By: Rich Ptak, Managing Partner, Ptak, Noel & Associates LLC
The commercialization of Cloud-based IT services, along with market and economic challenges are changing the way business services are conceived, created, delivered and consumed. This change is reflected in the growing interest in alternative delivery models and solutions.
Both providers and consumers of IT products and services demand more flexibility and choice in how they access, use and pay for technology. Cloud implementations are growing whether private (in-house), public (outsourced services ala Amazon or Google) or hybrid combinations of these two models. Initially, private models are dominating but the expectation is that flexible, option-rich hybrid models for services, capacity and features will become the new norm. Whichever model dominates Clouds implementations directly impact the design and delivery of new products, solutions and services. The growing popularity of demand-based services and usage-based pricing models result from efforts by customers and businesses to improve operational efficiency through service consolidation and cost optimization. Customer Relations Management (CRM) and Payroll/ Financial services are two long-running examples of beneficial Cloud-based services. Microsoft’s Office 365, IBM’s SmartCloud Foundation family, HP’s Cloud service plans, along with many others – all targeting mid-range, as well as high-end enterprises are testaments to the potential revenue that vendors anticipate from Cloud-building and service delivery. The benefits already realized by all sizes of businesses using cloud-based services, as well as the enterprises providing Cloud-based services are driving IT and business staff to apply the model in their own environments.
What does this mean for the mid-market?
Just as in large enterprises, mid-market IT and business staff want integrated solutions with clear paths to additional capabilities and increased capacities to meet their changing needs. For many, on-premises solutions and in-house services are preferred. Well-publicized Cloud service problems underscore existing challenges in security, stability and availability. But increasingly, on-demand and Cloud-based solutions are becoming attractive alternatives at appealing price points for the mid-market.
Prudence dictates that on-demand solutions (SaaS, IaaS, PaaS, etc.) be evaluated as business cases — with due attention paid to their ability to expand to meet long-term needs. Existing trends among IT service consumption favor consolidation and integration of IT and business services. This provides a significant opportunity for both creating and consuming on-demand solutions. Increasingly powerful tools allow accurate cost-benefit analysis to help buyers select the proper delivery and pricing models to meet their needs.
What’s the issue?
Whether evaluating the purchase of public Cloud services or implementing a private Cloud, IT and business staff should leverage the capabilities of experienced partners. Today, vendors including the Big 4, as well as many other firms offer prescriptive consults as part of the decision-making process. There are many partners to choose from, but even the largest service providers can suffer from delivery problems.
What do I want in a partner?
There are important criteria to consider in selecting a Cloud partner. More and more vendors are offering products and services tailored to the mid-market. These include pre-packaged combinations of hardware, software and services to implement a Cloud environment; service and platform offerings can sound remarkably similar and you need to have some metrics to evaluate the providers and their services. These should include:
- Does their experience fit what you are trying to do? — there are plenty of stories about success in implementing and delivering Cloud environments —make sure that the potential partner has experience that prepares them for what you want to achieve.
- Cloud is an evolutionary path, not “rip and replace” — most firms can’t afford the risk and expense of a total infrastructure rebuild. Transforming IT operations into a service oriented Cloud requires learning and change. For most, the far more reasonable approach is to treat transformation as an evolutionary project that takes into account the existing IT environment.
- Cloud-related skills and expertise in IT are still a scarce commodity — today’s typical IT staff are lacking in Cloud expertise — the partner should be able to tailor the pace, scale and scope of implementation to your needs and ability to absorb change. This requires them to have the insight, as well as flexibility to recognize the maturity level of your business and IT organizations.
- Cloud-usage patterns — as for any technology; there exist common ways and reasons why Cloud implementations are successful, e.g. optimizing utilization and cost of the IT infrastructure supporting business. A usage pattern will pose consistent challenges in implementation and execution that can be minimized or avoided with experience. A partner that understands and has experience with your usage pattern will help minimize implementation risks.
The other traditional financial, legal and experiential rules and guidelines for choosing partners still apply. There is no absolute guarantee that all risk can be eliminated, but these will help to minimize it