In this article let us investigate how the “service strategy” of an internal IT Services provider changes as a result of cloud computing.
Let us start with understanding the current business model. In the “shared services” business model, the IT department (internal service provider) serves the organization business units. The IT department can outsource some of the services or operational activities to third party service providers. The model is shown below:
In the shared services model, consider a marketing department wants to buy a CRM software. They may do some initial research and find a suitable application. Then they will involve the IT department, who will verify the selected CRM application is compatible with the organization’s infrastructure. When the IT department gives the “go head”, the business will buy the application. IT department will install the application, provide appropriate support during the lifecycle of the application, manage the licenses, and decommission the software when it is no longer required.
The primary role of the IT Service provider is an integrator. There are people who would argue that the IT need to move from “integrator” to “strategic partner”. Even if IT is a strategic partner, in the Shared Services Model, IT need to own the integration.
From “Integrator” to “Facilitator”
Let us now consider a subscription to a public cloud service for a CRM. Like the previous scenario, the initial investigation will be performed by the marketing department. Once they choose a subscription, the IT department’s role would be to facilitate the integration with existing application as required. The IT department should move from the “controller” role to a “facilitator” role, as the applications are not required to be hosted in the organizational infrastructure The support during the lifecycle of the application will be provided by the cloud provider.
This does not mean the entire role performed by the internal IT department can be sourced through cloud. The situation we are facing is not different from the outsourcing drive. We have seen that instead of “full outsourcing”, the organizations adapted “multiple sourcing” with the internal IT department playing the “integrator” role. In the cloud era, we organization will move towards a “hybrid cloud” solution, with the IT department playing “self service facilitator” role.
The role of integration will not disappear all together. In our CRM example, the CRM cloud may need to integrate with the Active directory. Without IT Support, the marketing business unit will not be able to integrate with the organisational infrastructure. However, compared to the shared services model, the emphasis on integration will reduce.
What is going to happen to “internal IT” budget?
The internal IT budget has a potential to decrease. Let me clarify. Instead of allocating the budget to the IT department and requesting the IT to buy an application, the business units has more freedom to go directly to cloud subscription. So, the enterprise may spend more on IT (including cloud), but may allocate less budget to the internal IT department.
Emphasis on Business/IT Governance
As the business units discover their newly found freedom, there can be duplication of cloud subscriptions and “stand-alone” subscriptions that will lead to sub-optimal business performance. Business/IT Governance needs a renewed focus to screen cloud subscriptions.
At a minimum, the IT department need to clarify their stand on Cloud Computing. If you have not already done, start writing a “Cloud Subscription Policy” – TODAY!
What will happen to the core support services, like email hosting?
For a Small to Medium Enterprise (SME), a public cloud subscription can be cost effective. However, for large organizations (greater than 2000 employees), public cloud email hosting will not yield any cost savings. The IT department will still play a role in managing these core services like email, printing delivered directly or through a third party.
The IT departments need to start investigating whether private cloud and hybrid cloud a viable option for their business.
For example, an education provider may choose to host the email for their staff internally and for students through an external cloud provider. As the students numbers periodically change and they need a quick turnaround, the external cloud provider can offer this flexibility.
In the next article let us examine Financial Management, Demand Management and Service Portfolio Management.