildly, shocked.  But here is the scary thing.  We found, among other things, outdated, and inaccurate product information, toll free numbers that no longer worked and, in the most disturbing incident of all, a site that collected personal information that we specifically stated would not be shared.  Well, you guessed it, we were using the information in precisely the ways we were telling people we wouldn’t. 

 

The lesson is that there are not only cloud services you don’t know about but people may be using them for all sorts of things that violate company policies, existing laws and who knows what else.  There is a great need for adult supervision!

 

marcwilkinson
marc wilkinson 6 Points | Fri, 03/30/2012 - 20:32

Hi Joel

I'd be interested in digging into your anecdote a little further – of the 57 websites that were found, do you recall the ratio or percentage that were stood up due to ignorance, vs subversive conscious decision?

You see we frequenty talk about (and even mention in this thread) Shadow IT – and as I look at the usage of say Dropbox on smartphones and desktops to quickly and easily share documents and presentations within the enterprise – the usage is frequently for expediency and without knowledge of any “wrong doing”.  These folks could be helped by IT, simply by making the services and capabilities they require readily and EASILY available in a self-service manner.  They were breaking the rules but in an understandable way.

Yet – there are "the others" - those who say “they won’t let me do it through proper channels so I am going to do it beneath the radar” – it strikes me that these are the ones we need to focus on and worry about more.  Since they will continue to circumvent process and rules regardless of the governance framework in place.

 

It strikes me that the folks who shared personally identifiable data probably fell into the second category – even if there was a healthy dose of ignorance floating around.  The fact that their faux pas could have cost the company millions and seen customers leaving as quickly as they could is something they just didn’t process.

 

So … how do you get these folks under control?  How do we herd the wrong-doers without giving them an excuse to cause malicious harm?  While I am a fan of SIAM and the new role of the CIO, addressing these types of people requires more.

 

<m.>

 

Judy Redman
Judy Redman 55 Points | Thu, 03/29/2012 - 15:42

Thanks, Joel.  Your insight is right on the money. And I'm sure your anecdote is one of the milder instances of sprawl and its impact.  ~JR

Louiseng
Louise Ng 5 Points | Mon, 03/26/2012 - 20:39

The topic of SIAM has many folks reeling still trying to understand what it means to “them” – IT isn’t the only organization within the enterprise that needs to think about supplier management.  

 

It seems to me that as IT has evolved over the last 3 decades we are circling back again to try to check in on our relationships to the business.  Remember when there was a “title”  in IT called the Business Analyst and IT would react to the requirements spelled out and interpreted by the Business Analyst.  For the most part the last 15 years IT has been focused and concerned about optimizing their own houses in an attempt to become the most effective and efficient support system to the Enterprise. 

 

This eliminated and compressed physical redundancies and transformed distributed IT to a slimmer centralized IT.  Then came the “let’s think of ourselves as a Service Provider” so how do we represent the Services we provide?  We implemented the position of the Service Owner and Service Manager to help define / describe the services and the expectation of service delivery.  That caused IT to tie infrastructure and applications to Services and offer some kind of SLAs to ensure IT is meeting expectation demand.  Now we are in the era where effective and efficient Operations with a Service Catalog and consumable services just isn’t cutting it (per the business) so we are back to the point we need to put back the “business relationship” position to analyze what the business drivers are and what the current need is to meet the Services SLAs that are potentially in jeopardy of being met. 

 

Full circle… and over all this time the Business and IT continue to need a governance layer to ensure the needs of the business are met but utilizing the IT department (and their suppliers) as effectively and efficiently to support the right mix of Capex and Opex spending in support of the Enterprise.   So how does the Business and IT balance the demand for service with the cost of doing business?   How does the need for speed and agility get balanced to quality and stability of service delivery from IT or other suppliers?

 

SIAM is an approach to an overall framework that supports the decisions to manage and govern the Value of Services, the demand and methods of service delivery, the impact to the Organization and integrated suppliers, and the management and reporting of service health.  This points to multiple layers of the enterprise that should participate in that management and governance to ensure that the overall enterprise strategy and portfolio of services are managed and directed based on the corporate strategy and POR priorities and may be satisfied by a hybrid service delivery model of internal and external providers.   

 

When it all is said and done you want to be able to measure the expected benefits of utilizing a supplier vs. internal IT as well as managing the suppliers to their contracts.  Without a governance layer that SIAM concepts promise it would be hard to analyze whether or not you were achieving the goals set out by the Service Owners as well as the service levels established in the supplier contracts.

 

Judy Redman
Judy Redman 55 Points | Tue, 03/27/2012 - 17:12

Excellent points, Louise.  Thanks for adding to the discussion.  Glad the post struck a chord with you. ~JR

pearl
Pearl Zhu 89 Points | Mon, 03/26/2012 - 18:51
Hi, Judy, enjoy the blog, I would say, cloud now has become crucial for IT strategy, and IT strategy is critical component of business strategy-all about business growth, cost effectivenss, governance., etc, so instead of reactively fixing applicaton sprawling at the age of cloud, CIO and IT may need proactively take initiative to craft and execute cloud strategy: http://futureofcio.blogspot.com/2012/03/five-criteria-good-strategy-vs-bad.html, manage cloud via integrated GRC discipline, IT and busienss need work more closely than ever to architect business solution in the cloud through 3 steps: diagnose, the choice of guiding policy, and execution. thanks
Christian
Christian Verstraete 406 Points | Mon, 03/26/2012 - 08:52

I actually believe there are two different issues here. On the one hand, yes there is "Shadow-IT" and the question should be raised on how we can address shadow IT in the organization. That's where the credit card plays a role.

But there is something else. When the CIO, in his role of "strategic service broker" decides to source a service from Salesforce.com, Netsuite.com or ArenaPLM to name a few, how many companies actually get added to your list? The big issue with SaaS is that the cloud "supply chains" most often are not transparent, which means you actually don't know who is delivering what part of the service. One strong advise I have is for CIO's that want to go that route, to spend some time with the enterprise head of procurement (or Supply Chain) and review some lessons on supplier management. That will definitely help in understanding who the actual suppliers truly are and how to manage them over long periods of time.

Tools and processes are a good starting point, and SIAM definitely helps, but there is need to establish a different mentality within the IT department, a mentality that is supplier friendly and that understands the changing dynamics of cloud.

PaulM
Paul Muller 119 Points | Mon, 03/26/2012 - 05:01

I have to admit going slightly doe-eyed whenI hear about SIAM. The whole idea of service integration speaks to the idea of a borderless, multi-sourced enterprise in a practical way vs all of the actionless hype we hear about our cloudy world. 

More please!

marcwilkinson
marc wilkinson 6 Points | Wed, 03/28/2012 - 16:00

You are not alone Paul

If you read any science fiction, you will find many describe a world where data is discoverable anywhere (subject to security controls), services just "are" and "do", and the whole fabric of computing is so pervasive that it just does what it is supposed to do, accessed from wherever you are, by any device you happen to have close - some people even use a sonic screwdriver.

With a hybrid or multi-supplier service delivery model - with the right governance framework, process integration and technology - we start on the journey toward a truely service centric pervasive information world.

BUT ... and this is something we can control;

  • IT has a habit of making things overly complicated - this wont accelerate adoption even if we think it is sexy
  • There is so much data out there, that we really need to get control of it - convert the "data" into "information" that is useful and useable
  • Starting on this journey without a plan (read strategy) or the right governance will result in the same frustration and mess as building an entire house from IKEA parts without reading a manual
pcalento
Paul Calento 256 Points | Fri, 03/23/2012 - 19:18

One of the challenges with managing cloud services sprawl is the role of the credit card in creating multi-source environments. For every well-planned cloud initiative managed by a CIO's designate, there is at least another under-the-radar project that someone has used the cloud for expediency's sake. The question of who's responsible is key ... especially if/when IT is held accountable to manage activities that were purchased without their involvement. Perhaps embedding IT directly into the LOB is one way to implement these service integration recommendations in order to manage the sprawl.

--Paul Calento

(note: I work on projects sponsored by EnterpriseCIOForum.com and HP)

joshuabrusse
Joshua Brusse 33 Points | Mon, 03/26/2012 - 01:56

Hi Paul...I like your "embedding IT directly into LOB"...over the last 30 years or so we have tried to "align IT with Business" and that never worked because it is actually about "embedding IT within the business" the same as embedding Legal, HR and other shared services into the LOB. The Consumerization of IT brings a new thing to the table: “Democratization of IT” the power back to the business (where it belongs); business will buy IT services wherever they want and the internal IT will not be able to stop that anymore…thus the retained IT organizations role in the business becomes more a advisory, governance and integration role...indeed responsible to provide the best in class IT but no longer responsible for "DIY". Being part of that LOB is than extremely crucial. That this requires a totally different attitude is obvious.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

marcwilkinson
marc wilkinson 6 Points | Sat, 03/24/2012 - 01:32

Hi Paul

You are spot on – the challenge of Shadow IT – something that has lingered around since the 90s when desks hid a multitude of secrets, frequently in the form of several business critical servers.

And – while some would say you simple mandate “thou must use Service X” –  as all those non-corporate phone users out there know, too many in the organization simply ignore the mandate.

 

IT whether they like it or not, will always be held responsible.  They spend the corporation’s budget and deliver “stuff”. The fact that a business line is paying double, by approving and paying for an employee’s wayward credit card use is unlikely to be connected until the problem becomes very large. So IT will always shoulder the blame even if the problem is due to a 3rd party provider they knew nothing about having a service outage.

 

In these cases, IT can complain and point to the rules and regulations, but the business will go away with a sour taste in its mouth.

 

My recommendation to IT organizations has always been one of embrace the change – capture the demand via a service request portal that IT controls, even if it simply passes through to the 3rd party or even just harvesting the IT support desk or analyse the network traffic.  This allows for the consolidation of the finances, as well as giving IT a better picture of actual usage – perhaps providing the catalyst to pull their finger out and do something similar or formalise the agreement.

 

In my experience, embedding IT into the line of business is already happening in a number of organizations. For example, financial institutions frequently have business analysts in IT and IT representatives in the business – helping join the two worlds.

As IT becomes more service centric there will be more of these IT service owners, and I think this will naturally lead to more alignment with the line of business.

PaulM
Paul Muller 119 Points | Thu, 03/29/2012 - 00:02

Mark - this raises the, much debated, role of the Enterprise Architect in the modern enterprise. My experience with the EA function was that it was widely deployed (ie: most companies have one), but poorly implemented and rarely followed.

EAs can no longer be the "chief no officer", given the unenviable task of documenting an architecture and standards that are rarely read and even less frequently followed.

I believe that EA, or more specifically Enterprise Strategy and Value Architects, is the "new black" required to manage in a multi-sourced hybrid world but the nature of the role has to change in order to make it more than a toothless tiger.

marcwilkinson
marc wilkinson 6 Points | Fri, 03/30/2012 - 20:53

Ahhh … The Enterprise Architect … Not sure Scott Adams has brought the EA into Dilbert yet, but it won’t be long.

I agree with parts of your comment Paul – I like your “new black” and agree that with the increase in multi-sourcing the role of the Enterprise Architect or Enterprise Strategy & Value Architects will become a core resource in making the new service delivery chain work well (for the business)

 

Where in my experience I have been a little disappointed is that I am still not seeing the enterprise architect role acknowledged or even implemented in many enterprises – often people will consider the Senior or Chief Architect to be the Enterprise Architect, not realising the difference between a solution or system architect grown up and an individual who can consume and assimilate the business’s need and strategy whilst understanding and addressing the nitty gritty of the technology and processes.

It is far worse when an organisation has invested in an Enterprise Architecture group, staffed by people who are not sure what it means.

 

I wholeheartedly agree this role needs to step forward into the light – but I just hope it is manned by people who know more than how to spell “EA”.

 

PaulM
Paul Muller 119 Points | Fri, 03/30/2012 - 22:17

well put

myles.suer
Myles Suer 137 Points | Fri, 03/23/2012 - 19:07

Doug,  I’m not the expert on SIAM, but can weigh in on the performance scorecard portion of your comments.  I agree with many of your comments. Certainly, we should get to the point where there is a really cost performance tradeoff. Unfortunately, this is not where organizations are going to start. Cloud puts pressure on them to say what their cost per infrastructure and business service is and what they believe they provide at a differentiated level. A friend at a large online business told me that their costs per server were lower but they use Amazon because their turn-on SLA is faster and they can meter, turn costs on and off, based on demand for example for testing. Everyone now needs to get to their costs. Obviously, a single priced catalog with different SLAs based on cost is the goal. People will not get there, we  at HP believe for a couple years. In the meantime, better vendor management in particular for SLAs is important. Many financial executives just pay the invoice even when promised service quality was not delivered. Good asset management, meanwhile, should be a goal. It should monitor inventory and configuration state, but also costs. We clearly with virtualization have more of a pool concept and we do not want to just peanut butter these costs. Finally, we believe that IT Financial Management, should not be about the precision of activity based costing, instead it should be focused on allocating costs to infrastructure, applications, and business services. Asset Manager can help manage the dynamic elements here, but we also want to then dimensionally analyze this data by service provider.

 

Goddardd
Doug Goddard 122 Points | Fri, 03/23/2012 - 20:28

Hi Myles and thanks for your comments. My work involves the automation of the governance of outsourcing contracts primarily, a big part of which is financial, demand and service portfolio management. Consequently, I can't really speak to the cloud world at the moment, other than what clients are saying about it, which I discussed below. However, in my world the resource unit seems to be where the action is at, not the service or category of service level, whether it is infrastructure or professional service. They will spend a lot of time identifying services and categories of services, but they then tend to ignore them. It is the resource unit that they see as the nexus of utility, warranty and cost, if I could put it that way. They want to then allocate those resource unit costs across their hierarchy. At a minimum it tends to be at the LOB level and across a geographic hierarchy. The costs are allocated directly and in a shared manner. However, many of them go far beyond that and allocate by things like senior VP, junior VP, program, project portfolio, account code. As I'm sure you know, they are trying to map costs to consumption and revenue points for a variety of purposes, such as charge-back, ROI, automatic budget forecasting, capacity planning and performance measurement (i.e. which senior VP does the best job of creating value through IT).  Getting that sort of detail from their vendors is very difficult, if not impossible, and those hierarchies are changing every month. In fact, many of them are downright furious when they get a multimillion dollar invoice, that has 3 or 4 line items, and they have to figure it all out themselves. It doesn't do much for customer relationships.

Goddardd
Doug Goddard 122 Points | Fri, 03/23/2012 - 17:00

This is a very important topic because the data certainly points to a movement away from single sourcing back to best of breed or multi-sourcing strategies. However, no one should underestimate the challenges.

A few of the problems to solve include the fact that cloud venders do not have very sophisticated pricing models at the moment and the SLA selection is a little limited as well. This will make cost comparisons with outsourcing or internal shared services very difficult.

Coming up with a single service catalogue is much easier said than done. It is even more difficult when outsourcing agreements are involved because they tend to have their own unique characteristics, their own service catalogues, even when the client and the vender are the same. It is remarkable how different the contracts can be when a single vender has multiple contracts with a single client. Once again, it makes cost comparisons difficult because one is not comparing the same things.

Another big problem is the fact that not all venders are as good at IT asset management as HP. Some big names are still struggling to integrate discovery tools with the CMDB, for example, and the integration challenge varies from Tower to Tower. There are also a lot of volume sevices being sold where the volumes cannot currently be measured. The tools don't exist.

Finally, I think performance scorecards are proving to be less than perfect when it comes to measuring ROI. They are not fine grained enough so many organizations are turning to things like activity based costing, etc. In combination with demand management requirements for charge-back, one again finds a major weakness on the vendor side. They are not good at mapping services or costs to client hierarchies, hierarchies that  are in constant flux. Clients often don't have the internal governance moxy they ought to and tend to rely on the vendors to provide it. Some vendors will only do so if the client was smart enough to put it in the contract. The later has always puzzled me because in essence they are saying to their client we cannot provide you the data you need to measure our service. Maybe that is one reason multi-sourcing is back in style?

 

joshuabrusse
Joshua Brusse 33 Points | Mon, 03/26/2012 - 02:23

Hi Doug...good points...but you're right: data certainly points to a movement away from single sourcing back to best of breed or multi-sourcing strategies. In my life I have always focused on the things I can change and leave the things I can't change for what it is. Well the way I see the future of IT is very simple: the business buys services where they want it (Consumerization of IT also brings Democratization of IT). You see it happen already everywhere, at the moment still in the smaller businesses but Enterprise will follow soon. Thus we better get ready in IT for our new role. We should indeed not underestimate the challenges; more reasons to start dealing with them now. For instance: what is the future role of the retained IT organization? I have experienced that IT people are (in general) a bunch of control freaks and they want to control more than they should. Take a restaurant…do you think the chef cares where the Boucher gets his meat as long as he complies with what is agreed (on time quality delivery)? So should the retained IT organization care how vendors manage their assets? I’m sure the suppliers of a restaurant have many different ways of promoting their services; nevertheless the restaurant has one menu. OK, I now oversimplify things I know…but my point is that IT must - very fast - figure out what their future responsibilities are and then decide how they deal with it…because chances are that they worry about the wrong things right now.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Goddardd
Doug Goddard 122 Points | Mon, 03/26/2012 - 03:27

"For instance: what is the future role of the retained IT organization? I have experienced that IT people are (in general) a bunch of control freaks and they want to control more than they should. Take a restaurant…do you think the chef cares where the Boucher gets his meat as long as he complies with what is agreed (on time quality delivery)? So should the retained IT organization care how vendors manage their assets? I’m sure the suppliers of a restaurant have many different ways of promoting their services; nevertheless the restaurant has one menu."

 

I think the consumer of the services is very much interested in the details of IT assets. In an outsourcing relationship, for example, they may in fact still own some of those assets, or they will be leasing the assets, or the vendor will be selling them the assets as part of the service, or the vendor may be leasing the assets on their behalf. One of the reasons legacy ERP fails in the extended enterprise is because they tend to assume all assets are owned by one side and are capitalized. More importantly, some consumers want to understand the costs of the assets because that affects the price they pay for the service and they want to know how to lower the cost of the service, by moving to the Cloud, for example. Other consumers want to map those assets to their internal hierarchies, because they want to control demand, or they want to measure ROI and the service level is not fine grained enough. Cost is a relative thing, especially when it is contributing to large amounts of revenue. One isn't always just interested in the lowest cost.

 

As to the future of internal IT and the democratization of IT as you put it, a sort of utility model of computing, I think governance plays a big role in that vision because the vision is about value creation, transparency and a greater alignment of IT and corporate strategy. The utility model points to a world of variable costs. If so, then the future is a function of each organization's corporate strategy. That strategy will determine the IT strategy and a big part of the governance of that strategy will be in the allocation of decision making rights. Presumably, it will be done in such a way as to promote the strategy. That normally means settling on a particular political system for each of the main stacks decisions need to be made about, whether it is principles and goals, architecture, infrastructure, applications or IT investments. If an organization sees growth as a function of business unit innovation and agility, an internal IT organization that believes only in monarchies, no matter which decision stack, probably doesn't have much of a future. However, monarchy may still make sense when it comes to data or reusable business components, even if anarchy reigns in applications and classes of application device. Much of it will likely depend on value measurement, once organizations put better systems for gaining operational insight into economic value, in place. Internal IT probably should start thinking strategically and make sure their measurements add up, even if that cycle is still in the early stages. Currently, they don’t do a great job explaining their value in a language the C level understands.

 

marcwilkinson
marc wilkinson 6 Points | Sat, 03/24/2012 - 01:22

Hi Doug

Glad that this topic resonated with you, we do feel it is important for a number of reasons;

  • Enterprises are already on the path – but without the strategy, controls or measures in place
  • Agility is one of the benefits, and if the wrong service partners are adopted with due consideration, that benefit will quickly be eroded, consumed by poor processes and technology hand-offs

Specific comments on your points:

"A few of the problems to solve include the fact that cloud venders do not have very sophisticated pricing models at the moment and the SLA selection is a little limited as well. This will make cost comparisons with outsourcing or internal shared services very difficult."

Cloud brings extra complexity to the transformation in particular because cloud is still relatively undefined and ungoverned.  Suppliers can launch a new cloud infrastructure service and call it whatever they like.  There is no easy comparison, with details of the service absent as well as different units of measure and overly complex pricing models. 

And while cloud is in its infancy, this is unlikely to change.  Easy workload portability will be the catalyst for standardised public cloud services, perhaps even leading to an equivalent to SAS70 for cloud services, where one providers GOLD IaaS can be compared like for like to another.

 

Until this happens, Provider & Service selection should not be underestimated.  Wise CIOs will look  –closely at the process maturity, service integration, support capabilities, security & reporting and overall governance structure – which in the long run will be much more important.

The cloud providers can learn a lot from the managed & outsourced contracts, while frequently considered overly heavy weight bring the rigor needed for an enterprise to “bet the farm”.

As cloud services mature, I believe we will see a convergence or shifting towards the more formal contracts, balancing the risk management and flexibility to appease the more cautious enterprise.

 

"Coming up with a single service catalogue is much easier said than done. It is even more difficult when outsourcing agreements are involved because they tend to have their own unique characteristics, their own service catalogues, even when the client and the vender are the same. It is remarkable how different the contracts can be when a single vender has multiple contracts with a single client. Once again, it makes cost comparisons difficult because one is not comparing the same things."

 

Ahhh, the single service catalogue.  Yes this is an interesting challenge – two fold – the service catalogue and the technology to support a federated catalogue.

With a multi-supplier service delivery model, you have a federated service catalogue – as enterprise IT, I will present a service catalogue to my consumers, but my services are composite – built from other internal & external services, many of which I won’t have authority over. 

The technology, similarly, needs to be extensible by the IT organization, either refer to and pull content from the applicable provider – something few catalogues are considering today.

However, it is probably not as big an issue as it sounds.  A catalogue is a fairly static entity, particularly after ruthless standardization & consolidation of services – and as such the IT organization could copy the supplier’s catalogue or provide visibility to the suppliers catalogue through their own service request portal - alleviating the immediate need for a federated catalogue.

 

As to asset management, I think getting better at asset management is part of the evolution of IT, from resource centric through virtualized & automated to service centric - eventually becoming Business Centric – all without using the c***d word .

I would propose that enterprises with a static or stale CMDB need to get their house in order before jumping on the cart.  I’m not saying that ITIL v3 fully implemented is necessary, but understanding what resources you have, and the services they support and deliver is pretty important as one looks at the integration of 3rd party cloud or managed services into the service delivery chain.

 

Your line about volume services piqued my interest – because of the “promise” that cloud is always cheaper – yet – as you say, there are services out there where the usage can’t be estimated in advance, and sometimes not measured after the fact.

This to me, is the flaw in many of the pricing model of many of the current cloud services – they make it too complex.  As a Financial Controller all the way up to the CFO, I want predictability… not randomness.

This again will change as cloud “grows up” and in the meantime, I would only recommend that it becomes part of the service selection – e.g. can I measure my usage?  Can I accurately estimate my usage?

 

You’re right, performance scorecards might well be less than perfect, but they are a million miles better than no visibility.  Having written ROIs for replacing drafting boards with Silicon Graphics workstations, with a 9 month payback, I think we all understand that the ROI is often “best guess”.  What I believe is important – and critical to a multi-supplier strategy is the visibility into the service delivery chain, across multiple suppliers, multiple processes and technologies – so that the line of business, the service owners, the financial controllers can all understand the service that is delivered and the price at which it is delivered.

 

This comes back to my view that as enterprises adopt more cloud services they will force a maturity in the service “contract” – while it may never be as formal as an outsourced or managed service, it needs to have certainly attributes that allow for confidence and predictability in end to end service delivery and cost.

Goddardd
Doug Goddard 122 Points | Sat, 03/24/2012 - 11:57

Hi Mark and thanks for you great comments. You did a better job of describing many of the things I breifly mentioned previously. However, let me just respond to a few items.

There is no question that governance, generally speaking, is not at a mature state in most organizations. In fact, most people are still trying to figure out how to define it, let alone put the mechanisms in place that can automate much of it. It is a world of two solitudes. On one side you have the management consultants, shall we say, who understand the linkage between financial management and strategic planning, for example, and on the other, you have the people whose world is filled with software and  hardware. In between is a big, dark question mark that both sides don't know how to connect. For the smart vendors, it is a huge opportunity. Unfortunately, most of them are trying to retrofit legacy ERP into the empty space and it just doesn't work. Personally, I think a completely rearchitected ERP, one designed from the ground up for the extended enterpise, will ultimately be required. Even then, it may be more of a component rather than a package play. Good to see HP recognizing the opportunity. 

The fact that consumers rely on their vendors for the governance of outsourcing contracts is a sign of the governance immaturity itself. To me governance is the responsibility of the top of the house on the consumer side. My personal sense is this situation is changing, in which case the vendors will need to do a better job, just to win the contracts. MIT published a study showing that those organizations who practise good IT governance are 20% more profitable and many investors will not put their money in companies that don't practise it.

On the service catalogue issue what I see at the moment is not much more than an eCommerce like storefront, when it comes to service attributes, one where the storefront is only active in one part of the world. As I said in another comment the action is really at a resource unit level anyway so perhaps it doesn't matter. I spend my life setting up things like volumetric billing systems and when you have to bill in 80 different countries, in all regions of the world, the service catalogue may also contain different prices for different countries, taxation rules, currency conversion features, etc.

On the scorecard issue I agree that something is better than guessing and I would think that guessing is how most strategic planning is currently being done. However, thanks to things like the CMDB and discovery tools and techniques for mapping floating heirarchies together activity based costing is no longer as labor intensive as it used to be. When implemented, a lot of the strategic plan simply writes itself. For example, organizations, including outsourcing vendors, will get out of lines of business that are costing them more to be in than they are making and on the consumer side, firms find out that what they thought was the number one cost component in IT is really number 5 or 6. To me this gets to the essence of the service portfolio management concept and treating IT as a strategic asset. Get rid of the dogs, invest more in the current winners and make new investments based on the facts, rather than guessing. 

Judy Redman
Judy Redman 55 Points | Sat, 03/24/2012 - 00:37

Hi Doug

I enjoy your blogs and your comments.  I always get new perspectives from you.  Glad that this topic resonated with you. 

JR

Goddardd
Doug Goddard 122 Points | Sat, 03/24/2012 - 11:59

Thanks Judy and thanks for starting such a great topic. Figuring out how to align IT and corporate strategy is something I find very interesting.

jdodge
John Dodge 1384 Points | Fri, 03/23/2012 - 15:04

Judy, welcome back. We've missed you.

Who would have thought that finding out what you have and who's supplying it would be so difficult? The white paper you link to is very interesting and detailed. What percentage of large enterprises to you believe have already embraced SIAM (Service Integration and Management)? Or how many are well down that path? 

Judy Redman
Judy Redman 55 Points | Fri, 03/23/2012 - 23:12

Hi, John:  Great question.  I consulted with our Services experts and they tell me that quantifying the number of enterprises who have embraced SIAM is on the hard side.   Almost all enterprises are already engaging in some form of multi-sourcing, whether this is wide area networking or outsourcing parts of the IT organization, real estate facilities management or printing of payroll.

Organizations are selectively sourcing services that meet their requirements already.  As IT becomes more service-centric we will see this increase significantly as it becomes easier to separate one service from another.

This is of course the start of the path, and without a strategy, the right governance model or process & technology integration, it is a path towards the blame game where service levels will be missed, expectations won’t be met or managed and customer satisfaction will decrease quickly.

 

Wh1t3Rabbit
Rafal Los 108 Points | Fri, 03/23/2012 - 03:07

Judy - I think the 2 more significant parts of your 6 questions are the on-boarding and contracts components.  Contracts can make or break a service from a legal and usability perspective which then runs into costs and liabilities.  On-boarding can be a fantastic time to validate some of the things that you've negotiated and gotten through in the contracts phase - assuming you've done due-diligence your onboarding results should match contracts... one would hope!

PaulM
Paul Muller 119 Points | Thu, 03/29/2012 - 00:37

Spot on! "look before you click!"

joshuabrusse
Joshua Brusse 33 Points | Mon, 03/26/2012 - 02:34

Hi Rafal...indeed a good point. The more reason, I think, to investigate the new role of the "retained IT Organization". In my humble opinion this role is a lot different from a “DIY” IT organization. Moving to this new model requires some transformation! Competencies the IT organization had before are no longer relevant and other competencies are increasingly more relevant. For instance Business Engagement Management (which is much more than just Business Relationship Management), Risk Management and – to your point – Governance and Supplier Management are going to be extremely important. Fast on-boarding and decoupling of IT suppliers will be one of those things the retained IT organization must be really good at.