Adrian Hollister, Digital Transformation, August 2015
By now it should be clear that buying IT the old way has long gone:
tin + software + installation + maintenance + staff + training + management + support tools = expensive + slow + poor value
Cloud has been coming for some time, but it’s the everything as-a-service (XaaS) element of Cloud computing that is so compelling. Removing the need for expensive and all consuming IT departments, thinning them down to an intelligent customer layer.
So what does that mean in practice?
As cloud based services are being adopted the approach and model of the IT department needs to change. Services move from local data centres to the cloud, storage moves to the cloud, telephone to the cloud, even network controllers and authentication are moving to the cloud. Office365, Skype, BYOD (bring your own device), Dropbox, etc. That natural convergence of IT services doesn’t leave a lot for IT does it?
There is plenty of value IT can still deliver, just in a different way. No longer about flashing lights, complex help desk systems, and the mysteries of poorly documented services; the IT team can now focus on delivering real business value.
But IT has seen a number of organisational models already in widespread use today, so let’s do a brief comparison:
- Centralised IT. The most commonly used model. Line of business are beholden to a CIO who controls the pace and priority of change. Attempting to be a compromise and usually perceived to be driven by cost and technology not business value.
- Decentralised IT. Usually with this type of model, each line of business has their own IT Director. Priorities are set at board meetings controlled by the line of business (LOB) and facilitated by the CEO. Multiple IT teams, development teams, help desks and support models.
- Federated IT. IT services are owned by a number of parties and the LOB may choose not to use the central IT service. It is quite common to see this after a merger or change and is usually short lived. Complex arrangements of interlinked services, support and development teams.
- Service led IT. A core set of IT services are provided from the centre but are provisioned by 3rd party. CIO focus is shifted to adding value to the business, away from commodity IT provision. Move from developing code to buying services. This is the core to everything-as-a-service (XaaS) led IT departments.
The service led model is a variation of the ‘intelligent customer’ approach taken when business move towards a heavily outsourced model. They key variation is that contracts in the service led IT model are numerous, short and with pinpoint focus. Creating the opportunity for numbers of smaller, specialised and high value businesses to apply.
This creates a level of competition and introduces flexibility to end failing contacts early and pursue new ideas when the business needs change. This also shifts the work that the IT department needs to do, from a hardware and bespoke solution focus, to one of managing their customer and their suppliers. In this approach, the organisational model looses ‘IT support’ but gains ‘supplier management’.
Being commodity, the help desk also goes, replaced from a specialist supplier; and perhaps this commodity element is the big differentiator. Anything that is not a core function of the business and is readily available to procure from a 3rd party should be considered commodity IT and provisioned by expert 3rd parties.
The delivery function also losses out. Without the need for vast quantities of bespoke code the delivery teams can be paired down to a core set of PM, Architects and developers for legacy code and integration maintenance. It’s important to note that all change in this model has to be self funding.
Example everything-as-a-service XaaS org chart
Change is not quite so difficult with as-a-service
Any new model or approach is going to be difficult: there must be a clear strategy for IT. Not only a sense of what is needed today, but also tomorrow; and that strategy must be understood and agreed with the business. The change however, can be quicker than a re-organisation with staff being redeployed in new roles or moved (TUPE) over to suppliers. As such the impact on the organisation and staff will be low compared to traditional reorganisation methods.
The financial considerations will also be different to a traditional reorganisation. Moving head count into supplier contracts will reflect good on in-year savings and savings may be had by purchasing more efficient services, returning floor space and reducing risk. Costs are also likely to be moved towards a standardised monthly fee, giving the business good visibility of often hidden IT costs. Finance will thank you for being able to plan clearly and provide consistent and open costings.
The approach to contracts needs to change. By using short 2 year or 2+2 contracts the business can choose to change provider. This will help the agility of IT provision to meet the changing needs of the business. Some may be tempted by cheaper longer term contracts and for some core services this may be appropriate, but it will limited your ability to grow and shrink to business demands.
There is a significant change in culture, from employment of vast teams of developers, support, help desk and technical specialists; the IT function needs to move to professional supplier and contracts managers and experts within EA, Security, BA and relationship management; and more importantly, projects and business change must be self funding.
By moving to a self funding business change programme, IT wont change things for IT’s sake.
IT for IT’s sake
It’s the bane of any business – IT doing the best thing for IT. Techies wrapped up in their technology, their brand or the latest toys. There is a place for this, but not in the provision of core IT services.
A pragmatic as-a-service model will force IT to move away from looking at technologies and brands and force them to think about what services can be used to meet the business need. It will force a move away from bespoke development to commercial off-the-shelf software and services (COTS).
- COTS – remove the need for developers to create endless unsupportable bespoke code. There are specialist applications and services that are likely to meet the majority of the business need. Start here and be flexible with expectations.
- Software as-a-service (SaaS) – remove the need to worry about the platform and the supported software layer. Just get up and running with the service provided. Flex to need.
- Platform/Infrastructure as-a-service (PaaS/IaaS) – remove the need for people to touch or play with hardware, brands, upgrades. Why do this in house, when you could be using industry experts who do this day in and day out.
It will be a substantial shock to the IT traditionalists. By taking a step away from the coal face of technology provision IT can work closer to the business; for the business; delivering real business value.
The move towards Cloud and as-a-service is inevitable. Will IT be able to keep up with the pace of change?
Key take away points
This is a big subject area that I’ve condensed into a couple of pages, but even if you do not have time to go through the text, here are my key take away points:
The value of everything-as-a-service (XaaS) led IT
- Vastly reduced in-house IT team – keep just the experts
- Vastly reduced in-house IT footprint – services in the cloud only small on-site d/c
- Focus on relationships with the business – IT only exists to support the business
- Clearly accountable IT costs – no hiding project, development and support costs
5 core rules of everything-as-a-service (XaaS) led IT
- Focus on being the intelligent customer
- Drive innovation and business value
- Commodity services should be provisioned by a 3rd party in the Cloud
- Restructure the organisation to focus on business value
- Document, plan ahead and agree your strategy
Read more: Part 2 – How do you manage change in an XaaS IT model?