Cutting through the cloud

I closed my recent column Time for action with an analysis from the Institute for Government’s March report System Error – Fixing the Flaws in Government IT. It positions its argument for change in the government’s approach to delivering its ICT agenda around the two concepts of platform and agile.

I recently made presentations to three audiences. The first was a gathering of local government IT and procurement managers courtesy of the conference organisation Inside Government.

The second was to ICT vendors courtesy of the trade association Intellect, and the third to a senior team from a young outsourcing venture. The common issue with all three audiences was the real challenge of charting a practical course of action into this new world of platform and agile.

There is real confusion here, significantly increased by the marketing fraternity labelling almost anything that moves as The Cloud.

That there is now a great opportunity for positive change in how the ICT agenda is delivered is not in doubt — the case for sharply cutting operating costs (platform) and sharply increasing responsiveness (agile) is understood.

The enabling capabilities of technological virtualisation underwrite the new generation of high-productivity, low-cost service factories that support the platform (think Google Apps and Force.com) and allow the implementation of effective Service Oriented Architectures (SOA) that enable the agile.

And the likes of Amazon and its Elastic Cloud have revolutionised commercial models in our industry with its ‘source on demand, pay for as consumed’ proposition.

But charting a practical course of action does require clear thinking.

A good starting point is an understanding of the transformational changes being wrought by the impact of the phenomenon of virtualisation on each of the three key ‘landscapes’ of our industry.

Firstly, the Technology Delivery Landscape. Virtualisation is transforming the modus operandi of technology delivery: where standardisation and automation are possible the new service factories are becoming the norm and feed a fast-developing market for Infrastructure as a Service, Platform as a Service and Software as a Service.

Effective operation in this universe of the virtual service requires new industry-wide standards (both open and proprietary) plus new operational approaches to delivering key aspects of assurance — in data management, security, continuity, service integration.

Service factories are now a fast-growing reality — but work to create and deliver the new standards we require is at its early stages. So caveat emptor: advance, but advance with care.

Secondly is the Vendor Competitive and Contractual Landscape.

The advent of the highly automated services factories challenges the business models of many vendors:

– Do they reposition into the new high technology/people ratio sector (killing long established ‘bums-on-seats’ business models) and compete as factory managers through deep expertise in service automation and manufacturing operations (platform) – Or do they focus in serving markets where the bums-on-seats model earns its keep through deep expertise in specific applications and markets combined with deep intimacy with clients’ businesses and their clients themselves (agile)

A vendor cannot position itself both ways, as the nature of the businesses at their core are too different — starting at the contractual, where the factory (platform) is about the ‘on demand’, standard Ts and Cs, and no term contracts — while the ‘agile’ will justify term contracts, but only where business relationships approach joint business ventures in their nature.

So again, caveat emptor: has your vendor clearly reworked his business models to compete in this new world and genuinely repositioned his operations accordingly?

Thirdly we have the Enterprise Operational, Systems and Contractual Landscape. The developing opportunity is to take out major chunks of your operational costs by restructuring around directly sourced back and front office transactional services and their supporting infrastructural services, procured on an on-demand arms’ length basis. In many companies, transformation of legacy-system sprawl is the chief restraint.

The potential to liberate in-house resource to refocus it on front-line client-close and market-deep operations is the real motivation here (this is where the competitive battle is won or lost, after all).

So get the CEO on board and plot the Big Change! But again, caveat emptor: take a sceptical approach to your existing vendor community, critically examine their proposals and be prepared to rework your supplier portfolio.

A well informed understanding of the transformational processes at work in each of these three landscapes is well worth the effort invested, as the insights gained will help disperse the current cloudy confusion and inform a practical plan of action.

Richard Sykes was vice president of IT at ICI in the 1990s and is now a consultant