iaas

Cultural fear of IaaS

There is general fear around the use of cloud based infrastructure-as-a-service.  A cultural fear of the change it implies: the movement of IT from power to service provider, the perception that management will lose control, and the organisational structure changes and more.

Let us just recap first on the difference between traditional infrastructure and IaaS:

Traditional infrastructure, bought and installed on site, is expensive and takes upfront capital expenditure, requires the purchase of all associated supporting software and hardware (such as monitoring and management) and requires a team of people to run and manage it.

By moving to the cloud, there is less upfront cost, lower optional expense and has fast delivery times.  This is a cultural challenge though:

big old IT projects -> dynamic procurements that are reliant upon 3rd parties

But where is the IT team with this approach?

Not known for their ability to evolve over time, IT teams traditionally are quite static, risk adverse and cost centric.  Their challenges revolve around two key fundamental changes:

  1. IT needs to be able to let go and let their services run elsewhere
  2. Business owners need to feel comfortable that IT can keep their data safe on 3rd party services

Both are a question of ownership.  IT needs to feel that it owns the services provided by 3rd parties and the business needs to feel comfortable that IT are keeping their information safe and secure.  Both are reliant upon the other, but IT should be leading the way and facilitating change.

 

The fix to IT-as-a-Project?

The focus of IT though is wrong.  In fearing the cloud providers, IT are alienating themselves from the business need for cost control, rapid change and flexibility.  IT are becoming the problem and not the solution.

Cloud providers run IaaS systems in vast numbers.  Security is their number 1 priority.  Without a secure environment in which to run the services, their market and customer base would soon dry up.  That’s not to say that the services hosted on IaaS are secure, but the base layer of the service must be secure.

So whilst IaaS focus their efforts on security, reliability and availability, internal IT teams focus on the next project.  These projects are often at the expense of the maintenance of infrastructure and base level services.

Moving into the cloud, removes the risks of IT-as-a-project, giving IT a stable platform on which to work.  As such it should be celebrated as a position that will enable IT to maintain a modern technology platform.

 

The IaaS budget problem

People are used to capital based procurements.  It’s the traditional way of buying IT things.  Big boxes turn up, they get plugged in and someone plays with them for six months to get them working.  Finance get to depreciate an asset and on the books you see just a proportion of the actual cost.

Procurement of infrastructure-as-a-service is by its very nature different.  There is no ownership of hardware, of flashing lights, of big data centres; you are procuring a service.  With no depreciable value, the service is a line in the Opex column in finance and often operation costs are considered bad and something to be cut.

So, it is not just IT that need to change, procurement and finance need to realise that the way of doing business in the IT world is changing.

  • IaaS prices are dynamic, going up and down in value
  • IaaS has frequent repurchasing of shorter term contracts (2-3 years not 4-5 years)
  • IaaS relies upon 3rd parties
  • IaaS 3rd parties are likely to be leading edge

 

Summary of cultural problem of IaaS

This is a more complex subject than summarised, here, but as a starting point, think about these key areas of cultural change required to support IaaS:

  1. IT needs to embrace as-a-service and use it as an enabler for rapid change
  2. IT needs to adapt away from IT-as-a-project and embrace buying commodity IT as-a-service
  3. IT and finance need to move from Capex to Opex purchasing models
  4. IT and finance need to accept and manage the risk of as-a-service

 

Read more about thoughts on Cloud and everything-as-a-service.

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

Cloud First Strategy: theories about the everything-as-a-service model

The Cloud First Strategy:

Practical theories for using everything-as-a-service XaaS

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?

 

Part 1 – Impact on the IT organisation

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

Org chart for cloud first strategy

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

 

Cloud First Strategy:  Read more:  Part 2 – How do you manage change in an XaaS IT model?