You know that using the cloud lowers costs, improves transparency and provides greater flexibility for your business. Service providers have been extensively, and successfully, promoting the cloud-based managed services model. A managed services model means that the customer buys a service on an as-needed basis paying a set unit cost. Technology services, owing to their inherently scalable nature, have been long prime candidates for managed services. Managed services gets a business away from buying and managing things like hardware or a contractor’s time to focus on the core business needs. Cloud has enabled service providers to dramatically extend the reach of their managed services.
The widespread commercialization of cloud has enabled a level of self-service and transparency that has historically eluded many outsourcing contracts. For instance, to set up a new virtual server, a click on a simple onscreen dashboard has replaced a lengthy design process. This sort of efficiency, true to the marketing brochures of the vendors, has the potential to transform your business. But, like most other enterprise technologies, the barrier to using the cloud effectively has very little to do with technology. Helping many companies, both large and small, navigate the journey to cloud managed services successfully has highlighted three key factors that can dramatically improve the outcomes from your cloud service provider:
1. Create a cloud service model which does not have high touch: This part of procuring cloud services is the antithesis of the traditional outsourcing model. Having an attentive account team and technical staff to give you the highest priority is what you want from a traditional outsourced service provider. In the cloud services world this becomes a liability. A high touch model while procuring and operating a cloud service invariably leads to a highly customized solution. When your service provider creates a highly customized cloud solution for you, it might seem like you are getting preferential treatment, but it actually decreases the economies of scale of moving to the cloud. If, and when, you decide to swap out a service provider – then the model that you have in place should enable you to do it rapidly with minimal disruption. This is not to say that you need to swap your suppliers every two years or that you should not form strategic relationships with your service providers; just that you should have the legitimate option to do so.
2. Create a short and regularly researched list of your strategic suppliers: Choosing the right strategic partner is a difficult task in cloud based outsourcing. The cloud-based managed services space is crowed. Players in this space now include niche hosting companies, traditional outsourcing providers, and product companies. The long term landscape is inherently difficult to predict. For instance, will a cloud based platform become the standard cloud computing the way Microsoft Windows became the standard desktop computing platform a generation ago? It is hard to predict and the business is still in many ways in its infancy. New evolving relationships, like the one IBM and Apple recently created, will impact this market. Identifying strategic suppliers in the still evolving arena of cloud service providers it is tough. So your cloud strategy needs to be fungible enough to be able to succeed even if you have to swap cloud providers or work with more than one service provider in the future.
3. Focus on the right benefits: You should focus on the tangible benefits that the cloud-based managed service model will bring to your business. This would typically include speed, transparency and overall costs. Focusing on these benefits and creating mechanisms to track them accurately should be the focus. A commonly quoted fringe benefit is about getting the ‘right’ split between Operational Expense and Capital Expense by using a managed service model. While financial engineering does have its occasional use, this is definitely not an advantage from the cloud. Money, no matter where you put on your ledger, is still money.
Managed services using the cloud, even with all the hype, are undoubtedly disruptive. As the technology matures, businesses will be transformed by it in ways we are now only starting to realize. Positioning your company to take advantage of this megatrend is absolutely the right thing to do. But rather than trying to set up a ‘right’ model, make sure that you set up a model that can adapt well. As that great philosopher of our age, Yogi Berra, once said “You've got to be very careful if you don't know where you are going, because you might not get there”.
Please join PA Consulting and
Google at the 2014 Global Executive Summit in Denver, CO when they present,
Platform as a Service: Democratizing Location Information through Mapping.
Rapid expansion of smartphone and location based services has familiarized mapping interfaces. Within businesses, skills have typically resided within the domain of Geographic Information Systems (GIS) specialists. However, consumer acceptance is driving the need to democratize location information, providing that capability across the business (e.g. sales) and customers. This is shifting the delivery of these services from internally hosted applications to new Platform as a Service (PaaS) models, with the advantage of rapid deployment, easy integration with big data and leveraging crowd-sourcing models. We will showcase some examples and identify key sourcing related considerations.