451 Research: ITaaS – turning technology into delivery services

InsightaaS perspective: 451 Research is one of the world’s leading sources of insight into cutting edge technologies — especially in areas that are important to InsightaaS and our principals, including cloud, collaboration, analytics, and sustainable IT.

InsightaaS.com works with 451 Research to bring occasional thought leadership pieces to our readers. This report, "ITaaS: turning technology into delivery services," provides an excellent example of why we consider 451 to be an important voice in today's IT industry. In it, 451 research director Dr. Katy Ring explains why establishing an IT-as-a-Service approach is essential to both IT departments and to providers of IT services. Ring starts with a world in which "an IT department views the LOBs [lines of business] as having many options for IT services, and the internal IT organization has to compete against those external providers for the LOB IT requirements." She notes — correctly, in our view — that lean IT departments that have lost resources and knowledge since the economic downturn, customer demand for systems that move from planning to operational in days or weeks rather than months of years, and trends such as cloud, consumerization and mobility have made it more difficult for IT to satisfy the needs of a demanding, diverse and fast-paced user community.

In order to align resources with requirement, Ring believes, IT service providers (internal departments and external suppliers) need to develop ITaaS strategies combining IT service management (ITSM) software, cloud management platforms, self-service catalogs and other components (such as Service Integration and Management (SIAM) frameworks) as needed. She closes by highlighting six reasons for IT service providers to rethink their approach to automation. We believe that both internal and external IT delivery organizations are well advised to consider Dr. Ring's advice.

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Dr. Katy Ring, 451 ResearchBy Katy Ring; special to InsightaaS.com from 451 Research

Providing ITaaS is a strategy being considered in many organizations, but it marks a significant change for both internal IT departments and for external service providers. Internal IT departments need to move to a more ostensibly commercial footing, competing with service providers and technology vendors.

Service providers themselves need to undertake radical internal change in order to restructure around the requirements of new-style IT-service delivery. Because of the significant changes required on both the buy side and the supply side, this is not an instantaneous market development. However, it's rare to hear any voices doubting its inevitability.

What is ITaaS?

IT as a service is an operational model where the IT department of an enterprise is acting and operating as a distinct business entity, creating services for the other lines of business (LOB) within the organization. At its core, ITaaS is a competitive business model where an IT department views the LOBs as having many options for IT services, and the internal IT organization has to compete against those external providers for the LOB IT requirements.

The catalyst for ITaaS within enterprises is typically mobile service delivery and the creation of the 'anytime, anywhere and any device' workplace. This has introduced consumer IT trends into the enterprise, and changed the culture around IT, making shadow IT far more prevalent. This — combined with the requirement for internal IT teams to provide services extremely quickly, in days and weeks after specification, rather than months or years — is pushing more IT departments to seriously consider ITaaS as a way to respond to more demanding requirements for speed and agility.

In order to pursue ITaaS as a strategy, the CIO needs to introduce a service-centric, cloud-enabled approach to delivery, with the goal of making outsourcing, compliance and mobility easier to achieve. To do this, certain tools are required, including cloud management platforms, self-service catalogs and ITSM software — these can then be combined to create an ITMaaS (IT management as a service) capability to underpin the ITaaS strategy.

Once this capability is in place, the future of IT will lie in managing service relationships by acting as a broker between the requesters and the providers of services. IT will then be operating in the world of service definitions: recording and analyzing services, more than actually creating and delivering them internally.

Why is the conversation turning to ITaaS now? Most organizations have leaner IT departments than in the past because of the economic downturn since 2007, which means they have lost both critical mass and some of their IT knowledge. This has made ITSM offerings more attractive because they offer the IT department tooling to deliver stronger performance, and the ability to provide additional business value without increasing headcount.

However, the challenge is that while organizations are beginning to make big multimillion-dollar investments in tooling to improve IT-service delivery and management, they often struggle to integrate and maintain the tools. This is because IT departments have typically customized the tooling for their environments, and then cannot keep up with the vendor upgrades for the tools because these break the custom code that has been developed. Additional staff must be retained to run this custom code. Moving workloads to the cloud exacerbates the situation, making IT services more challenging to price and manage.

While the traditional system and service management tooling available to most IT departments includes tooling that is not very well maintained or upgraded, internal support services are also often fragmented and not well-coordinated. Small wonder that existing IT departments are struggling to keep up with technology trends such as cloud delivery, the consumerization of enterprise IT, and mobility. While the benefits of these changes include lower costs and improved organizational agility, they also bring non-standardized IT, which is more complex to manage.

The situation is further compounded for organizations that have outsourced part of their IT requirements, and have opted to multi-source their managed services. This creates multiple technology management silos, which makes it difficult for enterprise service management tooling to have a big impact in improving service delivery.

These factors are combining to create a perfect service-provider opportunity to work with IT departments, to enable them to move to a business portal approach to managing IT that sets them on the path to ITaaS. There is an increasing buyer appetite to improve the automation of service delivery in order to improve end-user satisfaction without having to grow IT staffing levels. The ultimate goal for the IT department is to continue maximizing its reduction in operational expenditure, while minimizing business impact.

To do this, it needs to develop a portfolio management approach for services. Consequently, the tooling and transformational assistance that helps the IT department accomplish this is becoming a higher priority. What should buyers do? To begin realizing the ITaaS strategy, the IT department must embrace new tooling and frameworks to support the development of an IT service-broker role. The main tools to support ITaaS are ITSM platforms, cloud management platforms and the online service catalog to support end-user self-service capabilities. Depending on the complexity of the organization and its outsourcing arrangements, a Service Integration and Management (SIAM) framework and SIAM provider may also be required.

To borrow phrasing from the IT service-vendor community, the IT department needs to start thinking in terms of creating a portfolio of services, some developed internally, some provided externally via dedicated contracts, and others sourced from public cloud providers. The IT department has to match business demands to the services available via various sourcing models that reflect infrastructure housing decisions for different workloads, so that it can fulfill requirements by selecting best execution venues for those workloads. This requires all aspects of this portfolio to be visible, integrated and well managed as a collection of capabilities.

To prepare for moving toward ITaaS, CIOs need to evaluate the tooling that is in place, the automation technologies that can be used, and the processes and policies that need to be applied to ensure that the ITaaS portfolio is accessible, sustainable and secure.

Impact on service providers

For the majority of service providers, the service-delivery platform is a back-office workhorse and the foundation of its services, rather than being an offering in its own right. However, with the emergence of ITaaS as an aspirational model for IT departments, it is time for service providers to rethink their service-delivery platforms. There are six reasons for this:

  • The adoption of virtualized infrastructure by customers, especially in the financial services and retail sectors, is making it more difficult to continue using traditional system management tooling designed for physical infrastructure management.
  • The trend for selective outsourcing means service providers must able to work efficiently and effectively together to deliver services to buyers. It is increasingly difficult for a service provider to just deal with the technology tower that it has been contracted to manage.
  • Technology refreshes among buyers are bringing in new SaaS offerings that may also need to be managed as part of a services contract.
  • There is a growing requirement to provide lower fixed costs to set prices for consumption-based pricing models.
  • To provide service management intelligence for continuous service improvement, service providers need a standardized technology approach in order to generate data that is comparable between accounts.
  • ITSM tooling is driving demand for a 'single pane of glass' view that goes beyond an ITIL definition to create a system view of the data that is running the business.

The challenge is that many service providers have baked-in technologies that are not optimal for new-style IT services, at the same time as the outsourcing market is becoming more competitive with lower margins. However, they do need to have a roadmap to address the requirement for a Web portal interface, service management integration, a multi-tenanted option for service delivery, and a usage-based subscription model. Many are now in the process of introducing new tooling to support their managed services.

The 451 Take

In our forthcoming report 'IT Services: Tooling up for ITaaS,' we position vendors in terms of the different approaches they are taking to support buy-side organizations looking to move to an ITaaS capability. We also address some buyers' frequently asked questions about working with service providers in the changing service-offering landscape. ITaaS is also a topic that is being addressed in several sessions at our upcoming HCTS Europe event being held in London on April 1-2.

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