change

Cloud First Strategy: Support and supplier management

 

 

The Cloud First Strategy

Part 3 – Moving from legacy support to supplier management

Hardware and software become largely irrelevant as the key question becomes, “does this service meet the business need?”  The burden of complex supporting systems is moved to 3rd parties as part of the service they provide.  Help desk/technical support for the product also moves to the 3rd party.

supplier-management

With XaaS IT, ‘service management’ becomes a much less complex place to be. IT must move to act as the intermediary between the customer and the suppliers.

  • Manage multiple small suppliers and contracts
  • Maintain compliance and regulatory integrity of the IT service
  • Be trusted by the business, the IT team and the supplier community

Traditional IT teams must change.  They must transition from ‘service management’ to become ‘supplier management’, they must move away from their focus on technology to contract compliance and supplier relationships.

Example of the differences

Traditionalist IT people struggle to understand this concept, so let’s kick off with an example from a traditional service management function:

  • Help desk, call handling and 1st line support
    • Purchased for millions and supported by legions of staff.  Vast hidden quantities of money and effort are poured into bespoke and unique help desk systems.   All this for those ‘important’ help desk stats.
    • IT seems unable to work without its help desk and the unfathomable way people are expected to interact with it.
  • System monitoring
    • Another area tainted by the bespoke.
    • Multiple monitoring systems, plugged into master monitoring systems reporting to other monitoring systems.
    • Usually visually impressive, the stats and thresholds used are tweaked by IT who spend endless hours perfecting the meaning of red, green and amber.
  • Configuration management
    • Caught in a legacy trap, where IT consider people as a liability and risk.
    • People often go out of their way to remove monitoring, auditing software from their devices due to privacy concerns or because the tools stop people working effectively.

Now, compare that to the XaaS world:

  • Contracts include support and maintenance
    • Point services and solutions will include the whole life cost including the cost of support and maintenance
  • Pay by results
    • 3rd parties paid on results.  The business should not select based on the background technology.  The supplier should be chosen on merit and ability to meet the business need – technology is their problem.
    • Results = what your business values
    • Little point defining metrics that are irrelevant, unachievable or introduce undesirable behaviours.
  • Contracts designed to be flexible
    • Scale up and down; match peek times of demand, reduce at lower times of demand.
    • Agile.  Stick to 2 + 2 years.
  • Clear costs, known risk

XaaS Org Chart

The often traditionally bloated supplier management function does not even appear in the everything-as-a-service XaaS IT org chart.

org chat for service led it

Clearly this is a idealistic interpretation, as the need for help desk type services still exists, but they are provisioned by 3rd party experts and work for the supplier management function.

Is Xaas Outsourcing?

Outsourcing has sat in this territory for quite some time.  But the aims and goals of outsourcing are different to those of XaaS.  You can see my thoughts on the difference here.  Suffice to say, XaaS is surgical in nature, outsourcing is, by comparison, a shotgun approach.

It is likely that outsourcing is chosen by default as it resolves, in one hit, many of the problems experienced by poorly performing IT teams.  This though is created by an accidental slight of hand from IT:

IT support tend to work under the illusion that their IT service is unique and requires unique systems for support.  They talk about, document and create bespoke systems to maintain the mystery (their job and role).  This naivety helps to perpetuate the deception that IT is complex, impenetrable and poor value.

The more difficult the problem the more likely outsourcing is used to solve it; the more likely outsourcing is the more complex and bespoke IT make their systems; it’s a vicious circle that only culture can change.

There are plenty of reasons to keep internal teams, not least for the latent organisational knowledge; but often poor or out-of-date IT management skills push outsourcing as a quick fix.

Cultural change

One core aim of this approach is to fix the overly bureaucratic systems installed by management to create statistics, measurements, and controls.  The culture created by these systems often pushes the business to question why ‘help’ is included in ‘help desk’ and pushes IT staff to close calls as quickly as possible.

There is no need to create an IT team that everyone hates.  It is possible to design a service that meets the needs of the business in an affordable and sustainable way.

The goals of supplier management in XaaS

So you’ve decided the everything-as-a-service XaaS is the way to go, how do you convince your existing service management staff that supplier management is the way to go?

That’s not an easy one.  Those that embrace change are likely to be evangelised by the opportunities presented; others will struggle and may need to stay in their comfort zone through TUPE to 3rd parties.  TUPE may sound cold, but in the surgical world of XaaS IT, people can be moved into organisations that best fit their skills or ambitions.  This is no outsource shotgun.

Something you should do for every part of your organisation is to set key goals.  These should compliment and reinforce your vision for your IT organisation and should help people understand your intent and strategy.

Top 5 goals for XaaS supplier management:

  • Enable the digital workplace
  • Engage with customers, listen and take ownership
  • Form a sustainable relationship with the suppliers
  • Provide feedback to suppliers and customers
  • Create a sustainable and open financial model for IT services

Take note of the keywords here:

  • Ownership: alone taking ownership will increase the positive perception of IT.  It will create a shared sense of purpose, a shared need and a shared driver to help the business.
  • Sustainable: emphasises the need for practical and maintainable relationships, finances and business services.  This reduces the knee jerk IT management style prevalent in some areas.

 

Key take away points

Whilst brief, the paper aims to discuss the theory of everything-as-a-service IT and it’s impact on a traditional service management function.  The proposed move away from service management will scare most IT traditionalists and excite the visionaries, so please take these few points with you:

  • Service management in its current format is not sustainable and requires significant revision
  • Move to engage, listen and take ownership
  • Form a sustainable working relationship between business, customers and 3rd parties
  • Create a culture of change, innovation and partnership

 

Cloud First Strategy: Head to the INDEX, try the next Part 4 – being an Intelligent Customer or go back to Part 2 – How to manage change

 

Everything-as-a-service XaaS vs Outsourcing

XaaS vs Outsourcing: It’s a theme brought up at alt-c this week and something that most people are confused about: Outsourcing and everything-as-a-service XaaS are not the same things.

They may be used to achieve the same results but when you compare the intent of each they clearly show their differences.

Whats the difference between XaaS and Outsourcing?

XaaS is granular, focused and can be applied surgically to key areas that need attention.  Outsourcing is expensive to negotiate and apply.  It takes time, introduces additional cost of purchase and sale and implies a reduction in flexibility – details are lost or hidden in contractural obligations, service level agreements, the transfer of assets, liabilities and risk.

  • Outsourcing tends to apply to larger elements of business.  Whole teams or departments moved.  The impact to IT itself is structurally significant.
  • XaaS tends to apply to surgical strikes.  Moving clearly defined elements to a 3rd party.  The impact to IT is small and can be managed over time.
Which is best? XaaS vs Outsourcing

That’s going to depend on your organisation, neither may be suitable.  To help you decide in the XaaS vs Outsourcing debate, think about the following Top 6 reasons…

Top 6 reasons to go XaaS
  • Focus on business need
  • Speed and Flexibility
  • Standardised, transparent pricing
  • Access to global high skill resource pools
  • Improvement in image
  • Increase in competitiveness
Top 6 reasons to Outsource
  • Pass risk/staff to 3rd party
  • Create a structured framework of IT services
  • Focus on core business
  • Long term stability
  • Access global high skill resource pools
  • Known cost framework

 

Find out more about Everything-as-a-service XaaS or look me up on LinkedIn.

Cloud First Strategy: How do you manage change in XaaS?

The Cloud First Strategy

Part 2 – How to manage change

General change and projects need to be self funded.  I’m going to say that again – they need to be self funded.  The cost of IT should be the cost of the provision of the known service.  The unknown cost of change is given to the business to empower them to choose the priorities and provide the flexibility to select services not provided by IT.

IT should not be scaled to provide endless change and project support, but should be scaled to be the technical conscience of the business: facilitating change, translating business need to technical deliverables, engaging 3rd parties and providing an oversight into the IT elements of change.

Think SME not 3rd Party

Engaging with a 3rd party for delivery does not force you down the consultancy route.  Think of the SME approach – dynamic, agile, best of breed skills to best of breed solutions. 

Suppliers will thrive in this environment if they are allowed to part of the team and part of the journey.  The relationship with suppliers must be sustainable and based on trust between both parties.  Suppliers must be able to make a viable and sustainable profit and should run open book integrated into the IT accounts.

Remember: there is little point engaging with a supplier based on the lowest possible cost.   Underbidding suppliers run the risk of attempting to make up the money with change control, delivering a valueless service, or withdrawing from the contract.

It may even be viable to export any existing delivery team via special purpose vehicle (SPV) to allow them to work more dynamically, realistically with efficiency and energy.

Moving to an SPV could also be a quick enterprise that moves money around the balance sheet and reduces the headcount numbers.   An outsource may also achieve the same result, but costs will need to be carefully controlled and understood – change is often used as a source of profit in such enterprises.

Move away from bespoke code

Poorly executed Agile and similar methodologies often create swathes of poorly documented bespoke code.  With projects being self funding the sustainability of the solution must include on-going run costs.  Bespoke may be cheap to write, but it’s not cheap to maintain or support.

In the SPV model, the SPV is incentivised to pursue efficient, sustainable delivery models by owning the maintenance of the code and solutions.  Inefficient, undocumented, or poorly designed solutions will be financially and materially expensive to support and maintain.  The SPV will quickly have to become more efficient or loose contracts to 3rd parties.

The back catalogue of legacy and bespoke code created using agile or similar methodologies is likely to follow this SPV.  A contract for maintenance and support must be provided and at a fixed, but sustainable cost.  The risk owned by the SPV with clear incentive to reduce and remove the costly bespoke code elements.

Compensations drives behaviour

The move to SPV or outsource must have effective incentives for the staff and SPV.  The business may need consistency for a number of years after the structural change or the business may require immediate cost savings, either way, the team moved into the SPV must be motivated to achieve these goals.  The SPV route is a great way to move constrained exec’s out of the core and give them the flexibility to excel as a commercially driven arms length body. 

What about general day-to-day change?

It would be fair to assume that in the everything-as-a-service model there is strong reliance upon the need for the contracts with 3rd parties to include the cost of maintenance and support change.  These elements are needed to ensure that services are compliant with regulatory and security standards and to ensure that services can continue to interoperate.

The contractual obligations of 3rd parties should also be extended to allow the IT team to plan and organise change between the various solutions and 3rd parties.  This is standard IT practice, but here the intelligent customer becomes more relevant.  It requires a strong understanding of enterprise architecture, governance, the contractual commitments and a timetable of key business events and priorities.

Remember that purchasing on cost alone will fail in this model.  Whilst this is not unique to this model, purchases do need to be made on value to the business and support the everything-as-a-service model.  Excellence is required in supplier and contract life cycle.

Allow the business to change direction

Once in a while the business will need to change direction.  To scale up or down.  To create a new branch or brand; or to remove a few.  IT should not constrain the business from doing what it needs to do.  The contracts put in place with 3rd parties should be designed to allow the business high flexibility.  

Services procured could be based on metrics key to the business:  the number of products, staff or turnover.  This variation of the standard usage model often applied by suppliers may require significant negotiation and contractual skills.  Not all 3rd parties will be keen to work differently, so careful and pragmatic selection is required. 

Key take away points

Change is embraced as part of the everything-as-a-service IT model through the use of 3rd parties that are incentivised to be more performant, flexible and cost efficient. 

How to manage change in XaaS IT:

  • Cost of change is given to the business to empower them to set priorities
  • IT must not constrain the business from doing what it needs to do
  • Use dynamic and agile 3rd parties for delivery
  • Remove bespoke code by accounting for whole life cost of services

 

There is an opportunity to move existing delivery teams into a special purpose vehicle (SPV):

  • Allow radical reduction in delivery headcount
  • Allow constrained exec’s to flex their wings
  • Facilitate cost reduction through the removal of bespoke code
  • Facilitate competition with 3rd parties

 

Cloud First Strategy: Read the next article Part 3 – Moving from legacy support to supplier management go to the  INDEX or go back to Part 1 – Impact on the IT organisation