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Where the cloud needs to learn from classic outsourcing

September 12, 2011

There is one area where cloud computing so far is not meeting the requirements of enterprise customers. That is the area service management and support. I do remember back in 2007 we were working on the first proposal for a large enterprise customer. As this was one of the very first ones (certainly in the space of 100k+ seats) there was a willingness to cater for the customer’s needs and to consider customization not of the technical solution only but also of the service concept. I had many discussions lobbying for a kind of service manager role. We had it in that proposal but in the way further on through mainstreaming, smaller customers in focus and a more US centric view it was dropped. Only recently Microsoft has picked this theme up again and created the “Cloud Vantage” offering, which allows you to book an Online Services Delivery Executive with you service.

Why is the role of a service manager important for a cloud service to be successful?

From a customer perspective it is important that the cloud service is integrated into the IT delivery (internally and externally) almost seamlessly. You might remember some years ago we had a run on vendor consolidation in the large enterprises. Less interfaces, more control and reduced cost of management on the customer side were the drivers. The world has moved on and it is not the single vendor strategy anymore but the lesson learned is all about the means to manage a service provider. This is about the process framework (most commonly based on ITIL) in the first place and the way of operational collaboration on a management level secondly.

The customer will have one Change Advisory Board and as a CIO I would expect all vendors to work within this institution to align changes, downtimes, etc. The issue with cloud services is that there was the belief that a cloud service is different and an internet forum or blog or if going to extreme luxury a phone number would suffice. As a result cloud services present themselves as special and would alter the way a customer drives service provider management. This is inconvenient on the first glance but the impact is greater if you think about it.

  • The cloud service is one amongst many services procured by the customer
  • The customer has to step outside of the well-established framework
  • There is more cost associated with managing a cloud service where the general expectation is that cloud computing saves cost. It is a major alteration of the business case
  • The potential for frustration and customer dissatisfaction is much higher
  • Without the role of a service manager the customer can hardly fulfill the level of control as dictated by the local law (example: §11 BDSG Germany)

That the cost position cannot be avoided is best proven by the fact that the cloud services provider adds another position to his proposal if you want a service manager included. So one way or the other it needs to be paid. Just be careful to look into this early because nobody will tell you if you do not ask and you will end up with hidden costs not planned for.

Why do so many cloud providers struggle with this requirement?

Simply spoken this is the situation because they have forgotten to plan for it. Ok, I agree, a slightly aggressive statement but if you look at it there are some commonalities that can be picked across the cloud service providers.

  • The main target segments are very small and small companies.
    • They often do not operate within frameworks like ITIL
    • It is the one skilled IT guy (or lady) that will have fewer issues scanning the blogs and forums. 
    • A downtime might not yield a comparable huge impact as with large enterprises
  • The cloud market so far is fuelled by the U.S.A. in the first place
    • This market has some specifics that cannot be replicated elsewhere which impact the initial service concept technically and business wise
    • E.g. online booking by credit card
    • Lack of foreign operation or in other terms, an operation in the U.S.A. is perfectly fine for them as it is in country anyhow
    • Language is all the same (from software developer through operations, support and sales). Do not underestimate this factor. 
    • The market in itself is so huge that it makes perfect sense to develop for this market only in the first place. The only downside is that later adjustments are not only difficult but could also be met by resistance from the delivery
  • The is the basic assumption that cloud computing is IT 2.0 and therefore follows different rules like
    • Web support is king. Even email is already an exception
    • Users are used to a different dynamics (incl. downtimes) because they are all internet users or in other terms users of consumer cloud services.
    • It is pretty much take it or leave it. If you are not able to order and configure it yourself, use a partner.

One of the interesting observations is that it almost seems that some providers actively downgrade their service in the space of service management to create an upper limit on customer sizes that will pick up the service and create space for partners to survive (as long as they will use the companies on premise software for that business). This statement does not apply though to cloud only service providers.

Another reason why cloud service providers struggle is because the service manager needs a shortcut into delivery on behalf of the customers. My experience shows that the cloud delivery departments have a tendency to play closed shop and refer to the blog and forum. For a service manager to delivery real value he needs to be integrated into the delivery organization at least partly. This is a challenge as the service manager is a rare person mixing sales skills with project management skills and a deep understanding of the customers’ business and processes. Such folks with a broad skill set are usually viewed at least skeptically by people who are very deep experts in one field. It shallow but broad against deep but narrow. This relationship has to grow over time and it is an effort to establish a service management. But believe me the outcome is worth it.

The whole topic becomes quite obvious if you work with an outsourcer who embeds the cloud service into a larger proposal. There you can see the different worlds colliding. Luckily for the cloud provider the outsourcer will probably cover the sales manager role for the full width of the proposal. The only challenge is to give the partner the access to the delivery which could prove to be even more difficult. But partner programs requiring trainings and certifications do help to address this challenge.

So as customers make sure you are aware of your intentions to manage the cloud service and the associated costs. Only a full blown calculation helps you to make an educated decision.

As cloud service provider be crystal clear what is included in your offering or not. On top of that be sure that you are aware of the needs of your target market and if you target larger enterprises extend your service by including a service manager. Also start thinking about the integration into help desk and management tools of the customer (some good discussions on LinkedIn lately). Never forget your service will not stand alone and the customer needs to manage all of it not just you.

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