Managing Providers when you are a service broker.

In my last blog entry I focused on how IT is increasingly becoming a broker of services and what this implies for the IT department. In the previous one I mentioned how external services can be integrated within the enterprise service offering through a cloud broker platform.

To respond to the needs of the business at the speed required, IT should focus on the development of the services that truly differentiates the enterprise and source all other services from external providers. We have discussed this approach previously. The limited resources in IT truly need to be focused on the differentiation in this ever more digital world. This leads me to review how external providers are found and managed. That’s what I’ll focus on today.

Service Integration, a core competency

Service integration needs to become a core competency of the IT department now it will source services from multiple suppliers to cover all IT needs. It’s important to understand the development of this skill is mandatory for IT to remain in control of the digital flows of the enterprise. Indeed, if IT cannot respond to the needs of the business fast enough, the business will bypass IT and source services directly, creating an integration and security nightmare, ultimately putting the company at risk. This is what the concept of IT as a service broker is all about. A couple years ago Gartner predicted that “By 2017, 50% of total IT spending will be spent outside the formal IT organizations”. It is difficult to say whether this prediction realized, but many companies have to deal with “shadow-IT”.

How can this be avoided? In my mind there are three key skills IT needs to nurture to stay relevant to the business:

  • Have the ability to find relevant providers of specific services quickly
  • Being capable of integrating those services fast into the enterprise digital landscape
  • Manage and optimize the consumption of those services seamlessly for the business

To achieve those three, IT will need to combine a Service Integration & Management (SIAM) function with automation and orchestration to simplify the consumption of IT, increasing speed and agility while reducing cost. Let’s look at each of the three skills.

Find Service Providers

Although for many IT people, a cloud based virtual server is a service, the business is most often looking for services delivering some specific business functionality. These are more like SaaS type services. Our description caters for both types of services.

There is unfortunately no one “who’s who” list of IT service providers globally. A couple initiatives, and in particular Cloud28+ try to address this need. Its stated objective is to be the world’s largest independent community, promoting cloud services and knowledge sharing. It serves end customers, cloud service providers, solution providers, ISVs, systems integrators, distributors, and government entities dedicated to accelerating enterprise Cloud adoption.

Through Cloud28+ or other such repositories you can identify a service addressing the needs of the business and enter in contact with a service provider that can deliver you the actual service you are looking for. Obviously you will have to look with the business as whether the service proposed addresses their needs and how it can be securely integrated within the overall enterprise IT landscape. The compliance of the service with industry and geography regulations will need to be assessed. Once all of that is done, the service provider negotiation and onboarding can take place.

A number of years ago I reviewed research focused on the automatic negotiation of contracts. It dealt with the fast provision of services by enabling computing systems to negotiate terms and conditions through the use of a specific, machine interpretable language. Unfortunately that research was stopped and I have not heard any such approach being used in practice. So you will need either to accept the terms and conditions of the service provider as is, or enter negotiations, which, we all know, can get lengthy, delaying the availability of the service. For this reason it makes sense to try to onboard partners offering multiple services so you only have to do that negotiation once.

Integrating the service

IntegrationThe next phase consists in integrating the service in the enterprise landscape. APIs are used for that integration and you will have checked whether the service provider has well documented ones. The request, provisioning and de-provisioning APIs are typically associated with the provider’s platform. So the same APIs will be used for all the provider services that are on boarded. Specific APIs may exist to enable enterprise applications to interact with the service once provisioned. Secure communications between the enterprise and service provider environment needs to be established.

Once this is done and tested, the new service is included in the service catalog in the central service portal and business users can provision the service. This is where the management and optimization comes in.

Managing the service

From a business user’s point of view, IT is delivering a new service. If a problem occurs, IT will be called. It is IT’s duty to resolve the issues of the business, requesting help and support from the service provider. In other words, IT will perform level 1 support while level 2 and upwards may be handled by the provider.

IT will also receive the bills from the providers and depending on the way IT is funded, these costs will be transmitted to the business.

In the case of IaaS services, IT can use management software that optimizes the utilization of resources in line with the demand. In other words, if the business requests an application to run in a virtual machine located with a provider, the “T-shirt” size of the VM can be adapted to the performance needs of the application at any time. This is known as “scale-up” in the cloud jargon. The advantage is that the enterprise only pays for the resource it truly needs, optimizing cost over time.

The use of a service integrator

SIAMEnterprise IT should think about whether it wants to set-up a SIAM functionality internally or whether it outsources that capability to an external party. The diagram here under shows three potential models for IT. The Retained SIAM model is the one where IT itself performs all the functions we described above. The hybrid SIAM model is the one where IT finds the service provider and associated service, performs and tests the integration and then puts the service in production. A third party manages the service desk and handles all management and operation activities once the service is used. The third option, outsourced SIAM model has IT using a third party to perform the integration and management of the service and service provider while IT handles the relationship with the business. In my experience most clients have gone for the hybrid SIAM model allowing them to maintain the integration leadership and skills. Now getting there is a journey. I’ll discuss that journey in the next blog post.

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