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Moving to service brokerage (it’s not the same as SIAM)

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Felix service brokerage.JPG

 

By Félix Fernández

 

Félix Fernández is a CTO with HP Software Professional Services.

 

When talking about service brokerage—where IT delivers both internal and external services to users, often through a single catalog—a common question arises: “How is this different from SIAM?” After all, because the aim of Service Integration and Management (SIAM) is to present a tailored, unified set of IT solutions to support business processes, the service brokerage model is in many ways SIAM evolved. Instead of a few solutions that are highly customized for your enterprise, you are using many services from a mosaic of vendors. In effect, instead of relying on pre-implementation scoping and requirements exercises, you are using the marketplace as your customization tool. And, because these services are offered in a fairly uniform way, businesses are forced to standardize their operations.

 

Deciding which IT services to outsource
Many of our customers have been frustrated in the past because they spent a lot of money building and customizing solutions, but ultimately didn’t see the value that they were expecting. Usually, this is because whatever they built didn’t address their core business. If it’s not for your core business, chances are that a cloud supplier will have a simpler, easier way to handle things. The solution probably won’t be as customized or as perfect as you’d like, but for a much lower cost of ownership it often makes financial sense.

 

The shift from customization towards standardization is one of the reasons that service brokerage differs from traditional SIAM. The other big difference is that service brokerage usually entails shifting from a small number of suppliers to a large number of suppliers.

 

When you consider that many analysts predict that about 20 percent of software is going to be sold on SaaS by 2018, most customers will have hundreds of suppliers. Whereas SIAM is quite useful for managing ten or so outsourced solution, most companies will probably have 200-300 outsourcers in the very near future—if they don’t already. These solutions aren’t going to be customized for you, but the exact selection and total number of services is going to be different from your competitors.

 

What’s driving service brokerage?
There are a number of reasons that more customers are moving towards service brokerage to meet their IT needs. Let’s take them one at a time:

 

  1. Cost reduction: This is the most common, but probably not the most important driver. Customers want to expand the horizon of IT capabilities and at the same time reduce costs
  2. Simplification: Traditional tools no longer fit the way many companies do business. We have customers who have up to 40 or 50 different catalogs who are beginning to realize that they need to aggregate all that information and that in the face of too many choices IT consumers are confused. So, moving to a single, service-brokerage catalog can simplify things quite a bit, and this often uncovers redundancies that can then be pared down.
  3. Innovation: Customers want to innovate. When you have a service delivered on the cloud, it’s easy to consume and has a pricing model that is based on monthly rate. We have customers who have strategically decided that they want to have up to 70 percent of their IT services outsourced to cloud suppliers. Strategically, they prefer this model because they know they will be able to easily change their IT infrastructure to spur innovation as business needs grow and evolve. These customers are still thinking long-term, but would rather stay flexible with a short-term IT solution.

Do you notice that there’s one thing not on this list that most readers likely expect? Shadow IT. Obviously the shadow IT discussion is common but it’s not the main driver: It’s a symptom of an IT department caught off guard, but it’s not the disease itself, so to speak. Nevertheless, customers are very worried about shadow IT and are looking for way to convert shadow IT into controlled IT.

 

I’m in! How do I move to IT as service broker?
You can start by asking yourself two important questions:

 

  • How many contracts and how many suppliers do you have? It’s also important to understand how much time and effort is going into managing those contracts and suppliers. This is often an eye-opener.
  • How many people are truly using the services you already have? The answer to this question has cost ramifications in two different ways. Services with very low use that aren’t business-critical, or that can be addressed by other services, should probably be discontinued. But, for very popular services, the big user base will be more expensive under a cloud consumption model. That doesn’t mean cloud isn’t a good idea in cases like this, but, the cost is something to consider ahead of time.

So, SIAM is still useful, but at heart, service brokering is SIAM updated for our cloud-everything age. To learn more, read The New IT: Managing and Delivering Services in a Multi-Vendor Environment.


Felix2.JPGFélix Fernández is the CTO of HP Software Professional Services covering IT4IT, ITSM, PPM and SIAM. He is @ffromero on Twitter.

 

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Comments
harn145

If a "service broker" is to provide controls over services offered through it's brokerage activities, as suggested in the alleged benefit of "convert[ing] shadow IT into controlled IT," shouldn't the IT organization then know how to ensure alignment of those external services to their controls?

 

If so, how exactly is that different from SIAM? It seems to me that this article is based more on the lack of a good understanding of SIAM, and/or a desire to create "marketing advantage" than on a proper analysis of SIAM.

 

In actuallity, the opposite is true. A "service broker" (aligned to your definition) is a subset of organizational designs flowing from SIAM. The focus in design for such a "service broker" is to ensure the internal organization is aligned to standard(ized) external services, allowing proper assessments of those services against internal requirements (such as integration, data security, connectivity, availability, etc.) and the creation of exception reporting for those services. This ensures the business understands the exposure they have (risk, brand, etc.) when chosing these external services. If IT is set up to provide additional services to ensure compliance, they are more closely aligned to "traditional SIAM."

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