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Commodity IT – It’s a good thing for everyone!

les2By Les Viszlai

Traditionally, IT commodity services and products have the highest percentage of being outsourced in our industry. There is a belief among a majority of people in our industry that IT commoditization is a very bad thing.

In its simplest form, a company’s success is measured by its capability to produce a product or service efficiently and to meet the market demand for that product or service.  Running IT as a business implies that we need to also do the same for our internal customers by providing products and services cost effectively with repeat-ability and predictability at an agreed cost.  IT organizations are viewed as a business enabler and trusted advisor by getting out of the business of building and running commodity IT products and services and focusing on providing the business with resources that provide new product capabilities and business differentiators in their market.

We need to understand what a commodity is in order to change how IT is run and provide that business focus.

commodity starts as any thing that has a perceived value by a consumer. A more common understanding of a commodity is a product that is generic in nature and has the same basic value as all similar items. (a simplified example is a Server)

For example, virtualized hardware, in the IT data center context, is a device or device component that is relatively inexpensive, widely available and more or less interchangeable with other hardware of its type.

By definition, a commodity product lacks a unique selling point. In an IT context, the term usually differentiates typical IT products from specialized or high-performance products. A commodity, when looked at this way, is a low-end but functional product without distinctive features.  Generally, as hardware moves along the technology cycle, that hardware becomes a commodity as the technologically matures in that marketplace. That implies that most hardware products, like network switches, that have been around for a long time are now available in commodity versions, although they aren’t generally marketed as such.  In the past, physical networking infrastructure was viewed as specialized until the maturity of virtualization of this layer of technology became available and more widely spread.

Example IT Transformation Journey - Commodity Services

Example IT Transformation Journey

Lets look at a more traditional commodity example, the local gas station.  The gas at your pump is the same as the gas at any of the other pumps. It’s also the same as the gas at the station across the street or across town.  There may be a very slight change in price, but the products essentially sell for the same basic price and are the same regardless where they are purchased.  Can your consumers of IT products and services get this same consistency? Are we trying to refine our own gas before providing it to our consumers?

When we compare this scenario to a traditional IT organization we need to ask ourselves, what commodity areas are we focusing on reinventing and providing. From the IT standpoint, can we virtualize our hardware environment and reap some of the benefits like “FASTER TIME TO MARKET”, “COST EFFECTIVENESS” and “IMPROVED QUALITY”.  Are we already doing this and can we drive further up the technology curve build and/or broker services and products such as IaaS, PaaS or SaaS to drive faster business value?

Our common fear is that “Commodity IT” implies low quality and cost or that our roles will be outsourced.  In comparison, a commodity product or service is not sold cheaper that it takes to produce or run it.  Like wise a commodity IT product or service should have affordability, repeat-ability and predictability in delivery and as brokers not builders,  IT organizations can provide this service to the business.

In summary, studies have shown that IT organizations focus a lot of effort and resources on building and running products and services at the back end of the transformation curve.  This is the area with the least amount of business value but consumes a majority of IT time & resources.  IT organizations need to shift focus to the front of the technology cycle and help the business create and engineer new products and services that drive revenue.

IT best practices exist to help IT organizations move to the front of the technology cycle by reorganizing people, process and technology to use the building blocks of various commodity products and services to provide affordable, repeatable and predictable services. This allows IT organizations to focus on the front of the curve.  Now that’s a lot more valuable and fun.

Commodity IT – It’s a great thing for everyone!

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Les Viszlai is a principal strategist with VMware Advisory Services based in Atlanta, GA.

From CIO to CEO: 5 Steps to Organize an IT as a Service Provider

Jason StevensonBy Jason Stevenson

In my last CIO to CEO blog, we discussed How to Run an IT as a Service (ITaaS) Provider by providing services to meet customer needs using a commodity as an example. In this blog, we will discuss how to organize governance and personnel within an ITaaS Provider.

IT as a Service ProviderTo provide business/mission-value and remain relevant, many IT organizations are positioning themselves as a Hybrid Cloud Broker; providing both public and private cloud services to their customers and users. To be successful, these organizations must adopt ITaaS; a model in which IT is a commodity, providing services on demand to meet business needs through a scalable and measurable pool of resources using integrated and automated processes. This is accomplished through a blend of:

  • Cloud computing standards
  • Service management best practices
  • Leading cloud and virtualization technologies

The following provides five steps to reorganizing IT to become and ITaaS Provider.

Step #1: Service Owners and Managers

Misconception #1:
Service owners and managers are lower-level resources that: a) do not have financial responsibility, b) are not fully accountable for their service, and c) report into functional/project directors.

Organize an IT as a Service ProviderAs part of service portfolio and catalog management, IT assigns owners for each service.

  • Service Owners (SO) are accountable for service strategy including fiscal responsibility and understanding customer demand for their services. Service Owners solid-line report to the CIO.
  • Service Managers (SM) may also need to be identified for each organizational sub-unit such as lines of business, cost centers, geographies, etc. If used, service managers are accountable for service operation and potentially service transition. Service Managers dotted-line report to service owners.
    • In larger organizations, service owners and managers may use a one or more Business Relationship Managers (BRM) as a conduit to customers paying for the service. BRMs solid-line report to the CIO but are embedded with their customers. The CIO may also have an IT Financial Manager (ITFM) to coordinate ITaaS provider budget allocations to service owners and consolidated service chargeback to customers.

Step #2: Service Life Cycle

Misconception #2:
Service strategy, service design, service transition, service operation, and continual service improvement are just names of service management books.

Organize an IT as a Service ProviderThough many organizations claim to be service oriented, their organizational structures remain functionally and/or project oriented. The following diagram illustrates an organizational pyramid providing service orientation through a service-life-cycle-based organization.

  • Directors are assigned for each service life cycle step including service design, service transition, service operation, and continual service improvement. The CIO also acts as the service strategy director and also performs demand management. Directors solid-line report to the CIO but dotted-line report to the service owners/managers. These directors’ budgets are an aggregate allocated by the service owner.

Step #3: Process Owners and Managers

Misconception #3
Process managers can be an afterthought and “peppered” throughout the organization.

Organize an IT as a Service ProviderTo be successful, an ITaaS Provider must have mature processes under the control of process managers and owners.

  • Process Managers maintain unit procedure documentation. Monitor process reporting. Reviews process records for compliance. Provide ongoing process and system training to unit. Contribute to continual process improvement. Ensure compliance with policies, processes, and procedures. Facilitate regular process meetings and communication channels. Coordinate interface with other service management processes. Take corrective action if needed.

For organizations with intensely “siloed” or “stovepiped” cultures, process owners many need to be introduced. This is not preferred but a common reality.

  • Process Owners champion policies, process, roles and responsibilities. Provides ongoing process and system orientation. Facilitates quarterly reviews. Facilitates annual audits. Enables continuous improvement.

The Service Portfolio Manager (SPM) also fulfills the role leading a service/project management office. The office may including control, technical writing, quality assurance, etc.

Step #4. Technical-Facing Service and Configuration Item Owners and Managers

Misconception #4:
Technical resources for service design and operation do not need to work together in abstracted technical-facing services.

Organize an IT as a Service ProviderThe business-facing services discussed above are supported by functions each with its own owner.

  • Infrastructure Function Owner (IFO)
  • Application Function Owner (AFO)
  • Data Function Owners (DFO)
  • Service Desk Function Owners often fulfilled by the Incident Manager (IM)
  • Operation Center Function Owners often fulfilled by the Event Manager (EM)

These functions may be further decomposed into technical-facing services. Common technical-facing services for ITaaS include network, compute, and storage and each must have an owner.

  • Network Service Owner (NSO)
  • Compute Service Owner (CSO)
  • Storage Service Owner (SSO)

To be a successful ITaaS Provider, technical services are not “siloed” or “stovepiped” and therefore do not require managers in addition to owners as they are shared services. However, the components supporting technical-facing services often have:

  • Configuration Item Owners fiscally responsible for the component
  • Configuration Item Managers operationally responsible for the component.

Life Cycle Gravitation

Configuration Item Managers are often referred to as DevOps in an ITaaS environment; especially for configuration items supporting the application function. Depending on an organization’s culture, DevOps may dotted-line or solid-line report to the Service Design Director or the Service Operation Director. As the organization matures, resources naturally gravitate from operations to earlier phases within the life cycle.

Step #5. Users and Assignment Groups

Misconception #5:
ITaaS is just jargon. IT departments are about IT personnel delivery IT.

Organize an IT as a Service ProviderIn a mature organization, classification of events, incidents, requests, etc. are aligned to the business-facing and technical-facing services within the catalog rather than legacy Category/Type/Item classifications. In this respect, the Technical-Facing Service Owners and Configuration Item Managers discussed above may also be referred to as Assignment Group Managers. The remaining technical employees within the ITaaS provider report to these Assignment Group Managers.

Every individual employee of an ITaaS Provider must move from technology to process, to service, to customer, to mission, and then ultimately to a value focus. Because these individual employees are the first, second, and third line of support for the users receiving the service it is critical for these IT employees’ tools and training to encourage user value focus.

Though impractical from a presentation standpoint, the entire ITaaS Provider must conceptualize their role as an inverted organization chart with the users at the top of the organization, then IT employees supporting the users, and then IT management supporting IT employees.

Organize an IT as a Service Provider

Move from CIO to CEO by leveraging a Strategist from VMware to address the people, process, and technology elements necessary to transform your organization to an ITaaS Provider.

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Jason Stevenson is a Transformation Consultant based in Michigan.

From CIO to CEO: How to run an IT as a Service Provider

Jason StevensonBy Jason Stevenson

A service involves two parties: 1) a customer and 2) a service provider.

A service fulfills a customer’s need. Though there may be many components to a service, those technology, process, and people components are combined to form a single service. The customer should not need to understand all the subcomponents of the service to benefit from the service. Nor should any service-specific knowledge be required for the customer to solicit the service. In other words, the service should be expressed in cohesive layman’s terms.

Water Service Example

  • Customer Needs:  Water services fulfill multiple needs: life/thirst, personal/environmental sanitation, etc. If you put in a well, you have your own water and there’s no need for water service. However, if you do not have a well, you will need to engage the county water service provider.
  • Service Provider:  To engage water services, you expect simple contract language and simple commodity pricing. The customer should not need to be a plumber or hydro-engineer to engage the service.
  • Customer Expectations:  Once engaged, the customer doesn’t care how the water gets to them, what must be maintained, or who maintains it. After procuring the water service, they never want to talk to the water service provider again unless their needs change. If water service is interrupted, it’s the service provider’s problem. Customers don’t care what service provider people, tools, or expenses are needed to fix the problem, they just expect it to be rapidly resolved by any means.

How does this example relate to IT services?

First, let’s lay out the key players:

  • CEO, CFO, and stakeholders = Mom and Dad paying for the water service
  • IT Users = the family drinking the water and bathing in it
  • IT department = water service provider
  • IT services = water
  • Data, applications, networks, servers, storage = water treatment plants, water towers, mainlines, pipes, trucks, wrenches
  • IT staff = plumbers and hydro-engineers

Every time a customer experiences interruptions and contacts a water service center, the support call is not considered a “service” but is ancillary to the water service they are already payed for. The customer would rather not engage the service center at all. This is the same with an IT service desk.

Though a water plant monitors water flow and quality, it is not a service. The customer assumes the water is available with adequate water pressure when they purchase the service. This is the same with an IT operations center.

Though hydro-engineers and plumbers may be needed, for example in a large mall complex, they’re assistance would not be a service, rather a project to support the delivery of water services to the tenants and patrons of the mall. This is the same with IT engineers, developers, and project teams.

We assume the water is safe, maintained, and appropriate precautions are taken to ensure ongoing water quality and availability. This is the same with IT security, IT service management, and disaster recovery.

How do CIOs apply this to running as an IT as a Service Provider?

Think of what a water provider service catalog website looks like. It’s pretty simple… Water. Everything needed to supply the water is moot. You may be thinking “Sure this is true of a water commodity but IT is not a commodity.” No it is not… not yet.

So let’s take it up a notch and talk about utilities like telephone and energy services. Their service catalog websites contain utility services. Telephone companies for example list things like local and long-distance, Internet, call waiting, caller ID, conferencing, etc. on their service catalog website. They may also segregate their services by enterprise, small business, and individual customers.

Cable companies are even more similar to IT in some respects. They list things like VoIP communications, Internet, television/entertainment packages, etc. You can draw a parallel between each station offered by a cable company to each application offered by IT.

Regardless of commodities or utilities, service providers of water, power, telephone, cable, etc. have very simple service catalogs considering their extremely complex infrastructure and organizations. This is because the service provider has matured their services to focus on the customer/users and highly refined their services to meet specific customer/user needs, to remain relevant, competitive, and accessible.

To become a true service-provider, IT must take a similar approach to interaction with customers and users. To be successful, CIOs become CEOs by defining a usable service catalog with:

  • A clear business-focus addressing specific needs
  • Inclusive pricing and options
  • Seamless delivery
  • Transparent fulfillment

Jason Stevenson is a Transformation Consultant based in Michigan.

Solving the Shadow IT Problem: 4 Questions to Ask Yourself Now

Harris_SeanBy Sean Harris

Most IT organizations I speak to today admit they are concerned about the ever-increasing growth in the consumption of shadow IT services within the business; the ones that are not concerned I suspect are in denial. A common question is, “How do I compete with these services?” The answer I prefer is: “Build your own!”

What Would It Mean for My IT Organization to Truly Replace Shadow IT?

Totally displacing Shadow IT requires building an organization, infrastructure and services portfolio that fulfills the needs of the business as well as—or better than—external organizations can, at a similar or lower cost. In short, build your own in-house private cloud and IT-as-a-Service (ITaaS) organization to run alongside your traditional IT organization and infrastructure.

Surely your own in-house IT organization should be able to provide services that are a better fit for your own business than an external vendor.

IT service providers often provide a one-size-fits-all service for a variety of businesses in different verticals: commercial, non-commercial and consumer. And in many cases, your business has to make compromises on security and governance that may not be in its best interests. By definition, in-house solutions will comply with security and governance regulations. Additionally, the business will have visibility into the solution, so the benefits are clear.

How Do I Build My Own Services to Compete With Shadow IT?

Answering the technical part of this question is easy. There are plenty of vendors out there offering their own technical solutions to help you build a private cloud. The challenge is creating the organizational structure, developing in-house skills, and implementing the processes required to run a true ITaaS organization. Most traditional IT organizations lack key skills and organizational components to do this, and IT organizations are not typically structured for this. For example:

  • To capture current and future common service requirements and convert these into service definitions, product management-type skills and organizational infrastructure are needed.
  • To promote the adoption of these services by the business, product marketing and sales-type functions are required.

These are not typically present in traditional IT organizations. Building this alongside an existing IT organization has three main benefits:

  • It is less disruptive to the traditional organization.
  • It removes the pain of trying to drive long-term incremental change.
  • It will deliver measurable results to the business quicker.

What If External IT Services Really Are Better?

It may be discovered after analyzing the true needs of the business that an external provider really can deliver a service that is a better fit for the business needs – and maybe even at a lower cost than the internal IT organization can offer. In this case, a “service broker” function within the IT organization can integrate this service into the ITaaS suite offered by IT to the business far more seamlessly than a traditional IT organization can. The decision should be based on business facts rather than assumptions or feelings.

How Do We Get Started?

As part of VMware’s Advisory Services and Operation Transformation Services team, I work with customers every day to map out the “Why, What and How” of building your own ITaaS organization to compete with Shadow IT services:

  • Why
    • Measurable business benefits of change
    • Business case for change
  • What
    • Technology change
    • Organizational change
    • People, skills and process change
  • How
    • Building a strategy and roadmap for the future
    • Implementing the organization, skills, people and process
    • Measuring success

In the end, customers will always choose the services that best meet their needs and cause them the least amount of pain, be it financial or operational. Working to become your business’ preferred service provider will likely take time and resources, but in the long run, it can mean the difference between a role as a strategic partner to the business or the eventual extinction of the IT department as an antiquated cost center.


Sean Harris is a Business Solutions Strategist in EMEA based out of the United Kingdom.

Managing Your Brand: Communications and Marketing for Today’s IT

By Alex Salicrup

Let’s talk about the subject in which every IT department lacks expertise — and that is how to effectively market your capabilities and communicate value. And readers may think I am exaggerating on my next statement: IT departments around the world are ubiquitous in that their consumers usually have a less than favorable opinion of them.

Of course, we know that this perception is not true in all cases. However, in my experience, IT does not do a good job at managing consumer perceptions. And in the IT service provider world, managing these perceptions is critical. Unlike yesteryear, IT service providers now have to compete with public cloud providers that manage their brand very well and educate prospects on how their capabilities map to consumer needs.

During my time at VMware, I’ve had the pleasure of working with industry-leading global entities. Many of their IT organizations claim that their consumers are not taking advantage of using external providers, only to find out that they actually are — and in a big way. Others have accepted the fact that competition exists, and that they must address it.

Many IT organizations have concluded that they must manage consumer perception of their capabilities and offerings. In other words, they are trying to figure out how to sell their brand and services internally. Most have no idea how to achieve that. That’s where I come in.

IT communications and marketing is not just building out an IT education campaign.  It’s making a significant change in how IT strategizes and changes its internal culture to think and act like a hungry service provider. IT begins looking at a service as though it were a puzzle, with consumer needs as pieces of the puzzle.

Let me share a few areas to consider as you begin to develop your communications and marketing strategy. I concentrate on eight areas when assembling a marketing and communications plan:

  1. Understand your audience
  2. Interpret consumer perceptions
  3. Define your brand
  4. Identify the catalyst for change
  5. Create your vision
  6. Who, how, and what to communicate
  7. Managing organizational change
  8. Brand perception metrics

Understanding Your Audience
In every organization there are three main levels of strategic and tactical execution, as shown below:Salicrup-Comms Mktg graphicExecution is different at each of the three levels. Individuals within each level listen to and address solutions based on their domain of responsibility, and they understand solutions only from the point of view of addressing the needs of their level. This in turn needs to be addressed with the appropriate message for each level.

Interpreting Customer Perceptions
Marketing campaigns are designed to create perceptions (we’re better than those other guys). Consumer perceptions are always our reality. Understanding consumer perceptions help us identify how to manage them, and, how to package a solution.

The problem with negative consumer perceptions about your IT organization or the service you provide is that those perceptions are hard to change. So how do you communicate to your consumers that your people and services are the best solution for their unique needs?

Defining Your Brand
Brand is synonymous to reputation but also aspiration. However, a positive brand, as with reputation, takes time to build and is easily tarnished. Service providers have a good awareness of their brand perception with their consumers. This allows the provider to shape a consistent message, improve credibility, and enhance its brand through advertising its goals and achievements.

Identifying the Catalyst for Change
Change is not easy. There are two groups within any business that have to experience change. The group most impacted is the IT group. They are transitioning from traditional IT delivery to a service provider model. Therefore the hardest task — the part takes the longest — will be converting the IT personnel. Identifying why change is necessary and “what’s in it for you” can motivate your staff to follow your vision.

Creating a  Strong Vision
The critical aspect of a successful service communication strategy is the clear articulation of the vision.

Your vision must:

  • Be strategically feasible
  • Be effective
  • Incorporate the current position of the enterprise and catalyst(s) of change
  • Be ambitious
  • Be evidently accomplishable

Managing Organizational Change
No one is really happy about change. Turning your organization from traditional IT or project-based consumption to a service-based consumption model will incur role and cultural changes. The former is easier than the latter, and it needs strong leadership to guide it there. Furthermore, IT is changing the way that the business deals with IT. This is why organizational change management is so important. It is not just a operating change, it’s a massive behavioral change that people need to be guided through. If this is done crudely it will impact the brand severely and cast doubt about IT’s capabilities.

Effective communications are key — it’s very important that IT staff understand the unified message. They should become active ambassadors of the IT brand and the services the team provides. Communication, in this sense, refers to the art of persuasion. Crafting a message that is persuasive is a learned skill and essential if a perception is to be changed successfully.

In order to be persuasive, the IT team really needs to learn how their consumers think, and, predict what consumer reaction will be to events and solutions. People who are good at persuasion develop a keen sense of what solutions work and how messages need to be successfully crafted. This is paramount for any emerging service provider. Communication is about knowing what influences decisions at the three levels illustrated in the figures above. Therefore, different messages need to be crafted to persuade the different levels.

However, one of the highest risks a service provider has is individuals within IT not believing in the solution, the need for it, or how it’s being delivered. These individuals that are skeptical pose a threat of creating doubt within the consumers of the solution and its merits or capabilities.

A critical and difficult aspect of change for the IT staff is the understanding, adaptation, and dissemination of the vision and how they choose to communicate it. It is essential that leaders understand the dynamics of their teams, customers, and stakeholders. Understanding how to communicate and use your team to promote your brand and vision is important to your success. (Stay tuned for a future post, where I will talk more about individual motives and capabilities and how they can be mapped to three distinctive groups…)

Measuring Success — Brand Perceptions Metrics
It is imperative that an IT organization gauges how its consumers feel about the services they’re consuming from the service provider. The IT team needs to put in place metrics that capture performance against the needs of the customer and set realistic targets on what is to be measured.

This does not have to be complex — a simple 5-question survey is a great way to start. If the response is mainly positive, the IT team can include that message to its consumers to reinforce the positive perceptions. If the response highlights challenges, it’s a great way for the IT team to focus energy on fixing them — a catalyst for change.

In conclusion, I have covered steps and actions in this post that are fairly simple — perhaps perceived as common sense. However, IT traditionally does not have these communication and marketing skillsets. And, the IT organization has not needed them before the advent of public cloud — but they are needed now.

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Alex Salicrup is a transformation strategist with VMware Accelerate Advisory Services and is based in California.

How to Keep an IT Professional Happy

by Alex Salicrup

It’s 6:00AM; my alarm clock just went off.  Another day started in a hotel bed hundreds of miles away from home and family. As a consultant, I do this half of the week most weeks, working with my customers. And, my team’s experience is very similar to mine.

We meet this morning, all traveling from every corner of the U.S., to discuss several challenges that two of our clients are facing while making the cultural transition from traditional IT to service providers. Both clients are two of the largest, everyday brands we consume worldwide; both strive to achieve similar outcomes.

The mood in our conference room is passionate, yet full of humor and laughter. Sometimes we have tough days, but as innovators, we are always motivated by the answer yet to be formulated—we are IT explorers. We all believe in what we do and have seen the success that each of us uniquely brings to the problem-solving process.

As a strategist, I could likely secure a lucrative position within a major IT department. I receive emails every week for consultant-, director-, even executive-level roles. I pay no attention to them. Yes,  I endure long separations from my family and heavy travel. However, it’s difficult for me to contemplate leaving a job environment where I get to collaborate with amazing and motivated individuals and have a positive influence on so many organizations. To me there is no greater satisfaction than seeing my customers increase their skills and develop their capabilities to morph into a culture that uses a lot more of their annual budget innovating rather than reacting.

Why do I use myself as an example? Because I am the outcome of a well-aligned service provider. Because my attitude is likely to mirror any employee’s within your IT organization. All IT professionals would love to forge new routes, develop plans, and create innovative ways to forecast and meet or exceed business needs. No one is satisfied with reacting to repetitive requests and remediation.  These tasks still need attention, and there are more effective ways to address them. For many IT organizations, there just isn’t time or in-house experience to change status quo.

Unfortunately, most IT resources are still dedicated to reactive tasks. Many of the IT organizations I work with have tried to move away from this behavior but without the best practices to achieve service-driven ambitions, many stall in spite of their efforts. In the end, I believe the skill to execute is what’s lacking. Few IT organizations systematically tackle transforming their operations by subscribing to a roadmap that embraces the key pillars of a successful service provider.

Three key pillars of a successful service provider include:

  1. A proactive service culture,
  2. Robust processes that drive automation as well as using technical tools and,
  3. The technical skills required to operate the new environment.

Many organizations try, but find it hard to do it on their own. They may be so immersed in their culture that they can’t see the opportunities change will bring. The motivation may also be lacking to get them to the finish line.  This can change with the right focus and, possibly, the right help.

In my experience, it’s a fact that IT employees who embrace and subsequently become part of a service-driven culture enjoy their jobs significantly better—and like me, increase their productivity through efficiency. Over time, they find it hard to let go of those opportunities to innovate. Everyone loves it when a plan comes together! They learn new skills that are less tactical and more strategic. And the attrition rate among service-driven IT organizations is much lower than traditional ones.

I partner with clients to understand their goals and act as a shepherd to guide them in developing these results by constructing long-term road maps with game-changing milestones throughout their journey.  With the right direction and tools, the short-term wins soon amass to reach the organization’s end-state goals.

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Alex Salicrup is an IT transformation strategist with VMware Accelerate Advisory Services.

IT Transformation and its Impact on the IT Organization

How can the “old IT” be competitive in a marketplace crowded with external cloud providers? The promise of agility, cost savings, as well as self-service capabilities requires the new IT organization to truly transform to the role of service provider.

In this video, Accelerate transformation strategist Padmaja Vrudhula explains how IT’s new role as service provider elevates the business value the IT organization can bring to the business.

 

Handcrafted IT Infrastructure – Are You Still Relevant?

Author: Joe Chenevey

I’m a fan of George R.R. Martin’s best selling book series, A Song of Ice and Fire, as well as HBO’s television adaptation, A Game of Thrones. The first book in the series was published in 1996, and the current and fifth installment released in 2011. Five books in 15 years with two more planned! I imagine that when Martin started writing the first installment in the mid-90s, he used a desktop app on a PC, or perhaps he was still banging away on a Brother electronic typewriter—a relic even in those days.

Today, as he writes his sixth (and has hopefully started his seventh) book, I’m optimistic that he uses modern tools of the trade such as a razor-thin laptop, a smartphone, and productivity apps that can be sync’d between disparate devices through the cloud. Can you imagine if Martin was really old-school and wrote his manuscripts with a pen and paper? By the time the last two installments were completed and published, I might be older than Maester Aemon of the Night’s Watch (if you’ve read the books or watched the series, you know to whom I’m referring). And some friendly advice to sponsor network, HBO—please give George all the techie tools he needs to get those books written faster, so I can enjoy them and your wonderful TV series sooner rather than later.

Technology has transformed the publishing industry by enabling a much faster lifecycle from content creation to content publishing. Even considering physical books, the process to print, bind, package, and distribute a book is largely automated. In the world of IT, more so than in the world of publishing, both providers and consumers of IT services expect machine precision and speed.

So why is it that—even with widespread adoption of server virtualization—several large IT organizations I’ve been working with over the past weeks still primarily provision their IT infrastructure manually, component by component?

These IT organizations are finding that their consumers—the lines of business—are starting to look elsewhere for their infrastructure needs. The price for manually provisioned IT infrastructure as provided by their IT organization has become prohibitive both in terms of cost and time. And, as consumers, they are simply no longer willing to accept the long lifecycle to develop new services and provision workloads.

The explosive growth in the public IaaS market should indicate to all IT organizations struggling to keep up with demand that automating infrastructure provisioning has not only become a key competitive differentiator, but it will become a requirement for IT organizations to remain relevant to their business users. I see the market for handcrafted, highly customized IT services plummeting dramatically as consumers increasingly turn to service providers that can produce and offer the same infrastructure product faster and cheaper. For some companies, the path to maintaining relevance will not be a pure private model but actually involve a hybrid cloud service model in order to more quickly satisfy business demand while still maintaining overall control of workloads (and keeping infrastructure costs as low as possible).

The question for today’s CIO is: How long can you compete against third-party service providers and stay relevant to your enterprise? If the thought troubles you, it’s time you and your IT organization start defining a strategy on how to insert automation into your IT services. Automated provisioning and deployment—a vital cloud capability—addresses the needs of both your business users and your IT staff. The consumers of your IT services benefit from faster deployment of new infrastructure—in hours versus weeks—and more control over their workflow via self-service portals. By reducing the need for manual intervention, an automated system frees up your valuable IT resources for reassignment to strategic jobs that drive innovation. And most importantly, it enables IT and business users to work as partners—not adversaries.

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Joe Chenevey is a business solutions architect for VMware Accelerate Advisory Services. You can follow him on Twitter @VIJoe_Chenevey

VMware AccelerateTM Advisory Services can help you and your key stakeholders understand the IT as a service value proposition—our consultants quantify the potential benefits, develop architectural designs, recommend organizational and process changes, create a migration plan and advise during implementation. Visit our Web site to learn more about our offerings, or reach out to us today at: accelerate@vmware.com for more information.

Would you like to continue this conversation with your C-level executive peers? Join our exclusive CxO Corner Facebook page for access to hundreds of verified CxOs sharing ideas around IT Transformation right now by going to CxO Corner and clicking “ask to join group.”

CIOs, Lead the Cultural Change!

Author: Alex Salicrup

In my earlier blog, I described the challenges of competing with third-party service providers that many modern CIOs face. And, I closed by promising to come back with tips on how to transform a reactive, risk-adverse IT organization to one that’s more proactive and customer-centric. Here are some suggestions:

Automate
Your IT organization needs to run operations with the fewest number of IT staff possible. Now, don’t get excited—I’m not talking about reducing headcount. Rather than focus on reacting to requests, trouble tickets, and other events that can be fully automated, what I suggest is that your headcount be utilized to innovate, plan, and execute on new strategic initiatives that provide business results faster. In fact, companies that the Accelerate team has worked with and that have tried this approach discover that their attrition rate reduces as their employees learn new skills and gain focus in more rewarding tasks—job satisfaction increases.

Average Revenue Per User (ARPU)
It’s a strange term considering we’re talking about business users, but it translates to what is your average business user expects to pay for the average service they receive. What are your business users willing to pay AWS or other IaaS and SaaS providers for infrastructure and application solutions versus those of your IT organization? ARPU forms the basis of any service that is designed and added to the IT service catalog—this number drives everything. If your service is more expensive than the competitor, then what is the value that you are providing the user to justify that premium?

Service Offerings
Keep your service catalog relevant and enticing—but as lean as possible. Rather than offer a large number of bundles, narrow it down to basic offerings that will meet the needs of most of your users. Augment those services by adding additional features that have proven valuable to your users or your competitors’ users. These decisions can be complicated. This is one area I find most IT departments have to exercise constraint. The advice I give to my customers is that a small number of offerings can meet the need of the majority (70-80 percent) of users. When exposed to many choices, users will only be confused and distracted from your value proposition.

Business Cases
From this point forward, think of your IT department as a start-up company. Every time you have a business initiative that requires capital, you need to fight for it from other startups in the enterprise. It’s not good enough to prove how your initiative will mitigate a risk. Your business case will need to show projected service uptake over time, and how profitable it will be within an acceptable timeframe. Yes—I used the word “profitable.” Profitable should be the end goal for an IT organization. Even if internal finance practices are not suitable for this type of profit setup, it’s a cultural mindset that you will thank me for adopting.

Service Level Agreements (SLAs)
Your SLAs have to be aggressive and comparable to what external service providers offer. Why? Service providers are very innovative about how they mitigate all risks, including SLA risks, without expending a lot of capital. The same goes for the modern IT organization. This is an opportunity to let your business users differentiate between the levels of service they would like versus what they are willing to pay for. If your users want tighter SLAs, provide an SLA matrix with varied levels of risk mitigation (time-to-resolution, availability, performance targets) to choose from—they will pay according to level of risk assumed by IT.

An SLA matrix also sets users’ expectations for what can be demanded as a response from their IT organization. In my experience, this is typically a significant improvement for an IT organization’s service management. Of course, the organization will need to deliver on these SLAs, and metrics will be essential in keeping IT honest and to be able to demonstrate the value of SLAs. The business user must have a compelling reason to pay for the premium, which usually translates to consequences if SLAs are breached. Some are monetary penalties; some are services not charged for during breach. Your organization’s solution will be unique to your environment.

These are my high-level observations and suggestions based on personal experience as a service provider in a former life, as well as through my work with our Accelerate customers. Most of the IT organizations I work with have been running in reactive mode for years, and their biggest challenge in transforming to a more proactive role as service provider is cultural. To form a new partnership with business stakeholders based on the ability to deliver real business value, I encourage CIOs to guide the discussion from one that’s risk adverse to one of innovation and opportunity. Success is out there if you know how to get there.

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Alex Salicrup is a business solutions architect for VMware Accelerate Advisory Services.

VMware AccelerateTM Advisory Services can help you and your key stakeholders understand the IT as a service value proposition—our consultants quantify the potential benefits, develop architectural designs, recommend organizational and process changes, create a migration plan and advise during implementation. Visit our Web site to learn more about our offerings, or reach out to us today at: accelerate@vmware.com for more information.

Would you like to continue this conversation with your C-level executive peers? Join our exclusive CxO Corner Facebook page for access to hundreds of verified CxOs sharing ideas around IT Transformation right now by going to CxO Corner and clicking “ask to join group.”

Business Units to IT: Change speed and course, FAST!

Author: Alex Salicrup

I loved my military career and still tend to use this nautical analogy with many of my IT customers. At sea, small frigates are designed to be agile, maneuverable, and nimble. They can effectively change course, increase speed, or stop very quickly. The aircraft carrier, however, carries great momentum and displaces such a massive amount of water tonnage that it requires five miles to stop. Because of that substantial weight, changes in speed and course take time and a lot of effort from both crew and machinery to execute. So, when frigates and carriers navigate as part of a group, the carrier actually holds the frigates back.

Today, IT organizations can be compared to the carrier, and the new breed of business units and users that IT serves are the nimble frigates. Business units are relying more and more on their IT organization to get things done and have a perception that if IT is not fast enough, they’ll seek a public service provider to get what they need, when they need it. In their view, they have options and no longer have to wait on IT.

In the last year alone, the Accelerate team has received many an SOS from executives of Fortune 100 corporations who need help transitioning their IT organization to act like a competitive service provider.  When I do meet with the CIOs and executives of these organizations, I find that they do not have technology impediments to act as a service provider, rather that they lack the culture, processes, and structure to do so.

IT has tried to fend off the influx of external services from vendors such as Dropbox for storage, and infrastructure and application offerings from AWS or Google, but also acknowledges those services are widely available, easy to access, and require little to no customization. Facing sluggish sales to IT groups during The Great Recession, IT service providers got smart and shifted their attention to cater to the emotions of the new breed of users who want and need connectivity right now.  These users now lead marketing, engineering, and sales departments across the nation and have expense accounts. They are using IT services from third-party providers of IaaS, SaaS, and other services that appear to be more cost-effective, readily available, and perceptively easy to provision compared to what IT can provide.

We can’t deny it—internal business customers are getting impatient with the way services are provisioned to them. Today’s business user is significantly more technology savvy than ever before. They know enough or even more about services available to them than their internal IT gurus—or at least they think they do. And, they’re getting better at justifying these services every day, armed with a credit card and the URL for your least-liked IaaS or SaaS provider.

This rattles the CIOs I meet regularly with for so many reasons. In the most extreme cases, IT can’t control what workloads their users are sending out to the public cloud or how they access it—which could violate every governance security policy and best practice IT has spent years developing.

So who are we really dealing with? This new talent is forging the future of corporations worldwide—a new breed of decision-making business users who grew up with ubiquitous access to a computer. Most had access to the Internet for much their life, if not all their adult life. They had a high-tech environment at school and could access content and applications anytime, anyplace.

In my first year in the Navy, the most radical technological advancement in modern nautical warfare was the NAVSTAR Global Positioning Systems satellite network. Today—20 years later—a typical business user has about 10 times more power in their smartphone than we had during the Gulf War, and it has a more accurate GPS chip, too! Technology moves fast but IT often doesn’t. Sometimes IT simply can’t keep up with the value offered by the technology they keep.

The business world is driven by technology. We use applications for most tasks, and we access most of our personal services via several devices and with consistent experiences on each device. Most users are expecting the same from their business services, and business units want to give it to them. The response from IT organizations in many cases is similar to a 12-step program—refusal, fear, denial, fear, aggression, fear—and so on.

IT organizations are recognizing that they must act like a service provider in order to satisfy today’s business needs. Although their efforts seem to be focused and well motivated, many find it very challenging to transform their business model. The cultural mindset of a service provider drives methods to address risk mitigation that are very different from those IT organizations subscribe to. Simply put, service providers want their customers to allow them, as the provider, to assume much of the risk—for a fee, that is! It’s a value proposition that they can and do charge for.

IT organizations spend a lot of time and effort fending off risks in a variety of ways, and many incur significant internal costs to implement or manage risk mitigation practices. Third-party service providers may not be able to justify the same level of risk mitigation that enterprise IT organizations deploy—it would add cost to the solutions they offer and interfere with price points. Nevertheless, the service provider is able to provide a lucrative solution and still publish a lucrative price point to its customers.

Stay tuned for part two in this series—I’ll share my tips on how to move from a vintage IT organization to one that’s service-driven.

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Alex Salicrup is a business solutions architect for VMware Accelerate Advisory Services.

VMware AccelerateTM Advisory Services can help you and your key stakeholders understand the IT as a service value proposition—our consultants quantify the potential benefits, develop architectural designs, recommend organizational and process changes, create a migration plan and advise during implementation. Visit our Web site to learn more about our offerings, or reach out to us today at: accelerate@vmware.com for more information.

Would you like to continue this conversation with your C-level executive peers? Join our exclusive CxO Corner Facebook page for access to hundreds of verified CxOs sharing ideas around IT Transformation right now by going to CxO Corner and clicking “ask to join group.”