Automation is one of the ways that businesses can use the abundance of computing capabilities to maximize value. The Horses for Sources blog had a post about the automation of BPO efforts titled: Greetings from Robotistan, outsourcing’s cheapest new destination.

The post made the case for replacing people in processes with automation – automation in services is something I’ve mentioned many times before.

What the HfS post didn’t cover is the role that people can and must play even in a highly automated environment. Automation is good at handling situations that are fairly well understood. What agent techniques are not good at is knowing what to do when there is not sufficient information or the patterns identified are not well understood. This is a role where humans excel.

When performing automation it can be as important identifying what is unusual and how to bring attention to the situation. Human augmentation of automation is as important as the automation itself. Effectively bringing people into the situation to make decisions is an example of scarce resource optimization that is so important in a world of IT abundance. The people involved will have to be knowledge workers who are ready for a dynamic environment that addresses anomalies and be able to describe how their involvement can be replaced by automation in the future.

I was looking at a Horses for Sources blog post titled: It’s a miracle we’re yet to see any BPO/ITO security disasters that focused on the effect of having the Chief Security Officer show up at an outsourcing meeting and it got me wondering why the security officer would be viewed as such an innovation barrier.

The constraints of security could actually provide the framework to focus innovation. There is no doubt that security is a business expectation. It should not be a choice between having security and having innovative solutions, it is about having both. For example a well-designed single sign-on solution improves the security as well as the ease of use. Standards like security allow organization to focus their creativity.

Sure the security requirements may be viewed as “onerous” but it takes effort for everyone to work together and develop common goals and reaching an understanding of that “third right answer” that no one could have come up with on their own.

The post points out quite effectively that security can’t be bolted on but must be built in. If there is anything we learned from the 1990s, it is that perimeter based security just doesn’t work. As outsourcing and cloud contracts are written, the security needs of the enterprise need to be thought out and documented – not ignored.

Forrester recently released an analysis of the concept of a Cloud Broker. Although there was much to agree with, I actually view it a bit differently. They have a too hardware centric view for my taste. This is not something new and we (in HP) have been talking about it for years. My view is that the various components of a cloud approach build up on top of each other as I’ve described before.

The various market components can interact in different ways to provide value to the marketplace.

• Cloud Infrastructure provider – Infrastructure operators have been around for decades. Organizations who specialize in this area focus on the automation, security and performance needed to take what has been a traditionally business by business approach into a multi-tenant solution that can be charged “by the pound”. This is the core of the IaaS space.
• Software vendors – These players are critical to the cloud since their solutions are what actually add the business value on top of the lower cost solutions provided by the Cloud Infrastructure providers. Their software (and just as importantly their licensing) needs to change to enable the cloud shift for organizations. Taking advantage of the many cores that can be applied to the new leveraged environments and to have the solutions fail over gracefully when needed with no downtime is something the software vendors need to continue to address.
• Industry consulting – As more of the infrastructure operations and management functions are provided by 3rd parties, the need to integrated it all together in a unified, business value generating solution still remain. Consultants still play a role by having the deep expertise that can be brought to bear on the strategic cloud move.

Businesses specialize at the intersection of these IT industry components:

• SaaS – this is where the software intellectual property mentioned earlier meets the cloud infrastructure. Business application functionality is offered as a service by subscription. The consumer does not normally see the IaaS issues that may reside under the SaaS layer.
• Cloud Integrator – This is where the IaaS capabilities are used by consultants to help modernize both the infrastructure and the application portfolio and make it operate effectively in this new environment. Since the value needs to be generated against the organizations business model, integrating the various components can be critical to effective use of the cloud.
• BPO – Business process outsourcing has been around for decades and it usually involves access to both the software IP as well as the personnel with the industry (or at least process skills) required to take on specific business functions. It allows organizations to concentrate on areas where they want to focus and offload other business functions to experts in that area. Some organizations have relabeled this to BPaaS so it can align to the XaaS abbreviation model, but BPO has always been cloudlike.

Finally at the hub of these intersections is the cloud broker. This function may do all of the items previously mentioned or just perform 3rd party administration ensuring that a unified solution meets the needs of the business.

They need to have expertise in a wide range of hardware capabilities, ranging from the servers through the desktop and mobile platforms – after all the computer you have with you all the time is likely a smartphone.

They must also understand the analytics and user interface issues to weave together all these possibilities into a solution that is coherent and effective for the business. No one wants to be distracted by user interface or data inconsistencies. The elimination of latency through the use of automated workflow and techniques that allow people to focus on the anomalies and automate “normal” is key here as well.

There can be a range of capabilities in this cloud broker space ranging from the simple sourcing manager all the way though the business model integrator who deeply understands the business and technology objectives of the organization and is constantly on the lookout for technology solutions that disrupt the status quo. They need to be experts on the kinds of problems that usually hurt cloud deployments. Some of the descriptions of the cloud broker function that are out there make it seem like an IT management function, but to me its roots are deeper into the business needs and expectations than that.

What is common to this range of cloud broker is that the IT complexities of managing the workload and the vendors should be hidden from the end user – and to some extent the end business. After all if they wanted to know these details and manipulate the controls, they should have someone on staff that is performing the function, instead of purchasing it as a service. Many CIOs are going to spend much of their future effort in the cloud broker function, among other things.

Although these cloud broker function may seem like a vision, there are a few organization that HP supports today where this level of performance is expected and delivered.

There are some recommendations I can agree with though:

1)      Understand your window of opportunity – We can all see this happening. Know what is happening in the marketplace and if you retain your infrastructure what is the price point where you would change to a different model. If you don’t understand this point, you are passively deciding to stick with the status quo.

2)      Build trust with the right partners – I used the term partners here because I’m talking about a close relationship. Understand where they are headed. What are the lock-in issues? How does that make you feel? The farther out your headlights shine and the sooner the direction and issues are understood the less likely you’ll over-steer later.

3)      Plan to invest – There are many skills involved. You may not have them in-house. You will likely need to do some pilots to understand the implications financially, behaviorally and on the staff itself.

I was in a discussion this morning where an individual was talking about Business Process as a Service (BPaaS) and its role in organizations adopting cloud. I had to stop the meeting and ask: “Aren’t you really talking about Business Process Outsourcing (BPO)?”

A bit of dancing went on about the “as a service” model… and how it is different, but when we dug into the differences, they began to evaporate.

BPO has been around for decades and has always been multi-tenant, pay by the drink and most of the other elements that define cloud. Sure you don’t normally buy it using a charge card, but it is very flexible. It seems to be that those that use BPaaS are essentially “cloud washing” a concept that has been well understood and adding value for quite a while. What do you think? Is it really different??

One of the trends that’s been going on for a number of years is adding flexibility to an organization’s capabilities through variable access to resources from a variety of organizations. This multi-sourcing turns a corporation into an Ecosystem of service providers and in-house teams. This is nothing new and IaaS, SaaS… are the latest examples of this trend.

Over the last decade as more work is outsourced, the oversight of the various service providers has become a specialized service area in itself – much like the prime contractor role for construction. It’s not just about the provisioning of services though; the focus is on the on-going orchestration of services as well. Many times the Service Integrator (SI) accepts the software/hardware from the service providers into production for the client as their representative. The SI role is a business process (BPO) that’s been outsourced. They need to have expertise and focus on centralized management, becoming the “process owners” standardizing operational processes and ensuring an enterprise architecture exists and is implemented.

As businesses move to adopt hybrid cloud computing approaches, the skills of these Service Integrators should start to shine, since they will be experts in the delivery of end-to-end solutions that consistently deliver value. The dynamic nature of cloud is going to require specialized expertise that organizations will need to determine if they want to develop in-house or purchase from others – the assumption that it will be in-house is no longer valid.

Selecting a service integrator that can orchestrate a hybrid delivery model is not going to be easy since they will need to manage:

• Multiple providers – not just the people but integrate the systems and measures (KPIs) as well. For example, you can’t drop service requests between providers just because their systems haven’t ever talked to each other before.
• Processes – The SI will need to have well defined (and automated) processes that can span organizations as well. They need rigor and flexibility – a tough combination to maintain.
• Thinking strategically and acting quickly – Since the service integrator is in it for the long haul, spanning the contracts of the other service organizations, the SI will need to be measured with metrics that are more strategic in nature. Since they are coordinating the response of others, the operational metrics will be applied as well. The diversity of focus for these metrics can cause conflict, so communications across the Ecosystem will be a key to success.
• Sourcing and operational issues – The SI is brought in to allow the client to focus on strategic business issues so the SI needs to handle the technical concerns. Trust is the foundation for this relationship. Knowing the status of the current situation as well as progress toward corporate goals will be a characteristic of the successful SI.
• Service development, management, improvement and operations – The SI needs to take charge and be a trusted advisor to the client on performance and payments to all the service providers.

There is no doubt that large firms possess many of the capability necessary to run the service integrator function internally. Many desire to retain this vital function in-house because they want to control the governance and solutioning model. The question that needs to be answered is if the IT service integration is core to their business and where they want to spend their internal resources. As the corporate Ecosystem becomes more complex, more specialized skills will be required. Investing in creating and maintaining those skills and tools needs to be an active decision. This is becoming a specialized skill that will prove to be tricky for many organizations.

The conflicts mentioned previously between operational and strategic focus, measures and integration are opportunities for innovation in service integration. Service integration specialization will enable an increasing level of flexibility for many organizations. 3rd party providers are going to bring skills to the market (and your business) that may be out of reach internally. The build/buy decision starts with a  fundamental assessment into how well your current sourcing strategy supports your IT operating model and then looks deeper to figure out how well your IT operating model supports the business strategy. The decision is formidable but bringing in a third party will challenge your organization and your service providers in how they price their work, reconcile conflicts of interest and qualify their provider. The service Integration role will turn into a critical success factor for enabling a more flexible and highly integrated instant-on future.

Naturally service integration is an are HP has been working in for years.