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Cloud service broker: The financial drivers and benefits

KeithMacbeath

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I’ve written before about the way that cloud forces a shift in IT’s operating model. As cloud adoption matures, we’re seeing such a shift play out in businesses around the globe. IT is realizing that it cannot deliver the agility the business needs if it continues in the traditional mode. Instead, it’s transforming into a broker of services. But this transformation has far-reaching implications, particularly from a financial perspective.

 

The cloud service broker role forces IT to operate more like a business unit than a cost center. And, in the process, a cloud service brokerage serves business needs for greater agility, usability, cost management, and control. At HPE Discover London, HPE will be showcasing an array of demos, workshops, and sessions on cloud service broker solutions. Here’s a look at the financial forces driving the transformation to cloud service broker—as well as the financial benefits you can expect from making the journey.

 

Today’s cloud marketplace? Confusing and complex

We all know that businesses are turning to cloud providers in the search for agility and financial flexibility. Cloud promises choice in digital delivery. Now the problem is too many choices at every level of the technology stack:

  • Application
  • Platform
  • Infrastructure

Shopping for cloud services in the marketplace presents myriad questions around suitability, cost, performance, security, and other key factors. Lines of business can become overwhelmed by the choices and the complexity of managing cloud services—or they may make poor choices that increase risk and waste.

 

Of course IT has experience in outsourcing services – but traditionally on long-term contracts. By introducing a real-time element, the proliferation of cloud services stretches IT’s sourcing and management capabilities as well. Without the right tools, governance and framework to broker multiple services, IT will not be in a position to help the business resolve complexity in in cloud sourcing and management.

 

In addition, the marketplace for cloud services forces market economics onto internal IT. Now, not only is IT sourcing services from multiple providers, but it also must represent its own services alongside those external ones. How can IT recommend internal sourcing unless it’s able to demonstrate a credible cost and performance comparison of its services versus those of an external provider?

 

IT as a business and the 4 Ps of cloud finance

The transition to cloud requires IT to transform into an internal business focused on demand and supply. It needs to capture the mix of services its internal customers demand and decide how those services should be supplied: that is, which should it offer as an internal provider and which should it make available from external providers. In making these decisions, IT needs to consider the four “Ps” of cloud finance:

  1. Pricing. Identifying, understanding, and using the new financing models that are leading to a fundamental shift in IT's enterprise role.
  2. Planning. Assessing customer demand and creating a strategy for meeting specific needs.
  3. Participation. Engaging shareholders to get a better handle on which services to offer and which to avoid.
  4. Processes. Establishing ordering and billing processes that are simple, fast, transparent, and reliable.

This is not easy work to do. But cloud service broker solutions can help. And having made those decisions, IT can ensure ease of consumption for business and application teams. Acting as a cloud service broker, IT can ensure that the right mix of services is easily available, facilitate the right mix to be consumed for each delivery, and enable the delivery of services with value-added aspects such as security, assurance, dynamic cost optimization, and financial transparency.

 

Here’s a deeper look at two key benefits that relate directly to your bottom line.

 

Automated cost optimization and service assurance

Hybrid service delivery promises to meet variable demand with variable cost. But to truly capitalize on this promise requires a full brokerage capability.

 

In the past, IT built infrastructure sized for peak capacity. As a result, infrastructure utilization might be as low as 15%, with extra capacity sitting unused except for those rare times of high demand. But a cloud service broker solves this problem by enabling business users to maximize utilization of lower-cost infrastructure (private cloud) and scale out automatically to a more expensive public cloud option when demand peaks.

 

This ability to automatically provide dynamic capacity can be represented in your service catalog. Ideally, your cloud service broker solution has load balancing built in, along with pre-approved budget controls, to enable cloud bursting (extending infrastructure into public cloud) as needed. When demand decreases, public cloud services can be automatically de-provisioned. (See our Cloud Service Broker Platform demo at HPE Discover London to learn more.)

 

Financial transparency to LOB management

As IT is automatically and dynamically optimizing cloud services, it also needs to be certain that it has visibility into service costs. Although in the past IT has created chargebacks to the business, financial transparency—especially at a granular level—has been elusive. But with HPE Cloud Service Broker solutions, IT is able to track actual costs against plans, and dashboard the result.

 

Financial transparency into the true cost of IT services creates a feedback loop where IT and the business continue to refine cost and agility considerations. For instance, you might have a situation where different consumers are consuming services from many different providers. Under those circumstances, it’s difficult to track whether you’re doing a good job of managing costs. That’s why you want to look for a cloud brokerage solution with a mechanism that provides such feedback.

 

You should also have a showback mechanism to show to the line of business which users consumed which types of services. If you wish, you can put in an approval control to set budgets for different lines of business, different sets of users, or different projects. As new requests come through the service catalog, the system tracks whether there is indeed budget available. This gives you a proactive cost control mechanism, as well as a way to show back after the project so that people can analyze what they’re actually spending.

 

Learn more about cloud service broker

If you’re going to HPE Discover London, look for a number of sessions and demos around cloud service broker, including:

 

Find suggestions for how to enjoy London in the HPE Business Insights guide to East London nightlife.

If you won’t be with us in London, you can always check out our Service Broker Consulting Services to learn more.

 

Related links:

  • Digital_Transformation
About the Author

KeithMacbeath

Keith Macbeath is a senior principal consultant in HPE Software Services specializing in applying BI techniques to IT Performance Management, including Cloud Financial Management. Keith has years of experience in data services, solution delivery and consulting to the financial services industry in London, Tokyo and New York.

Comments
MarggieHopkins

According to this amzing article Cloud services - this is not only a convenient tool for keeping your own information (all my articles, that was written during my working as freelancer at https://www.upwork.com/ and https://theessayservice.org/ still are collecting in the cloud), but also a great way to manage it, work with a lot of programs without the physical installation of their own terminal, simultaneous access and file editing, and, of course, huge opportunities for the development of the entertainment industry. And these are just the main areas behind the development of cloud technologies. If you take into account the computing capabilities of computers, at some point connected to the World Wide Web, the prospects for the development and use of such services look very tempting.

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