I was in a discussion yesterday that touched on the trends in the IT services space. The biggest trends are thoroughly discussed in the trade press, but I had a slightly different and hopefully more strategic perspective to share.
- In 2011 and 2012 there has been a great deal of discussion about the movement of work from on-site to cloud based off-premise. Most organizations have at least stuck their toe in this space, it seems to have moved out of the early-adopter area, at least from a pilot project perspective. A closely related trend is the move away from human centric processes to human augmented processes where automation plays a key role. IaaS is the leading example of an automated business process that just happens to be IT based – all business processes are headed to this model. I was talking with a marketing person just the other day about the fact that automation is the new off-shore.
- Also in 2011 and 2012 there has been lots of press on social and mobile with a focus on providing a 3rd platform for the deployment of business systems. That perspective was fine for the turn of this century, but today the trend would be more accurately portrayed as an Nth platform model. Tablets (for example) where not popular just a few years ago, even though they had been around for over a decade, now they are one of the fastest growing areas of innovation. The whole view of BYOD movement is oriented around out shift in focus on the data and its access, not the devices. The business access platform may be a game console or some other device beyond the phone or PC, yet organizations need to be able to ensure information security
- The whole industry is shifting back to its roots of a more industry expertise centered value generation approach, requiring deep expertise in a number of industries. Related to this shift is the fact that service platform delivery is as much about behavior as it is about the platforms themselves. That is why ‘gamification’ or metrics-based behavior modification is going to be of increasing importance -- it is applicable to all aspects of services.
- The custom solutions delivered in a standard way will become a core service provider capability. We’ve seen this in the cloud computing space but much more of the market will become IP asset-based, where a core piece of software/service (possibly including human assets and skills) forms part of a standardized offering. Of course there will always be the issue that one organization’s commodity is another organization’s reason for existence. Those that have the skills and the IP to make it easy to buy will still be able to differentiate.
Do you think there are trends that I am missing? If so, what are they and why? Is there anything you should do about it?
Last week I posted on multi-sourcing and its implications on IT cost that got me thinking about a post in CIO titled: U.S. Beats India for IT Outsourcing Innovation and Understanding that reinforced my frustration with those who equate outsourcing with off-shoring. Yes, there is a geographic connection, but let’s not make it tighter than it actually is.
For over a decade the organization that is currently HP ES has been using the concept of best-shore to ensure that the right people with the right skills are applied to the problem at hand. The broad brush labels used in this CIO article just do everyone a disservice, in my opinion. The issue of innovation and outsourcing has been around for a long time.
People are not fungible – they bring a unique set of skills, resources and capabilities. The offerings in the services industry (beyond the most basic IaaS) are about selling people’s capabilities, especially to larger organizations that want solutions tailored to meet their needs. That is part of where the innovation in the services space comes from – doing custom work in a standard way. The relationship has to be structured to make innovation happen.
The use of other organizations to extend the enterprise is a strategic decision that needs to be treated as such. It is not just about cost cutting. It is about meeting the needs of the organization for quality, security… , as well as cost effectiveness, using whatever means are necessary. As organizations move their service needs up the value chain into more personalized/consumer focused services, these quality issues are paramount, since a confused or frustrated customer is typically not a return customer. The focus needs to be on quality. The geographic location is just a distraction, if the quality is the same.
Gartner recently put out a video describing some of the forces that are reshaping the fundamentals of how IT services providers deliver & sell and how buyers consume. Delivery models and methods are coming that will improve the quality, predictability and value of service offerings. It may be that greater physical "face time" improves the relationship more than just the cost benifits, regardless of where the work gets done.
Now that the benefits of cloud computing are firming up and organizations are moving beyond “if” into “how”, the question of public vs. private clouds is taking center stage. There are those who view private cloud as just virtualization or not really cloud at all.
Companies like Google and now Microsoft are pushing an all-public cloud model by offering services such as Google Apps and Office 365. While other companies are hoping to eliminate the security concerns around public clouds by looking to bring similar capabilities in-house as a private cloud workplace service.
In all of this noise about cloud, there remains a lack of clarity around what the cloud really is, where it exists, and how you can incorporate it into your existing enterprise and do something meaningful. This confusion is part of the reason cloud comes off the peak of expectation and enters into the trough of disillusionment. Just because the rest of the market may go through this process, it doesn’t mean that your own enterprise will. People are beginning to realize that each organization can have its own definition of cloud.
This confusion is most obvious in the range of terminology used to describe cloud offerings. “Public cloud”, “private cloud” and “hybrid cloud” seem to be confusing at various levels and just because you understand them from your context, it doesn’t mean that when you talk with someone else it means the same thing to them.
I’ve written numerous posts about cloud over the past few years and have been talking about the concept since the turn of the century, but I don’t think I’ve ever written down my definitions:
- Public cloud – This is a multi-tenant, pay by-the-drink service that is highly scalable and dynamic and accessed over the public Internet. It may be infrastructure, its operations, software, or even access to the capabilities of personnel running a business process. It allows for access to environments (someone else’s capital investment and intellectual property) to meet your business needs. This is ideal for when usage needs are undetermined and the data transport and security issues can be overcome.
- Private cloud – An intranet based set of leveraged hardware, software and services. It is centrally managed, usually charged out within the organization for usage. It is also highly scalable and relatively dynamic. For large organizations that can afford the capability it provides a more clearly defined and auditable secure environment. It may be hosted by someone else or within an organizations internal data center – after all it’s the network that provides the data transport and hardly anyone owns that internally anymore. This is ideal for when you know generally how much computing resources you will need and the data transport and security issues require greater control.
- Hybrid cloud – This is a combination of the two environments, usually requiring specially created software and management tools and approaches to allow the work to flow between the environments. Almost every organization of size that does anything with public cloud will likely need to have a hybrid cloud environment in their enterprise architecture.
Another area of confusion is caused by there being a couple of things about the move to cloud that I think are totally underestimated.
1) The integration effort between software and environments. The data just doesn’t magically keep itself in sync.
2) The need for consistent user interface to present information in context.
3) The security and data transport concerns. You can only work on the data if you can get it to where the work needs to get done, in a secure fashion.
4) The exit strategy – what will you do when you are done with a cloud service provider? How will you get the data that started out as megabytes and ended up as petabytes into the new environment?
Some people ask “Are we headed to an all-cloud business model in the future? Are in-house IT departments headed for extinction? Is Outsourcing dead?” Probably not, yet cloud computing is here to stay and its implementation is growing. Gartner forecasts revenue for cloud services in 2010 to increase 16.6% over 2009, up to $58.6 billion.
There are numerous opportunities to apply this computing abundance in new ways for those who want to plan for it. I'd say one of the first things organizations need to do is define their priorities and set expectations that any efforts will make.
I came across this video about HP’s efforts to support containerized data centers and it looked worth sharing.
Although the concept of a containerized data center has been around for a while, this assembly line approach to creating Performance Optimized Datacenters (POD) is definitely a sign of how the concepts behind private clouds or data centers are changing.
New generations of containerized computing approaches can help address the fact that time to market for data centers can be an important attribute of getting new functionality on line, we're definitely moving beyond the early days of canned compute. Since Purdue is using PODs, I knew they had to be good (alumni plug).
Since the interfaces for these PODs can be standardized, whole new levels of automation, monitoring, operational efficiency and bundled solutions are possible.
Joe McKendrick had a blog post a while back that asked Do SOA and Enterprise Architecture now mean the same thing? I’ve said in the past that cloud is also very dependent on good EA (at least above to IaaS layer).
I personally view that EA is about the alignment of enterprise business goals with technological initiatives from an end-to-end perspective. SOA is about the assembly of functionality from services is definitely impacts the Enterprise Architecture as it’s defined but is a subset. Going forward I firmly believe that it will take on a great portion of the EA as more of the items that used to be in the EA are hidden in services coming from SaaS vendors.
Getting the most out of the cloud is definitely one of the roles that EA will need to take on. All these different buzzwords do address the issue that businesses expect differentiated value from their IT systems and at the same time lower costs and higher quality. These techniques will all need to come together to make that happen going forward.