How Government Early-Adopters Use Cloud Services

What are the best practices for deploying managed cloud services? Case studies have now confirmed that cloud services can be a better, faster, less expensive and less risky way to source Information and Communications Technology (ICT) solutions, according to the latest market study by Ovum.

Results from recent research conducted by Ovum details the experiences of five public sector organizations that have successfully deployed cloud services -- either with Infrastructure-as-Service (IaaS), Software-as-a-Service (SaaS) or Platform-as-a-Service (PaaS).

Highlighting the known benefits and the catalysts that empower organizations to embrace the cloud service delivery model, Ovum says they have developed a framework to assist government agencies in understanding the organizational factors associated with early adoption of managed cloud services.

Moving Beyond Analysis Paralysis

"Cloud services have long been debated across the globe, but it is now time to stop discussing theory and start discussing the actual experiences of early adopters,” says Dr Steve Hodgkinson, Director of IT research and advisory services at Ovum.

According to their assessment, many government agencies are stuck in a mode of perpetual cloud service evaluation. Meanwhile, they're unable to sustainably develop strong ICT capabilities because of funding, resource and skill constraints.

That being said, we know that mature enterprise-grade cloud services will provide an innovation edge to agencies -- enabled by ICT capabilities delivered at a lower cost than would otherwise be possible.

The five case studies included in this research reinforce this key fact. Each of the agencies used cloud services to overcome constraints in their ICT capabilities, and the results were compelling.

Cheaper, Faster and Better ICT Solutions

These organizations found that the benefits were greater than expected while the risks and difficulties were lower than typically experienced with traditional ICT projects.

"These proof points reveal that cloud services do actually live up to the promise of better, faster, less expensive and less risky ICT," states Hodgkinson.

The Ovum cloud services catalysts framework defines the key leadership decisions, business needs and forward-thinking that explain why early adopters were able to embrace cloud services.

The framework provides guidance for considering the degree to which a cloud service is a good fit for an agency. It also provides a diagnostic tool for thinking about the catalysts that may need to be created or nurtured in order to enable agencies to understand and embrace cloud services.

Ovum believes that the case studies of early adopters reveal more about leadership and decision-making than they do about the abstract benefits of the cloud delivery model.

"Why is it that some agencies embrace cloud services while others remain sceptical -- and even fearful -- of the cloud services model? Our framework is a major step forward for understanding the enablers, and sticking points, of cloud services adoption in the public sector," concludes Dr Hodgkinson.

All five case studies were conducted in Australia and include:

• The Salvation Army Employment Plus: 750 employees in 80 locations, all applications moved to Telstra Dedicated Hosting IaaS.
• Monash University: 15,000 staff and 63,000 students all moved to Google Apps Education Edition SaaS.
• The Queensland Department of Environment and Resource Management: a CRM application for coal seam gas exploration regulation deployed for 30 users using Microsoft Dynamics CRM SaaS.
• The Torres Strait Island Regional Council: 350 employees, all applications moved to Telstra Utility Hosting IaaS.
• The Victorian Department of Business and Innovation: CRM and grant administration applications deployed for over 450 employees using Salesforce SaaS/PaaS.

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Five Predictions for Managed Cloud Services in 2012

The proof-positive business impact from managed cloud services deployment, including the numerous associated productivity benefits and anticipated cost-savings, have pushed cloud computing well into the mainstream during 2011.

As we move into 2012, International Data Corporation (IDC) predicts that this evolution will continue as more users test the growing capabilities of the public cloud services that are already available.

However, by 2015, IDC envisions a very different scenario -- one where cloud services will become commonplace, thereby forcing significant changes in the ongoing adoption of progressive business technology practices throughout legacy IT organizations.

"In the next 24 months, the 'cloud' as a marketing label will cease to exist, as the success of cloud services will mean that it will permeate the sourcing strategies of the CIO and business unit manager alike," says Chris Morris, Lead Analyst for Cloud Services at IDC Asia/Pacific.

He adds, "The use of externally sourced business and IT services from the cloud will form the basis of what we see as the Outsourcing 3.0 period, and will provide an extensive portfolio of services from which innovative solutions can be constructed."

How Cloud Drives the Next Wave of Outsourcing

With Outsourcing 3.0, the cloud will metamorphose into a universal service catalog of individual cloud services. This will begin to replace both traditional information technology outsourcing (ITO) and business process outsourcing (BPO) engagements as well as on-premises infrastructure.

IDC believes that in an Outsourcing 3.0 scenario, the sourcing of business and IT services from multiple external suppliers will result in a major challenge for the enterprise CIO. They will become a service broker and aggregator, involved in sourcing, integrating and managing the services -- on behalf of their business units.

Drawing from the latest research and internal brainstorming sessions amongst IDC's regional and country analysts, the following are five cloud predictions for 2012.

These key points represent major trends with either the most significant financial impact or long-term market impact across the Asia-Pacific region, according to the IDC assessment.

1. Less than Half of End-Users across APEJ will complete their Private Cloud Projects by 2014
2. Making 2 + 2 = 1: Cloud Service Orchestration Services Lead the Drive to Outsourcing 3.0
3. Infrastructure as a Service (IaaS) will become Verticalized by 2013
4. By the end of 2012, 90% of Telecom Service Providers (SPs) in the APEJ region will have brought a broad portfolio of Cloud Services to market; but, by end of 2013, their Portfolios will become Specialized as they redefine their preferred role in the Cloud Ecosystem and target specific markets
5. Cloud SP (CSPs) strategies based on Aggregation and Resale of IT and business services will Fail to meet Profitability Goals by 2013 unless they can efficiently and effectively Manage, Support and Bill Services from Multiple Service Providers

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Business Objectives Drive the Shift to Cloud Services

Adoption of cloud computing services continues to accelerate as organizations move from limited deployments to comprehensive solutions, according to the latest market study by CompTIA, the non-profit trade association for the information technology (IT) industry.

More than half (56 percent) of the organizations surveyed for the CompTIA study said their investment in cloud computing will increase by 10 percent or more over the next 12 months.

“This additional investment will likely be accompanied by greater complexity in the overall cloud strategy, such as moving to a hybrid cloud model or adopting more advanced services beyond Software as a Service (SaaS),” said Seth Robinson, director, technology analysis, CompTIA. ”Organizations may begin exploring options such as Infrastructure as a Service (IaaS) and Platform as a Service (PaaS), which will allow them to experiment with custom application development.”

IT departments are often a key driver behind the transition to managed cloud services, but the CompTIA study suggests individual business unit leaders within an organization are equally or perhaps more likely to now seek out the benefits of a cloud service deployment.

About one in five (21 percent) companies surveyed said that line of business leaders championed the transition to a cloud solution -- independently of their IT department.

“Most SaaS applications are easily accessible through the Internet, making it relatively easy for business employees to use them without involving the IT staff,” Robinson said. “But there are risks in this approach, as lines of business often do not have the same awareness of security and reliability as the IT department.”

Demand for Procurement and Implementation Guidance

That being said, apparently the results from the study provided no specific evidence of where CIOs or other IT managers demonstrated security breaches -- as a result of business leaders leading the shift to managed cloud services.

However, the CompTIA study findings did indicate that there's growing interest throughout these organizations to invest more in cloud computing education and thereby learn about the technology deployment considerations.

Although the mainstream business manager's understanding of cloud computing has improved over the past year, many users continue to have questions regarding details of cloud service implementation.

The 2010 CompTIA cloud computing study found that 60 percent of end users desired a clearer definition of cloud computing. In 2011, that number increased to 66 percent.

Areas where users want more clarity include the types of cloud computing offerings (Software as a Service, Platform as a Service and Infrastructure as a Service) and the types of deployment models (public cloud, private cloud or hybrid cloud services).

Attainment of Business Objectives Drives the Shift to Cloud

Organizations that have invested the time to learn about -- or are experimenting with -- cloud solutions indicate they have a higher level of comfort with cloud computing offerings. Approximately 72 percent of these organizations feel more positive about cloud computing now than they did one year ago. Another 25 percent of survey respondents report no change in their perception.

“For those who feel more positively about the cloud than they did a year ago, the primary reasons are the technical benefits and the ability to achieve other business objectives,” Robinson noted. “This finding is in line with data from other CompTIA surveys, where the primary advantage of cloud computing appears to be increased capability, not cost savings."

Note: the survey included 500 IT business professionals and other key decision makers within the U.S. market.

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Cloud Services Interest Erupts in Groundswell

The anticipated benefits from adopting managed cloud services have reached the executives suites of many corporations. Proactive CEOs and CFOs are pushing their IT leadership team to seek out actionable information and guidance.

There's also a constant stream of service providers announcing new offerings -- and the momentum is becoming a global phenomenon. As a result, Forrester Research has witnessed an expanding number of client inquiries around cloud computing.

The acceleration in market development has been building for some time now. Forrester analysts responded to more than 264 client inquiries about cloud computing between January 2008 and April 1, 2009 from companies of all sizes and industries.

IT Teams are Adopting Cloud Strategies
Once considered a niche business technology where awareness was viewed as optional, Forrester now says that knowledge of cloud computing has become an IT organization necessity. Interest is fueled by expectations of major cost savings, scalable and dynamic environments, on-demand infrastructure, and much smaller maintenance requirements.

In a recent research note, Forrester outlined the most common questions about cloud services.

Twenty-three percent of cloud computing inquiries were about the types of applications that companies were moving into the cloud and how best to leverage cloud service environments. People want to know the spectrum of possibilities -- what apps to put in the cloud?

Some questions are motivated by the need for improved business agility. The promise of better scalability and versatility makes cloud services appealing. Moreover, innovation is often stifled by the investment needed to acquire and deploy new IT infrastructure and associated application environments.

Fifteen percent of the inquiries were on challenges, risks, and the effects of cloud-based services on IT -- such as, what are the typical use cases, and how much enterprise data should live in public clouds?

Clouds are Coexisting in Hybrid Models
Forrester believes questions regarding when to build internal clouds, and the "internal vs. external" debate, will be at the forefront of cloud computing due diligence in the coming months -- which cloud service scenario is a best-fit for our particular needs?

Forrester concluded from their client engagements that cloud computing represents a significant shift in the way IT operates today -- it's not a passing fad, it's a trend that's based upon solid business need for a change in the status quo.

The following are Forrester's recommendations:

• Know your costs, requirements, and potential areas for cost saving.
• Businesses with basic requirements can begin to pilot public clouds.
• Evaluate internal clouds, while also considering a hybrid model.
• Formulate standards, and a cloud policy to govern procurement.
  

As the momentum for managed cloud services continue to build in 2009, we'll be on the lookout for additional sources of insight.

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Managed IT Services Buyer's Guide - part 3

Here are the final three questions from our ten-point Q&A that's designed to help guide your procurement process. Part 1 included the first three managed and hosting service buyer's guide questions and Part 2 had the next four questions.

8. What are the type and scope of management capabilities that you routinely offer?

• Request a list of capabilities and associated benefits, relative to your needs.
• Historical reporting is essential, forward-looking insight is valuable.
  

Examples of typical basic management tools include a service desk and management of various activities including assets, configuration, fault, change, release/update, performance, capacity reporting and planning, and trend reporting with recommendations.

9. If required, how will you support existing or acquired IT/networking infrastructure?

• Service providers may have policies that limit the device types they support.
• In addition, some providers only support devices they install and configure.
  

If you are like many managed service users, then you have an environment where a combination of self-managed and out-tasked infrastructure will need to coexist -- at some point in time. Service providers should be able to delineate how their role and responsibilities start and end in a multifaceted scenario. Likewise, they should explain their role in the event that they are asked to operate in a multi-vendor or multi-service provider environment.

10. How do you price and deliver professional services, beyond the scope of the managed service?

• Examples of advice, support, and guidance should be included as standard.
• Ask for non-standard consultation examples, and associated fee structure.
  

There will likely come a time when you will ask your service provider to perform an activity that is beyond the scope of your managed service agreement. You should anticipate this event by asking the service provider what constitutes routine (non-billed) information and guidance, and in contrast what is the fee structure for time and materials work -- or other billable activity.

In Summary
Managed services have a long and successful history of helping businesses like yours to reap the full benefits of IT and networking technology capabilities -- without the drudgery and distraction of the ongoing equipment operation, management, maintenance, and perpetual updates or enhancements.

You can download the complete checklist "How to Select a Best-Fit Managed Service Provider" as a .pdf document.

Also, the "Managed versus In-House Service Comparison Calculator" may help you build an internal business case. This build vs. buy expense comparison tool should only be used for basic estimates. We recommend that you consult a managed service provider to obtain an accurate comparison, based upon your actual requirements.

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Managed Service Buyer Checklist – part 2

The following are questions four through seven of a ten-point Q&A designed to help guide your managed or hosted service procurement process. Here are the first three buyer questions and service provider answers.

4. What is the depth and breadth of your current managed service portfolio?

• A service migration path provides the means to adapt to your growth needs.
• Service providers that are specialists may offer services through their partners.
  

It helps to have a forward-looking view of your needs when selecting a service provider. Sometimes a specialist is preferable to a multi-service provider. Otherwise, try to anticipate future service requirements, and consider giving preference to a provider with those combined skills.

5. How can I be sure you will apply the best people, processes, and tools? Is your company certified by a leading vendor, and are your offerings delivered using industry-leading technologies to meet the highest quality of service?

• Service providers have data on how they've qualified to meet standards.
• Providers are often required to attain a "qualification level" that is tiered.
  

The good service providers will achieve basic industry-standard technical certifications. The better service providers will comply with the ITIL foundation practices. The best will have passed the stringent qualifications of a service designation process that requires an independent third-party audit of their performance. They must pass rigorous annual assessments of their network operations center. Technical design and operations staff must also complete advanced training.

6. Where are your network management facilities located, and what are the hours of operation? Describe your escalation process, in the event of an outage.

• Service providers typically have both primary and backup facilities.
• Find out whom to contact when your primary support contact is not available.
  

Depending on your needs, service support during regular business hours may be enough. However, some businesses have requirements for 24-hour operation. Help desk coverage, staffing levels, and backup planning are important aspects to consider in this scenario.

7. What are the assurances for levels of availability, serviceability, performance, and operation? What is the process for remedy if and when levels aren't maintained?

• All service providers establish and maintain benchmark measurements.
• Service contracts detail the metrics, and references have results data.
  

It is now common for service providers to offer service-level agreements (SLAs) as an integral part of a service contract, where the "level of service" is formally defined. The SLA can include the common understanding about services, priorities, responsibilities, and guarantees -- sometimes specifying financial remedies as a result of failure to comply with SLAs.

Next step: The remaining Q&A will be featured in part 3. We'll also provide a link to a complete list, and an ROI calculator to help you start to build a business case.

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Best MSP Procurement Checklist - part 1

The process of researching, reviewing and selecting a managed or hosted service provider can be a daunting task for those business and technology decision makers that have never performed this task before. Like any other process, there are some best practices.

The following candid questions will help you determine if a provider of managed services can meet and exceed your expectations. Also included are examples of specific details that you should seek.

How do you select a best-fit service provider? Ask all the right questions. Where do you start the selection process? Focus primarily on how the service offered will help to solve problems or create new opportunities -- not merely what it does (its features and functions).

1. Are you prepared to offer only the features and functions that my business needs, instead of the ones that you include in your one-size-fits-all service bundle?

• Ask for a list of all the "standard" items included in the base bundle.
• Request details of all optional items that can be added and/or subtracted.
  

According to recent market research, decision makers at companies of all sizes now prefer that service offerings only include essential features as mandatory elements in a bundle. All other features may then be selected from a menu of options.

2. Can you describe the services that you offer -- and their business benefits -- in terms that I, and the other members of my executive team, will understand?

• The salesperson or sales support person should address your specific needs.
• Ask the service provider to explain any terms that you don't understand.
  

If you can't determine how the managed services will directly benefit your business, then you'll be unable to make an informed decision. Qualified service providers should be able to describe their offerings within the context of your specific business requirements.

3. Will you provide case study materials to demonstrate how you delivered a managed service solution that solved a business challenge similar to mine?

• Documented customer success stories provide useful insight.
• Reference checks should include details on the business impact.
  

While a service provider with limited experience may be able to meet your application needs, those that can clearly articulate the methodology they use to meet their existing customer needs will likely provide a better fit. Moreover, a basic knowledge of how your industry operates will help to avoid misunderstandings.

Note: these are the first three questions from a list of ten. The remaining Q&A will be featured in part 2 and part 3. We'll also provide a link to a complete list that you can download, and a useful ROI calculator to help you build a business case.

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The More Things Change, The More They Stay the Same

I received an email the other day congratulating me on a column I wrote for NetworkWorld nearly three years ago entitled, "Why Managed Services Fail."

The 'shelf-life' of web content always amazes me, but it is gratifying to have people stumble across my past writings and still find them timely.

What struck me as I revisited this 2005 column was how many of my points were still true,

• "...Almost every supplier and service provider I talk to admits that selling managed services has been harder than expected."
• "The first problem these managed service providers face is packaging."
• "The second issue is pricing."
• "The third challenge is positioning these services properly."
• "But the biggest obstacle to selling managed services is poor sales skills."

Sound familiar?
Although industry research clearly shows that customers are becoming more receptive towards managed services and the economy is even driving an increasing number of customers to actively pursue managed service alternatives, many MSPs are still suffering from poor sales and marketing skills to respond to these opportunities.

They are still thinking in terms of selling products rather than services. They are still promoting the 'speeds and feeds' of their technical capabilities rather than the business value of their service capabilities.

As a consequence, many MSPs end up selling their services to IT managers who are only interested in continuing to buy systems and software rather than selling solutions to higher level decision makers who are interested in the business impact of their services.

Worthy of Your Business?
So, if you are an IT or business decision-maker who is seeking to acquire managed services, don't be surprised if your potential MSPs are talking to you in the wrong terms and trying to sell you the wrong value propositions.

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