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5 most common mistakes when becoming a cloud service broker

Ops_Guest

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Guest post by Wiemer Kuik

A powerful role has been carved out for the service broker in the new world of hybrid IT. While this role is quite different from what most people in IT are used to, it has become more and more critical. Over the past few years we’ve worked with customers to evolve and expand the role of the service broker. However, in these customer engagements, we’ve seen some recurring misconceptions and mistakes that have hindered the success of their service brokers. Now we’d like to share five of these insights with you, to help you find the right mix for optimal service brokering.

Understand the new operating model

Most transformations to the service broker go off the rails due to a lack of understanding of one concept—this is about fundamentally changing the operating model of IT. Most people in the IT industry aren’t even aware that there are options in the way IT departments can be structured. The operating model has changed from a mostly “engineer to order” to “engineer to stock.” This new model has had an enormous impact on the way IT is organized, what the goal is, how success is defined, and what IT will deliver.

But instead we are seeing that an organization moves to the service broker operating model without clearly communicating it to every level of the IT organization. Maintaining an “engineer to stock” approach could result in having as many customized services at the end of project as there were at the beginning. That’s why it’s crucial you communicate this shift clearly to everyone at the onset of a project, and then keep repeating the message.

Link the service broker to the business goal

The change of the operating model is not a goal in itself, but it is linked to a clear change in the needs of the company. Changes in the competitive landscape will inevitably lead to new directions in the way a company models its future. That clear value model, including defined strategic outcomes, will determine the changes in the value chains and the alterations in the business models. Those changes are typically described in business terms such as “time to market,” “marketshare,” “IT cost compared to a benchmark,” or “moving from CAPEX to OPEX.”

In those new business models, the role of IT will most likely fundamentally change as well. This means changing from a department that’s focused on efficiency and predictability to an organization that’s focused on responsiveness and standardization. Put another way, the department is moving from consuming resources based on an allocated budget to consuming resources based on demand forecast. If one fails to make it crystal clear to everyone in the IT organization why the change is needed, everyone will stay in their comfort zone. Their behaviors stay the same and nothing will change.

 

Recognize the new multi-source reality

The core of the service broker concept is the understanding of a multi-source reality. For most companies, multi-sourcing IT services, sanctioned or unsanctioned, is already a reality. This means that the business has realized that it now has choices in where it can get IT services. In this world, the IT department must transform from a monopoly (“We’re the only provider, this is the best we can offer”) to a one-stop shop of IT services (“We can offer you the best services available, either internally or externally sourced”).

This new reality means the first question for everyone in IT should now be, “Given the demand of the business, and in light of our new operating model and business goals, what is the best source of this service, instead of just best technology?” This approach has great benefits for the business, and it also helps IT regain relevance in the new value chains.

 

Instead, it is important to kick off projects with a clear focus on the core of the business. Doing less work and getting faster output is a great way to work in the new style of hybrid IT. Communicate the role of the service broker to the whole IT department on day one, so everyone starts making the right decisions.

 

Create a new service broker function

To take on the role of service broker, you’ll need to adopt a new mindset (including different goals and metrics) and a clear plan to make it all work. Start with a description of the service broker role—clearly separated from the current operations functions of IT—with a direct report to the CIO. The accountability of the service broker must be separated from the IT delivery organization from the start.

In many cases, decisions in favor of external service providers will be perceived as a threat to the jobs in the IT department. So the service broker must be enabled to work independently and have clear accountability. When the accountability isn’t clearly separated, you may find others in the department trying to hang on to the status quo and hindering the service broker’s success. To avoid this, clearly define the functions, roles, governance, and audits before focusing on the more technical aspects of the role.

Describe the services

It’s illuminating to see how new services are described in the early stages of the move to the service broker model. The service descriptions are usually highly technical, focused mostly on the supply side. It can be likened to the waiter telling you all the details of the kitchen, the ingredients of the food, and the make and model of the dishwasher when you order a meal. But a true description should look at services from the demand side. Hybrid IT means separating demand from supply, and introducing services accordingly. So the right starting point is the service definition.

The service definition should be so appealing that potential customers will want it. A service catalog that only has technical descriptions is fine for internal IT use, but for any other audience it should be complemented with a business catalog. In other words, sell the meal, not the kitchen.

While there are always other factors and issues, the ones described here are most common. If you want to learn more about service brokering and see live examples of customer roadmaps to the new hybrid IT world, please feel free to contact us.

About the Author

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Comments
Stuart Crann

It's a great concept and definitely the right way to look at an ROI as well as getting the right price as a buyer.

Just be careful that "one size doesn't fit all". Secure contracts still insist (as some people burnt by offshort, cloud and even hybrid soltusion) on keeping things on-premised and using CAPEX to to buy their services outright.

It's an odd world!

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