Tag Archives: Gartner

July 15, 2012 · 3:57 pm

Gartner research note sets out how the Cloud Services Brokerage market will grow

Cloud Services Brokerages Challenge Traditional IT Service Providers for Cloud Services Delivery

There is confusion about why the term “cloud services brokerage” is needed when traditional IT services firms already embrace an array of cloud services. We examine why we need the term “cloud services brokerage” in cloud computing and the broader traditional IT services market.

Tiffani Bova | Daryl C. Plummer

Published: 1 May 2012 ID:G00233235

Key Finding

  • Cloud services brokerage (CSB) defines a role and key value propositions for new cloud-enabled IT services offerings that the market is demanding.
  • CSBs have cloud at the center of their solutions and business models, whereas traditional IT services providers are transforming and transitioning their portfolios to include cloud services. CSBs won’t likely offer traditional application and infrastructure services without the presence of at least one cloud service.
  • Many traditional IT services providers are struggling to define their path in cloud services, as they face challenges in delivery, growth and profitability, without undoing their core business, which has been immensely successful and profitable.
  • CSBs do not eliminate the roles that IT services providers have played and will continue to play in the market. Instead, CSBs are focused on providing seamless and flexible access to multiple cloud services (many of which may reduce costs or complexity around consuming multiple cloud services). CSBs will introduce more competition and place more pressure on existing, and sometimes incumbent, providers to reduce scope, scale and complexity in their offerings.
  • Understanding the value that a CSB provides by consuming multiple cloud services gives internal IT leaders who are driving cloud adoption a focused way to understand what they should be focused on. Also, it gives traditional IT services providers guidance on which IT service roles will be most affected by cloud.
  • Many traditional IT services providers are pursuing cloud services as new offerings; however, these are not the same roles that will drive the growth of a composite CSB market. A CSB plays a specific role within the cloud services value chain and is not required in all instances.

Recommendations

  • Sourcing, vendor managers and CIOs: If cloud services are the center of a desired solution, then use the CSB select/evaluation criteria versus the traditional IT services criteria (see “Essential Provider Selection Criteria to Use When Outsourcing the CSB Role”), because the CSB attributes address a different set of requirements.
  • When planning your overall cloud strategy, taking into consideration the most effective and efficient acquisition and support model should include the option of leveraging a CSB, especially if you plan to consume more than three different cloud services.
  • Develop internal IT skills that are focused on business process management and how a cohesive hybrid IT environment can deliver expected business results.

Analysis

CSB is a term that describes the market, model and role that support the intermediation between cloud services and cloud consumers. This intermediation, and a definition of the term, is described in detail in “Cloud Services Brokerage is Dominated by Three Primary Roles.” Also brokerage, as a business component, emerges whenever a service provider-service consumer model is established (see “The Role of CSB in the Cloud Services Value Chain”). Stock brokers, real-estate brokers, travel brokers and third-party advisory/intermediary firms represent simple and well-known examples of a brokerage. The existence of brokerage models is not in question. However, the issue arises in the IT sector, when trying to compare the brokerage models with traditional IT service models. This research examines the reasons that “brokerage” as a term and a concept in cloud computing is necessary and useful. It will allow us to distinguish when traditional IT service language and approaches are good enough versus when cloud services brokerage language is more appropriate (see Note 2). This research offers traditional IT services providers and end-user organizations guidance on how new CSBs will position themselves in the market to differentiate from the traditional IT services provider.

IT Services Were Here First

One complaint that brokerage naysayers advocate is that the language of brokerage (e.g., aggregation brokerage, integration brokerage and customization brokerage) is already covered by traditional roles such as technology aggregator, solutions aggregator, system integrator (SI), independent software vendor (ISV) or distributor. They argue that there is no need for new terminology to describe what is already being done by these providers. Some traditional aggregators even go so far as to say they do not like the term “broker” because it minimizes their value into something that can be quickly commoditized. We respectfully suggest that traditional language is not always appropriate when applied to cloud-based solutions (see Note 1). The differences in the cloud model identify significant differences in how aggregation, integration and so forth must be done to deliver on the cloud computing value proposition of agility, efficiency, new capabilities and reduced cost. Traditional IT services providers often have access to, and can make direct changes to, specific technologies, which is not necessarily true in cloud delivered services (such as software as a service [SaaS], platform as a service, infrastructure as a service, and business process as a service).

Because cloud providers do not generally allow a third party to have general access to all back-end systems, code, technologies, or even visibility into how the service is built or architected, the ability to have (implementation or integration) control, is severely limited. This represents a major difference, for example, in how one must approach integration in the cloud versus on-premises, custom-built implementations.

We Must Use More-Effective Terms When Describing Changes to Markets

In the cloud brokerage world, the new terminology is intended specifically to introduce the concept of three or more independent parties (provider, consumer and broker) working together, where no one of them has complete control over the actions of the others. Brokers intermediate rather than control; Traditional SIs, ISVs and aggregators control more often than intermediate. In the cloud, intermediation is more about coordinating the inputs and outputs of multiple services, rather than about controlling how their technology is implemented. This highlights the core difference. Using the traditional IT services language can imply that a certain level of technology control or assurance is available in the cloud when it is not. Neither the integration brokerage nor the consumer controls the technologies or the business workings of the original cloud service providers whose services are being integrated. In this way, cloud brokerages are responsible and must manage the risk of failure, low service quality, inadequate security assurance, and liability between providers and consumers — all through a relationship in which the brokerage is the customers’ single point-of-contact for multiple cloud services, even where they have little control over certain outcomes.

However, at no point does Gartner suggest that cloud services brokerage should replace traditional IT services or minimize them. Instead, we offer CSB as a set of roles (within a composite CSB market and using CSB models) that can be adopted by traditional IT services companies whenever they need to add additional value to cloud services on behalf of their customers (such as hybrid cloud solutions, or integrated cloud services). For example, the SI role and the CSB aggregation role are not the same, but they represent complementary approaches to solving customer problems in managing products or services from multiple providers. A CSB must interact with at least one or more cloud service, otherwise the term is inappropriate and the CSB would continue to be considered a traditional IT services provider because it was providing integration services.

Also, other differences are worth noting. Gartner has identified six key differences that make CSB something more and less than traditional IT services.

No. 1: The Buyers Can Be Different

Cloud brokerages will have buyers ranging from individual consumers to small or midsize businesses (SMBs) and large enterprises. This range of buyers is seldom served by traditional IT services providers exclusively.

No. 2: The Cloud Brokerage Cannot Modify the Actual Service Implementation or Own the Technology

In traditional IT service scenarios, the SI usually has access to, and sometimes complete control over, the technology within the provider solutions that they are delivering. The potential removal of that control places different burdens on the integration brokerage, which has to integrate or aggregate services it has little ability to change.

No. 3: The Technology Used for Integration, Customization and Management Can Be Different as Can the Integration Scenarios

CSBs may use different technology than the traditional system integrators employ to deliver solutions to their customers. These technologies not only require different skills to use, they apply to different kinds of integration scenarios. Federation, API management, governance (for policy management and enforcement), and offline asynchronous access are among the simple differences. Cloud brokerage technologies for integration and governance in shared multitenant environments account for more than half of the difficulty in integrating cloud services, as opposed to on-premises technologies.

No. 4: The Contract Is Managed Differently

Although the relationship management side of purchasing cloud services will remain relatively the same as traditional IT purchases, the CSB model will lessen the need for high-touch, high-trust relationship-intensive models when it comes to contracting with all the individual cloud service providers that customers choose to work with.

Cloud contracts will typically involve multiple companies that are given assurances only through the contract that may rely on outcomes to manage. In other words, a cloud integration brokerage must integrate services where the only guarantee of performance or availability is through the established SLA agreed on in the customer contract or the brokerage agreement.

Although this happens at times in traditional technology integration, in the cloud, the added restrictions makes it much more difficult to get detailed information about the system underlying the services being integrated, which can cause significant risk for CSBs.

Establishing who is to blame for a problem is an extraordinary challenge for customers and brokerages alike. It is critical that CSBs keep their focus on demand/experience fulfillment, and responsiveness to incidents/issues to ensure that the relationship is consistently supported by a positive experience.

No. 5: The Channel for Cloud Brokerage May Be Widely Different Than Those Established for Traditional System Integrators

Selling through and with other channels adds a layer of complexity to the CSB role. Determining the best way to market will drive increased adoption. However, in the cloud service value chain, the suppliers and distributors will often be new entrants to the market with relatively unknown capabilities and brands.

No. 6: There Are New Cloud Specialists

This may be the most important reason for having new terminology. New cloud specialists that do brokerage, integration, customization and aggregation do not necessarily come from the traditional IT services world and do not associate themselves with it (see “Who’s Who in Cloud Service Brokerage”). They approach customers with different marketing messages. They have different technical and business-related skills, establish new value propositions, generally have well-established partner ecosystems dominated by third-party cloud-native IT providers, demand new types of relationships (with providers and customers) based on cloud-centric innovation and business models, and use new technologies and integration scenarios to provide cloud-based solutions.

The Impact

Cloud computing is moving fast (“Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2010-2015, 2011 Update”). The influx of new cloud specialists is helping in the adoption, however there is still a significant skill gap for providers that have cloud experience and internal domain expertise for implementing and integrating multiple cloud services (see “Cloud Adoption at Risk Without Big Channel Investments”) broadly across the market.

Gartner predicts that the number of CSBs that will go for scale and large market reach will be in the hundreds worldwide, and include communications services providers, IT wholesale distributors, retailers and large direct market resellers (to name a few) because they have the existing customer relationships with a majority of the SMB market and are pushing for greater relevance in cloud. This is not to say that others won’t become CSBs, which are more locally focused on vertical markets or segments and keep their offerings to a tightly managed set of services.

Companies taking on the CSB role are expected to handle certain scenarios that would previously have primarily been the domain only he traditional IT services providers. This suggests that there is some urgency to either capture market share in the cloud for those original providers before new companies do it, or that traditional providers will likely acquire the new cloud specialists that are brokerages, to fill out their cloud portfolio. One other option is that companies need to do it before the original cloud service providers acquire new cloud specialists to fill out their new cloud channel ecosystem.

Conclusion

The relationship between CSBs and other types of IT services sourcing and delivery models can be confusing. In particular, the question is often asked: What is the difference between CSBs and traditional IT services offerings?

For clients who have followed Gartner’s cloud research, certainly both terms include similar concepts, since brokerage deals with aggregation, integration, custom development, or even governance/management of cloud services are also attributes of traditional IT services providers’ offerings.

The answer for IT providers and buyers of cloud services lies in examining what is different enough about cloud computing to warrant the CSB term. Service providers need a mental framework for deciding how to migrate services to the cloud, while consumers of cloud services would benefit from the same mental framework to be used in helping them decide how to pick the right cloud brokerage providers.

Please not that the above text is not a complete version of the research note most of the six key differences have been edited.

Cloud Service Model

Key difference No.4 – The Contract Is Managed Differently

The traditional approach to managed services is to create a thin retained layer or carve out responsibility to the procurement capability for oversight and governance of the Service Provider.

With the Cloud new Service Delivery models will evolve and the role of the Cloud Service Broker will be to stitch the end-to-end service value chain together.  The complication with these new ways of working is that the CSB has limited control of the service provided to the Business.

I do not agree with Tiffani / Daryl that the answer lies in a Service Level Agreement with defined penalties.  This will not enable the CSB to provide predictable service levels.

What is required is a refresh of the way that Service Management Practices will enable the Business, Retained IT and the CSB to review Business Outcomes instead of service metrics and process measures.

For example – the cloud enables elasticity and can provide capacity on demand to process  a significant volume of invoices during peak periods where previously they may have been stuck in the system or a backlog built up.

For me, a Cloud Service Model means that utility / warranty (defined in the ITIL 2011 Edition Service Strategy core volume)  is delivered from a “Black Box” so rather than focus on managing the CSB the Service Management role will need to become a hybrid manager and focus on enabling Business Change.

Most service organisations already have a Business Relationship Manager role, however these individuals will need to shift their attention away from just Portfolio and Demand Management more towards presenting options to the Business that demonstrate how the Cloud platform can bring new solutions to the table.

Innovative Cloud Solutions

The cloud enables you to think beyond the traditional

You have to make cloud transformative for your Business

If you’re not thinking out of the box you are not really thinking about the cloud in the right way

 You are not doing the things that the cloud makes possible

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July 8, 2012 · 10:54 am

Cloud Sourcing, Cloud Brokerage and Hyper-Hybrid Clouds

Cloud Sourcing

Frances Karamouzis and David Mitchell Smith

During the next few years, market dynamics will determine whether cloud sourcing will be the demise of traditional outsourcing, if it will lead to the convergence of services and products currently marketed “as a service,” or if it will result in next-generation outsourcing.

Clients now have more choice, that choice is to turn away from internal IT and look at external vendors that can do all of those services at once

Get “SLAs with teeth” those that have business implications

 

How Cloud Brokers Will Differentiate

Gartner VP Tiffani Bova discusses how VARs, MSPs and technology consultants can become cloud brokers working within cloud aggregator services.

How many of you in the audience feel that you have being delivering Cloud for years?

How many of you today can do usage based billing?

It isn’t about the PC it’s about the Personal Cloud

I

Besol named ‘Cool Vendor’ in

Cloud Services Brokerage

Besol, the leading provider of next generation multi-cloud management platforms for private and public clouds, today announced that the world’s leading IT analyst firm, Gartner Inc., has selected the company as a Cool Vendor in Gartner’s “Cool Vendors in Cloud Services Brokerage Enablers, 2012” report published on 12 April 2012 by Tiffani Bova, Daryl C. Plummer, et al.

According to the Gartner report Key Findings, “The cloud services brokerage (CSB) is emerging, and first-mover advantage will be key to gaining awareness and share. CSBs are challenged to continuously build or buy the capabilities required to compete in the three CSB roles: aggregation, integration and customization”

“We in Besol believe being chosen as Gartner Cool Vendor is as a testament to the dedication, hard work and focus on innovation of our team” said Javier Perez-Griffo, Co-Founder and CEO of Besol. “The Tapp platform from Besol allows users to manage their cloud infrastructures independently of their cloud provider, but more importantly, enterprises can manage both their public and private clouds from a centralized point.”

Perez-Griffo continues “Cloud services are no longer restrained to large enterprises or IT-savvy organizations. Through our platform, SMBs of all kinds are now able to ‘tapp into’ the cloud and deploy and manage their infrastructures seamlessly, in a completely new user-friendly experience.”

Hyper-hybrid Clouds

Chris Weitz – Deloitte

Today, hyper-hybrid clouds are an advanced form of cloud services in the early stages of adoption, but the approach is rapidly becoming the norm for cloud services architecture.

A hybrid cloud is a cloud that works across different environments where you have services from vendor clouds working directly with clouds inside of an organization, thus forming a hybrid cloud.

Hyper-hybrid clouds are the multiplication of numerous hybrid clouds working together to serve an organization. The hype curve for cloud computing is at an all-time high, for pretty good reasons. Cloud computing can help increase agility, decrease costs and improve service delivery capabilities — and it can happen fast.

Tiffani Bova – has coined the term “born in the cloud”,  For me this is where new capabilities are forming on the cloud platform so that a different approach is required to manage the increased complexity of hyper-hybrid clouds.

Cloud Service Brokers add value by managing one or more cloud service on behalf of the service’s recipients.  Gartner says that cloud service brokers represent the single largest revenue growth opportunity in cloud computing through 2015, emphasizing that without cloud brokerage the cloud industry cannot survive.

I say that clients will need to design and implement Cloud Service Management practices [CloudSM] to govern the relationship with their cloud service brokers and external providers.

Services configured from Hyper-Hybrid clouds will set new delivery challenges for Next Generation Service Management CloudSM to overcome.

The guidance provided by the ITIL 2011 Edition and COBIT5 framework does not help define CloudSM practices required to address the dislocation of company compute assets which previously were on-premise and have now become “Place Less” being delivered from anywhere in the Hyper-hybrid Cloud. 

So what criteria do you apply in sourcing your Cloud Service Provider?

Do you need to engage a Cloud Service Broker?

Should you jump to Hyper-Hybrid clouds directly or be more risk averse?

I can only think of the classic consultant response “it depends”

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July 1, 2012 · 9:15 am

Will it be acceptable to wear Google glasses in the workplace?

“On June 27th Sergey Brin, one of the company’s co-founders, revealed the next stage of Project Glass, its effort to create wireless-connected glasses that allow their wearers to do a host of things, including receiving and responding to messages, and taking and sharing photos and videos.”

Economist – 30th June Edition – LINK

Google Glass Explorer Edition

Google’s Sergey Brin reveals video-capturing, augmented reality glasses at Google I/O in San Francisco.

we don’t want technology to get in the way

we want to empower people to use technology naturally

Google Glasses Demo

The Google Glass Explorer Edition will sell to software developers for $1,500 and ship in early 2013.

As you can see from the demo with augmented reality you can look at a subject and a wealth of helpful data will be overlaid.

As always success will be predicated on the ability of application software to analyse data and help ensure that you have the right information at the point of need. 

For me Google Glass combines the best of the three major initiatives for any large organisation, namely Mobility, Analytics and Big Data.  Glass is a completely new mobile platform that will enable access to cloud based personal or company information that is tailored to individual needs.

I envisage that in 2013 Gartner will publish their peak of inflated expectations for Wearable Computing.  This new Hype Cycle will spike interest in wearable computer glasses. 

Just like smartphones and tablets the price of wearable computer glasses will be driven down over time.  These glasses will become the must have fashion item for Q1 2014 as rich apps [systems of engagement] are made available, and the price for a pair of glasses is more affordable.

I believe that the key difference between smartphones, tablets and Google Glasses is that you no longer need to look down at your device.  Glass allows the individual to keep looking up and stay engaged in the moment. [Look Up not Down]     

Having reluctantly accepted the need to allow staff to bring their own devices into the workplace the CIO will need to have policies in place to deal with the new challenges that wearable computing and augmented reality present.

With Google Glasses the individual has ubiquitous access to audio, video and data that is enriched by augmented reality. 

Controlling access to company information assets will be a security concern for most CIOs and will make it high on their list of top 10 issues to deal with over the next 18 months.

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June 24, 2012 · 1:16 pm

Cloud Computing Economics

In my 27th May post I responded to a thought provoking article by Bernard Golden stating that “CIOs are not Business Leaders”.

We exchanged details and I had the good fortune to meet with Bernard this week in London.

Bernard is one of the “Rock Stars” of Cloud Computing and has recently joined enStratus as its new Vice President of Enterprise Solutions.

“In this new role, Bernard will help enStratus customers leverage the cloud and build best-practice operations based on the enStratus cloud management platform. Bernard brings vast experience working with CIOs around the world to incorporate new IT technologies and meet their business goals”.

We discussed various Cloud topics and I would like to focus on two themes.

Cloud Economics

Mark Teter, CTO at Advanced Systems Group, discusses the economics of cloud computing today.

Cloud Providers have a Chinese Menu of charges

What is your Total Cost of Assets?

Substituting a one time Capex model for a Re-ocurring Opex model

Divorce is expensive from a Cloud Provider

“Recently, ASG conducted a detailed financial analysis of three cloud computing solutions:

1) public cloud from Amazon EC2;

2) purchased private cloud infrastructure; and,

3) a leased private cloud infrastructure. Here’s what we found:

Based on our analysis, a private cloud computing solution whether leased or purchased would seem the way to go. In addition to the financial benefits, we feel that there’s a propensity for additional flexibility and greater uptime.

This analysis shows a $513,295 cumulative cost savings over three years for the private cloud purchase versus the public cloud option. The private cloud lease saved $489,874 versus the public cloud option over the same three years”.

The Truth About Cloud Economics

By Drue Reeves and Daryl Plummer of Gartner – LINK to full HBR article

“For companies, cloud computing’s new economic model stands in stark contrast to the traditional economic model of IT where we buy technology from a vendor as a capital investment and continue to invest in maintaining and servicing it over time. Traditionally, much of the money allocated to technology has been locked away in capital expense allocations used for buying physical goods. However, cloud services are just that, a service, and require reallocating money to operating expense budgets”.

New Delivery Model

Verizon offers customers guarantees about how fast data will travel between one cloud and the other. Verizon bought Terremark in 2011 to competes with providers such as Savvis or Rackspace.  This short video takes a creative approach to exploring how Verizon and its Terremark IT services delivery arm are fundamentally changing how businesses and consumers will access content.

The Cloud is Democratizing Technology

The Network is going to evolve into an IT Platform

Must be able to Deliver Metered Billed It Services

So the Cloud Computing Economic model is compelling:

  • No initial capital spend required
  • A flexible TCO model for service provision can be lower (typically in the short term)
  • Good way to align and scale “technical capacity” with “business demand” (e.g. Xmas trading, Summer trading, Financial Period end)

Senior Business Stakeholders are investigating how, when and what to migrate to the Cloud without compromising security and regulatory requirements.

The Business needs to have transparency in order to evaluate whether it is buying the right cloud services and managing them in the right way.

There are many companies providing advisory services however the Vendors tend to sell the benefits of their cloud enterprise solutions [e.g. IBM SmartCloud, Citrix CloudStack, SAVVIS Symphony] and typically ignore the radical set of new people and process challenges.

CloudSM

As a Service Management Practitioner I believe there is a gap in the market which I am calling  CloudSM – Cloud Service Management is typically a managed service or a dedicated on-premise private solution.

The Cloud Service Management provider is accountable for end-to-end governance and delivers key process capabilities including orchestration, service provisioning, automated workflows, monitoring and metering.

External managed Cloud Service Providers have the people know how and mature processes to be more compliant than internal IT shops.  In addition they will definitely deliver CAPEX and OPEX savings that can be re-invested in enabling Business change.  

Welcome to the new world of Cloud Service Management that is required to manage the New Delivery Models.

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June 10, 2012 · 11:35 am

Gartner Survey Shows Why Projects Fail

Analyst : Lars Mieritz

Published: 1 June 2012 ID:G00231952

A recent Gartner user survey shows that, while large IT projects are more likely to fail than small projects, around half of all project failures, irrespective of project size, were put down to functionality issues and substantial delays.

Key Findings

  • Runaway budget costs are behind one-quarter of project failures for projects with budgets greater than $350,000.
  • Small is beautiful — or at least small projects are easier to manage and execute. The failure rate of large IT projects with budgets exceeding $1 million was found to be almost 50% higher than for projects with budgets below $350,000.

Recommendations

  • To optimize success, look for ways to limit the size, complexity and duration of individual projects, and ensure funding has been committed.
  • Stay on top of costs, especially for the largest projects. Ensure that there are the appropriate mechanisms in place to identify budget variances and/or overruns early. Regularly review how cost estimation is done to understand how accurate and effective your approaches are, and pursue improvement opportunities.
  • Keep the schedule realistic. Many large projects fail because business conditions keep changing after the project scope has been set, leaving a significant disconnect between the agreed-on scope and budget versus what the business will require and pay for by the time the project is delivered.
  • Invest in truly capturing and understanding the business expectations and functionality sought from the project, and ensure that there is initial, adequate allocated funding, as well as good processes in place for revisiting the expectations and required funding at multiple points during the project.
  • Increase the frequency of project status and review meetings, as well as ongoing confirmation of the project’s alignment with business strategy — with an eye toward identifying and cancelling projects at the earliest possible stage that no longer meet company needs. 

Survey Objective

The survey was conducted to provide insights into IT project performance in organizations across North America, France, Germany and the United Kingdom.

Data Insights

Survey data is a useful tool for heads of project management offices (PMOs) to gain a broad perspective on the major causes of IT project failures and to assist in the challenge of identifying, building, and developing the skills and staff required for highly effective project and program leadership.

This research explores the survey results with regard to causes of project failure across three project sizes and provides a tangible reminder for all project and portfolio management (PPM) professionals not to lose sight of the trade-offs sometimes required for delivering projects on time, on budget and with the agreed functionality.1 For the purposes of this survey, small, midsize and large projects were defined as follows (see Figure 1):

  • A small project was one with a budget of less than $350,000.
  • A midsize project was one with a budget of $350,000 to $1 million.
  • A large project was one with a budget that exceeded $1 million.

Figure 1. Distribution of Success and Failure Across Project Sizes

 Source: Gartner (June 2012)

Figure 1 illustrates the distribution of success and failure across project size. The respondents were asked to indicate the percentage of their organization’s IT projects over the past two years that were deemed a success or failure by the business.

In analyzing the collective responses of some 150 participants in the 2011 Gartner five-country survey, the failure rate of IT projects with budgets exceeding $1 million was found to be almost 50% higher than for projects with budgets below $350,000.2 At 25% and 28% respectively, the failure rates of midsize and large projects are similar, and in both cases, nearly one-third higher than the 20% failure rate observed for small projects (with budgets below $350,000). Overall, the results of this survey are consistent with what we have observed when we have polled this question previously, and we are seeing a pattern emerging where small IT projects experience a one-third lower failure rate than large projects 3

Many small brooks make a great river. The survey results give a clear indication that, by ensuring that projects are kept small, and as a rule of thumb, not exceeding six months in duration, a much lower failure rate can be achieved. As such, setting clear criteria around limiting project size will be a hallmark for successful PMOs, and the guiding principle revolves around establishing projects whose scopes and functionality can indeed be delivered in the time frame and, thus, maintaining a clear focus of the endpoint.

Rather than taking on large, expensive and lengthy projects, it will be more prudent to view them as programs consisting of a series of small projects, each delivering its piece of the overall initiative. This will also enable the use of regular program oversight reviews to ensure that the big picture is maintained and to rapidly reassess and recalibrate should any of the individual efforts get off track.3

No matter what the reason, no one likes failures, so in seeking to understand the causes behind the project failures, Gartner asked the respondents to distribute the projects that were deemed to have failed in their organizations over the past two years across six frequently mentioned reasons or causes of project failure:

  • Functionality issues
  • Substantially late
  • Quality issues
  • High cost variance
  • Canceled after launch
  • Rejected or not implemented for other reasons

Figure 2 explores the project failures shown in Figure 1, and illustrates the percentage of failures that respondents allocated to these six typical causes of IT application project failure (see Note 1 for project failure definitions).

Figure 2. Why Projects Fail

 Source: Gartner (June 2012)

It is not entirely surprising to see that the challenges of bringing projects in on time, on budget and with the agreed functionality are mentioned by two-thirds of the respondents as causes of project failure, because this is largely in line with previous observations.4 However, that fact underlines the ongoing nature of these three challenges in the sense that, no matter where you stop and take a snapshot, these three are likely to appear. The key is not to be complacent (we are not the only ones with projects running over), and take steps to understand the particular circumstances in the enterprises so that the right mix of processes, people, tools and skills can be developed or put in place.

Figure 2 also highlights the improvement opportunities that can be achieved simply from improved communications, in the sense that nearly half the projects fial for not doing what they need to do (functionality) or doing it too late to be valuable (late). This hints at project planners not asking the right questions, such as “When is late too late?” or “What scope would you give up to have something delivered sooner?” or reassessing functionality needs with enough regularity that no gap is allowed to develop. Project planners need to be aware of and address changes in the environment, and understand that cost, scope and schedule are not weighted equally. By maintaining close ties to sponsors and stakeholders, and being upfront regarding the trade-offs between functionality scope and schedule, expectations can be recalibrated on an ongoing basis, thus improving success rates.

For organizations at the lower levels of PPM maturity, any effort toward improving scheduling, cost estimation and functionality will yield significant results. For organizations at the higher levels of maturity, we recommend broadening the suite of performance metrics that are used to provide deeper insight into the factors that might be driving the rather persistent greater than 20% failure rate we’ve seen over the years.

Methodology

Gartner conducted a research study in October 2011 to examine current performance of IT projects in North America (the U.S. and Canada), France, Germany and the United Kingdom (see Figure 3).

Figure 3. Geographic Distribution of Respondents

 Source: Gartner (June 2012)

In all, 154 organizations with at least one PMO or related office were qualified and interviewed via a Web-based survey. All respondents were required to manage or work within their organization’s project management function. The resulting sample consists of organizations across various industry segments (see Figure 4) with $500 million or more (see Figure 5) in annual revenue.

Figure 4. Distribution of Respondents by Industry

Source: Gartner (June 2012)

These findings and recommendations from the Gartner survey are in line with conventional wisdom.  

So what can we do differently to help ensure project success?  

The people side of any change programme must be addressed in order to secure success.  

In addition, provide regular feedback to the customer, for example by adopting Agile SCRUM principles of iterative development or implementing new Systems of Engagement practices.  

One fresh area to be considered is Cloud based Development and Deployment.

Introducing Enterprise Cloud Development:

the next evolution in managing modern software development across the enterprise.

[youtube http://youtu.be/7szMYT9LkvQ]

Three Industry Innovations have emerged  – Agile Software Development + DevOps + Hybrid Cloud Development & Deployment

Five Step Blueprint for Embracing Enterprise Cloud Development Blueprint

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March 11, 2012 · 12:23 pm

Multi Vendor Management is much more than just Supplier Management

This week the IT Service Management gurus have been discussing whether ITIL is Broken.

David Moskowitz – Interesting discussion @ Facebook #back2itsm group regarding whether #ITIL is broken http://goo.gl/QxdBR (hint, I don’t think it is) #ITSM

ITILZealot – @davidm2 #ITIL isn’t broken, it is a nirvana that may never be totally achieved but functions as a goalpost to aim for

David Moskowitz – Admit I’m tired reading about how broken #ITIL is. Hint: it’s DESCRIPTIVE meaning it’s meant to be adapted. So… adapt, don’t complain

You will have to join the #back2itsm Facebook group to view the interesting discussion thread.

The exam question is not whether ITIL is Broken, it should be about the quality of the explanatory guidance provided in the ITIL 2011 Edition core volumes.

In my experience the books describe “What to Do” but contain insufficient detail on “How to Do It”

Let’s drill into a particular topic by taking a look at the guidance provided by the ITIL industry standard framework for Supplier Management and Multi Vendor Management.

 

Service Design – 4.8 Supplier Management

The purpose of the supplier management process is to obtain value for money from suppliers and to provide seamless quality of IT service to the business by ensuring that all contracts and agreements with suppliers support the needs of the business and that all suppliers meet their contractual commitments.

I encourage you to read through all of section 4.8 for example 4.8.5.3 Supplier categorisation.

Service Strategy – 3.7.3 Multi-vendor sourcing

Sourcing services from multiple providers has become the norm rather than the exception. This approach has been delivering benefits and gaining increasing support. The organization maintains a strong relationship with each provider, spreading the risk and reducing costs. It should also be noted that each provider may represent a different type of sourcing option.

Governance and managing multiple providers, who often have little to do with each other outside of the common customer, can be challenging.

Service Strategy – 3.7.5 Sourcing governance

Governance refers to the rules, policies, processes (and in some cases, laws) by which businesses are operated, regulated and controlled. These are often defined by the board or shareholders, or the constitution of the organization; but they can also be defined by legislation, regulation or consumer groups.

This description of Sourcing Governance is non-specific.  What is required is a practical example of how a Governance Board provides oversight for multiple vendors.   

The purpose of the Vendor Management Board is to ensure that strategic vendors are acting as global service partners in the company’s best interests, in a way that is consistent with the intent of contractual obligations.

Objectives of the Board:

  1. Maintain a productive and well managed strategic relationship at the most senior levels
  2. Provide a forum for open and honest two-way communications between client and the prime vendor
  3. Ensure that both client’s and the vendor’s relevant medium-term and long-term strategic imperatives (business, technical, etc) are understood by both parties, and potential opportunities and risks are identified
  4. Identify and exploit opportunities to leverage the relationship between client and the vendor in order to add value
  5. Provide a forum for reviewing holistically at a global level the service being provided to client by the vendor

The Vendor Management Board should meet formally every quarter at a minimum

IT/BPO Outsourcing and Supplier Management explained

Thomas Coles – MSM Software

00:30 MSM have been engaged by a client to manage the relationship with over 25 suppliers.

What does ITIL have to say about the Supplier Manager role and responsibilities?

Service Design – 6.3.12.1 Supplier Management Roles

This section sets out the Process Owner and Process Manager responsibilities that need to be performed in support of the supplier management process.

For example, the Process Owner works with the business to ensure proper coordination and communication between corporate vendor management and/or procurement and supplier management.

Section 6.3.12.1 does not provide the right level of guidance to define and effectively establish the role.  Here is a more detailed [15 point] list:  

The Vendor Manager is responsible for:

  • Developing and maintaining executive working relationships with strategic vendors
  • Facilitating negotiations and commercial engagements with the vendors for current and future business requirements
  • Creating an escalation path within the vendor organisation for the purposes of dealing with high profile service and account management issues
  • Implementing best practice vendor management processes in addition to the ongoing governance thereof
  • Acting as an escalation point for vendor performance or governance issues
  • Managing the dispute resolution procedure relating to claims or disputes between the service organisation and its strategic vendors
  • Liaising with business relationship managers to channel and prioritise their requirements to the vendor(s) and to ensure that internal customer expectations are met.
  • Evaluating sourcing strategies to ensure they reflect Client’s operational and vendor experiences
  • Developing the contractual elements of the sourcing strategies
  • Evaluating markets for sourcing developments and opportunities
  • Maintaining a current understanding of external environments, including vendors and product innovations
  • Managing review meetings with strategic vendors to ensure delivery against objectives and contract budgets, developing regular reports on contract, and commercial milestones and performance, and informing internal customers, vendors and management of activities and progress through regular written and verbal communication
  • Administering commercial and financial arrangements with vendors to include billing, invoicing, performance/penalty adjustments and internal charge-backs, where appropriate
  • Managing ongoing regional or local evaluation and benchmarking requirements for ITO and  BPO services
  • Managing the evaluation of vendors against the efficiency and effectiveness metrics, and report results and findings to IS and business stakeholders.

Vendor Management – Best Practices For Your Business

Regardless of what business you are in, vendors play a key role in the success of your business.  By using the following vendor management best practices to build a mutually strong relationship with your vendors you will strengthen your company’s overall performance in the marketplace.

  • Vendor Selection – right vendor for the right reasons
  • Vendor Search – create a short list of vendors that meet the defined requirements
  • Flexibility – willingness to work towards a mutually beneficial contract
  • Vendor Performance Monitoring – must be monitored constantly in the beginning
  • Communication – avoid misunderstandings and proactively address issues

A well managed vendor relationship will result in increased customer satisfaction, reduced costs, better quality, and better service from the vendor.

Carmela DeNicola, FYI Business Consulting

I recommend that you read the full article which provides more detail for each of the five best practice areas.  Here is the LINK

Bill Laberis – In tough times, lean on your vendors

You can and should lean more heavily on your big IT providers to prove tangible and intangible value

 

The Next Wave of Vendor Relationship Management – LINK

What is the next great strategic sourcing practice for sustaining cost reductions and driving an efficient, competitive business in an environment that is constantly and dramatically changing?

The answer is in how companies are addressing vendor relationship management and creating incentives that better leverage the capabilities of their current providers.

Most mature outsourced companies have created a concentrated multi-provider base, often with a handful of large sourcing vendors playing a major role in supporting the organization. These efforts have shifted business critical processes and value chain activities to outsourcing providers, creating new major provider relationships that are vital to operational continuity.

Accelerated software delivery life cycles, vastly more sophisticated infrastructure virtualization, rapid pace of process and technology convergence, and the need to work seamlessly with offshore vendors have made effective vendor relationship management more demanding and more critical than ever before.

The challenges of Multi Sourcing

FUJITSU UK executive Discussion Evening

If you can get past the annoying background noise this video clip has sound perspectives from senior level practitioners.

At 02:55 Dr Richard Sykes of Intellect talks about the need for outcome based agreements with a single vendor which is not Multi Sourcing.

Multi-sourcing: CIOs tips on making it work for you –

and your suppliers

Businesses are moving away from trusting single suppliers to deliver multi-billion pound outsourcing megadeals in favour of accessing services from multiple providers instead.

Almost 40 per cent of CIOs surveyed by Harvey Nash/PA Consulting Group last year said they planned to increase their use of multi-sourcing – where IT or business process services are sourced from a range of suppliers rather than a sole provider.

Multi-sourcing, as well as providing access to services from best in breed suppliers, offers a way around the common pitfalls of being locked into a long-term deal with a single vendor. Long-running outsourcing deals with sole suppliers can encourage low innovation, sloppy service delivery and customer dissatisfaction as the supplier, safe in the knowledge that it has a multi-year contract, has little incentive to try too hard.

However multi-sourcing is not without its risks, in particular the potential for the deal to come apart if the client fails to get to grips with co-ordinating multiple providers or if communication between suppliers breaks down.

At the recent CIO Event, CIOs shared their thoughts on the best ways to get the most out of multi-sourcing and keep multiple suppliers on track:

  • Check whether multi-sourcing is the right approach
  • Small deals may not be suitable to be broken up and delivered by multiple suppliers.
  • Outsourcing contracts often require suppliers to invest upfront and if splitting a deal into smaller contracts reduces their value too much, suppliers will likely reject the job as not being viable.
  • Companies should also check how many suppliers have the skills needed to deliver the work they want to outsource.
  • If only a small pool of suppliers are able to carry out the work then multi-sourcing may not be the best approach as there will be too few qualified suppliers to provide competition.

Nick Heath

This is an extract from a longer article which also explores the following: Competition is good, Reward joint success, Keep suppliers clued up and Align your goals.  LINK

 

IT services the end of multi-sourcing is nigh

Multi-sourcing is dead; long live the trusted advisor. As contracts reduce in size, power is being redistributed to the key players in many outsourcing engagements, according to Ovum.

In the new report*, the independent IT and telecoms analyst firm finds that on the back of an ever reducing number of megadeals the average contract value has fallen to USD$65m in the first nine months of 2011.

Jens Butler, Principal Analyst of Ovum and author of the report commented: “The mix of major providers in outsourcing contracts has shifted from the much-heralded multi-sourcing approach to a more contained portfolio of suppliers and services in recent contracts.”

The report uncovered the increasing prevalence of single “capstone’ vendors “controlling” larger proportions of contracts. On average 60 per cent of total contract values (TCV) are being allocated to a single, lead supplier across multiple supplier deals signed since 2009 highlighting the fact that consolidation of control and governance is shifting to a single, trusted supplier model.

“The more mature markets are moving towards consistency in contract size and length, enabling suppliers the ability to plan and think strategically and develop value that can be delivered through the lifecycle of the contract”, said Butler.

The report notes that in the emerging markets, cost management and control are less of a core factor in decision making and there is a tendency to leverage IT to support business growth and expansion. As such, the key driver for enterprises when investing in IT is speed of delivery.

Butler recommended  that enterprises need to be prepared to engage with multiple suppliers, offer a big enough carrot of additional services and to be prepared offer more applications into the mix in the emerging markets.

Jens Butler

* IT Services Contracts: A Single, Trusted Supplier

Many factors are driving a review of IT sourcing strategies:

Business Drivers

  • Meet growing business demands for IT solutions that contribute to competitive advantage
  • Accelerate time-to-market for IT solutions, such as for new business models
  • Maintain high satisfaction levels with business

Financial Drivers

  • Reduce IT costs 
  • Maintain a flexible cost base
  • Maximize returns on IT investments
  • Balance costs, quality and service levels

Capability Drivers

  • Re-skill and up-skill IT personnel
  • Focus on IT capabilities that will deliver business value

Risk Drivers

  • Address IT performance issues
  • Improve IT workforce management

Multi-sourcing has become a de-facto standard service model for outsourcing in large companies as it accumulates benefit from the capabilities of the best players.

However it should be noted that the benefits of multi-sourcing come at the price of increased complexity.  Additional complexity is created where the organisation has implemented:

  • key nearshore and offshore locations to provide balance between skills availability and service cost
  • a hybrid model enabled by private and public cloud services

Companies must stand up a retained IT organisation which is responsible for Vendor Management providing oversight of the outsourced suppliers, commercial management and end-to-end service management capabilities.

The retained IT organisation must be specialists who will typically focus on the following topics: 

  • Buying Services: Company focuses on what services needed and not on how they should be delivered
  • Service Levels – Management through output measures e.g. KPIs, enhanced and predictable service levels without resource constraints
  • Pricing – Service based pricing; paying for usage with annual cost reduction targets
  • Contract Terms – Service unit prices defined up-front; payment related to service usage
  • Contract Governance – Client controls demand, but not delivery
  • Retained Skills – Focus on service procurement, business enablement, requirements and service measurement
  • Processes – Client buys standardized processes and tools (based on best practice frameworks) instead of spending company resources to build and maintain them

Multi sourcing is typically enabled by a prime service integrator.  The prime integrator (lead supplier) ensures service levels through industrialised Service Management practices which are supported by an integrated toolset.

Industry standards, such as CoBIT 5, ITIL 2011 Edition and ISO/IEC 20000 have an important part to play in the standardisation of ways of working across multiple vendors.

I hope that you now appreciate that implementing a multi sourcing service model and multi vendor management is much more than just the supplier management process and roles described in the ITIL 2011 Edition core volumes. 

Gartner recognises this as one of the greatest areas of stress for CIOs, how to make sure you choose the right service suppliers, and how to get them to work for your benefit not theirs.

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December 18, 2011 · 1:47 pm

What Will 2012 Look Like?

The current fiscal austerity and threat of a double dip recession means that there is a burning platform for change across IT enterprises to manage costs whilst enabling future Business growth.

  

Peter Sondergaard states that the second recession is about to hit which will impact Enterprise IT spending budgets in 2012.   

There is a fair degree of consistency in what the research firms / commentators see as the key trends for 2012.  I particularly liked what Frank Gens from IDC had to say and I have also picked out the Outside-In messaging from Deloitte and how it resonates with what Ian Clayton has been banging on about for ages.  My own observations appear at the foot of the post. 

IDC Predictions 2012: Competing for 2020

“Frank Gens presents the IDC outlook for the overall technology marketplace.  In 2012, the ICT industry’s shift to its third major platform of growth — built on mobile, cloud, social, and Big Data technologies — will accelerate, forcing the industry’s leaders to make bold investments and fateful decisions.

  • Worldwide IT spending will grow 6.9%, surprisingly solid growth in a fragile, recovering economy.  Mobile devices and apps and emerging markets will be the biggest growth drivers, while European debt issues will dominate downside risks.
  • Emerging markets IT spending will grow 13.8%, driving a whopping 53% of IT growth.  In the second half of 2012, China will supplant Japan as number 2 in the IT market.
  • “Mobility wins” will be the top theme of the year as mobile devices outship PCs by more than 2 to 1 and generate more revenue than PCs for the first time.  85 billion mobile apps will be downloaded, and mobile data network spending will exceed fixed data network spending for the first time.
  • The strategic focus in the cloud will shift from infrastructure to application platforms and the race to build the largest portfolios and ecosystems around those platforms.
  • Spending on public and private cloud services, and the building of those services (the “cloud arms dealer” opportunity), will reach $60 billion. Amazon will join the $1 billion IT vendor club.
  • In a mobile, cloud-oriented world, the network is more critical an infrastructure than ever.  For 2012, we predict rising demand, disruptive infrastructure shifts (to mobile), intensifying challenges (competition, funding), and expanding opportunities (cloud). In short: a world that will require a lot of adaptability to thrive (or even survive) in.
  • Big Data will join mobile and cloud as the next “must have” competency as the volume of digital content grows to 2.7ZB (1ZB = 1 billion terabytes) in 2012, up 48% from 2011, rocketing toward 8ZB by 2015. There will be lots of Big Data – driven mergers and acquisitions (M&A) activity.
  • Major IT vendors will make “statement” acquisitions in social networking as social technologies become a core part of IT’s next growth platform. Social platform leader Facebook will attempt to leverage its consumer dominance into a much broader role serving businesses in B2C commerce.
  • As the number of intelligent communicating devices on the network will outnumber “traditional computing” devices by almost 2 to 1, the way people think about interacting with each other, and with devices on the network, will change. Look for the use of social networking to follow not just people but smart things.
  • Much of the money will be made on top of the “third platform” by building highvalue, vertically focused solutions. The buildout of these solutions — in healthcare, energy, government, financial services, and retail — will accelerate in 2012 — leaving IT providers without vertical competency on the sidelines.

Gens concludes by saying that by the end of 2012, we’ll have a good idea which vendors will — and won’t — be among the industry’s leaders in 2020.”

The full report is available to download

Extract from Deloitte Predicts the Top 10 Technology Trends for 2012

Outside-in Architecture:  Flexibility in operating and business models is proving more important. As a result, need to share is colliding with need to know and shifting solution architectures away from a siloed, enterprise-out design pattern and into an outside-in approach to delivering business through rapidly evolving ecosystems.

The fundamental shift in focus required by Service Provider organisations away from the current enterprise-out to a new outside-in approach has long been advocated by Ian Clayton.  Ian developed the “Outside-In Service Management™ (OI-SM)” term, concepts, and associated methods and services.

Outside In Thinking For Service Provider Organisations

 “The Outside-In Service Management™ (OI-SM) program helps service organizations apply “Outside-In” thinking to service management initiatives, ensuring customer centricity, customer thinking, and the creation of value for customers.  OI-SM takes precedent over traditional “inside-out”, process, best practice, technology, capability level and service centric efforts.

Traditional improvement efforts, including most IT Service Management projects, work “inside-out”, focusing on what’s happening inside the service provider or infrastructure management organization, how it works, and using internal performance measures.

Outside-In thinking ensures the organization ‘learns to see’ from a customer perspective, and service management and improvement efforts are driven by understanding what a service does for the customer in terms of enabling and supporting their desired results or ‘Successful Customer Outcomes (SCOs)’.”

 

Gartner – Predicts 2012: Four Forces Combine to Transform the IT Landscape

This Predicts 2012 special report highlights how the control of technology and technology-driven decisions is shifting out of the hands of IT organizations. New forces that are not easily controlled by IT are pushing themselves to the forefront of IT spending.

Specifically, the forces of cloud computing, social media and social networking, mobility and information management are all evolving at a rapid pace. Business unit stakeholders often recognize the value of new technology before IT departments can harness it.

 

For me, the top three trends for Enterprise IT in 2012 can be summarised as “MoSCo” which refers to Mobility, Social business and Cloud. 

Some of my other observations would be:

 

2012 is not about doing more for less it is about choosing which things you will do and those you have to stop doing altogether.  The Business will be directed to cut back on discretionary spending that will impact their key investment decisions.  At the same time the Business will need the flexibility to respond quickly to changing imperatives.  

 

In 2012 if the expected service does not meet the perceived service the expectation gap will grow and the Business will go elsewhere.  With enterprise mobility will come the need to re-evaluate target service levels which will need to be tiered depending on the device the Business user adopts to access corporate information.

 

In 2012 there will be increased pressure to craft new and re-negotiate existing contracts requiring best in class Sourcing and Vendor Management capabilities and practitioners within the Service Provider organisation.  These SVM professionals must be able to interact with the Business / Procurement whilst actively managing Supplier / Vendor relationships in a multi-sourced environment. 

 

In 2012 the impending “Eurogeddon” crisis will fuel a significant increase in the adoption of cloud based services.  As service offerings mature the Business will focus on “Not If, But When” to adopt the cloud especially if it improves project delivery timescales.  

 

In 2012 the Business will examine how, when and what (Infrastructure + Applications + Services) to migrate to the cloud to save cost and resources.

 

Last Word – I am looking forward to the premiere of “House of Lies” a new American comedy TV show in Jan which is based on the book, House of Lies: How Management Consultants Steal Your Watch and Then Tell You the Time.  Survival of the Slickest indeed.

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October 30, 2011 · 3:42 pm

Cloud Enabled Service Catalogs

The IBM Cloud Reference Architecture sets out the Cloud Service Consumer on the left, the Cloud Service Provider and finally the Cloud Service Developer.  Within the Common Cloud Platform the Service Offering Catalog (highlighted in black) sits in the Business Support Services domain which is separate to the Saas, PaaS, IaaS Cloud Services.

IBM acquired Cast Iron Systems, a leading Software as a Service (SaaS) cloud application integration provider.  Websphere Cast Iron integrates Packaged applications, Home Grown applications and CloudBurst.  CloudBurst provides pre-installed, fully integrated service management capabilities across hardware, middleware and applications.  This includes the Service Catalog which effectively is a list of pre-engineered services from which Developers can choose. 

The IBM SmartCloud offering shows the five different cloud service configurations from Private to Managed Private to Hosted Private to Shared Cloud Services and finally Public Cloud Services.  The Service Catalog definition for these five Cloud Service  configurations will be different because the respective Service Assets (Capabilities and Resources) together with component parts of the Service Value Chain will vary according to requirements. This is because Service Integration and Interoperability becomes critical to achieving true benefits of cloud. 

What the business wants is a single “pane of glass” storefront with a scalable Service Catalog

Through 2015, cloud services brokerage will represent the single largest revenue growth opportunity in cloud computing! (Gartner)

  1. By 2015, at least 20% of all cloud services will be handled via brokers, rather than directly—up from less than 5% today. (Gartner)
  2. Through 2014, cloud service brokerage will generate more than $5 billion in sales—up from less than $50 million this year—making it the fastest growing area of cloud computing. (Gartner)
  3. By 2015, 50% of new outsourcing deals will be significantly Cloud enabled.  (Saugatuck)
  4. Technology platforms (enabled by Cloud IT) have emerged as the newest value lever for services leadership and adoption will continue in 2011 at a rapid pace. (Saugatuck)

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