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Do this and your IT org can be competitive with cloud vendors


Erik van Busschbach.JPGBy Erik van Busschbach


If you’re in central IT, how likely are you to hear this from the line of business? “Wow, guys, I never thought you could do the same thing as a cloud vendor.”


If you say “never,” then we should talk. As I wrote in my last blog post, central IT can regain control of the service lifecycle, drive business innovation and increase customer satisfaction. You can compete with cloud vendors on services. To get there HP Software Professional Services uses a framework called the IT Value Chain, which is basically a blueprint you use to transform your IT. My particular focus when I work with customers is at the very top of the value chain, in an area we call IT Services Strategy. When you fix your problems here, you drive down through the other parts of the value chain and improve all aspects of your IT operations.


If you want to hear LOBs sing your praises, you need to transform into a services-centric organization. Here’s how IT Services Strategy helps you do that.


Transforming into a services-centric organization

When I work with customers on IT Services Strategy we talk about three crucial steps they need to take:


1. Create a bill of material for all your business services: Simply getting people to internalize what it means to be services centric is the most fundamental change your IT strategy department can make. So you want to start with what the business thinks of as a service and then break it down into a bill of material. What you’re trying to get is the decomposition from the thing that the business does, all the way down to the IT components involved: the application, the server, the database, the network, the storage and the data center.


2. Get clarity around cost and performance of the service components you provide: Take that bill of material and associate cost and performance data to each item. This step is essential to being able to determine whether you can get a service cheaper or at better performance from a cloud vendor as opposed to providing it yourself. You need to know what you’re capable of before you move to the next step.


3. Lead the conversation around business tradeoffs: Once you are able to attach cost and performance data to service components you’re able to make considerations like:

  • Do we need to do this ourselves because we’re unique and the only ones who can provide this?
  • Should we do this ourselves for security or risk reasons?
  • Could a third party do this at lower cost or higher performance?


Increase speed and efficiency by moving from projects to components

There’s a concept from manufacturing I find very useful to illustrate the shift that’s required in doing this service-centric work. In manufacturing you have a process called engineer-to-order, which is project centric. When you engineer to order, you’re doing a one-off for a customer. At the other extreme is configure-to-order, which is centered on components. In a configure-to-order model, you take a standard component and plug it in.


This is the key concept I try to convey around IT Services Strategy: You want to shift from engineer-to-order to configure-to-order. Doing projects makes you slow, unpredictable and costly. If you go configure-to-order, it makes you very predictable, very fast and a little bit less flexible. Of course you have to find your own balance. So when I work with customers I might tell them, “If your ratio is 80% projects to 20% components, let’s shift that ratio. Let’s go 70/30, 60/40 or 50/50.”


The great thing is that, once you get these concepts, you can see how it all fits together and you can make incremental changes. You don’t have to do it all at once. I might work with someone to help them cost their services or understand how their services break down into projects versus components, and I’ll show them how it all fits together under the overarching IT value chain. The exciting thing for me is that it takes a very short time to convey the ideas. So I can put the keys in customers’ hands, and it takes hours or days, rather than weeks or months. Contact HP Software Professional Services if you’re interested in learning more.  


Erik van Busschbach is a CTO in the HP Software Professional Services Strategy and Solutions team with 15 years in IT enterprise software development and delivery. With experience across the entire software value delivery chain he knows what it takes to turn strategy into results.


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