IT As Cloud Service Provider: New Skills Required - InformationWeek

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IoT
IoT
Cloud // Infrastructure as a Service
Commentary
8/9/2013
02:35 PM
Scott Bils
Scott Bils
Commentary
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IT As Cloud Service Provider: New Skills Required

Pricing, PR and demand management skills aren't in the traditional IT organization toolset. Start stocking up.

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Corporate IT organizations are facing real competition. Business users are deploying sophisticated SaaS applications on their own. Developers are looking first to public cloud IaaS and PaaS platforms to build new applications, reducing the need for internal infrastructure. With every new third-party cloud service, more IT budget dollars go outside the door. So what's a CIO to do?

CIOs are coming to the realization that their organizations need to become true IT-as-a-service providers (or ITaaS, for yet another clunky addition to the XaaS lexicon). Instead of organizing around traditional technology silos, the vision is to become a modern service provider that offers and orchestrates both internal and external IT services. Under this model, corporate IT offers a menu of SaaS, PaaS and IaaS options for business users via a centralized service catalog. Business users are free to pick and choose cloud services that corporate IT has vetted or provides itself.

One example is the internal, private cloud IaaS and PaaS environments IT organizations are deploying to capture the hearts and minds of developers. To compete with Amazon Web Services and Rackspace, some enterprises are rolling out private cloud environments that meet self-serve provisioning requirements and include reusable components and common services. Their goal is to provide environments that are "good enough" to keep developers in-house, not best-in-class IaaS capabilities.

[ Who's the king of cloud storage? Read Cloud File Storage Fight: No Knockout Yet. ]

IT organizations must address a set of obvious technology issues to support this model, including integration, identity management and security. But to compete as a service provider, they're finding they also need unfamiliar business skills and capabilities. Among them:

1. Offer Design

it's not enough to just build a private cloud and let it loose. Just as Amazon and Rackspace do, enterprise IT must identify the starting points, bundles and configurations it will offer internally, including CPU, memory, storage, network and other services and components. Post- launch, the IT organization needs to respond to user needs and usage behavior and modify its offers accordingly, just as a third-party service provider would do. This is easier said than done.

2. Pricing

With cloud service catalogs, many CIOs are implementing chargeback models, whereby business users receive a bill at the end of the month for all IT services, whether they're internal or external. To compete with vendors, IT organization must evolve the pricing of their private cloud services beyond "cost-plus" models. That pricing must reflect market dynamics and provide incentives to keep volumes in house.

3. PR And Marketing

Bear with me. This isn't a stretch. While CIOs don't need to retain PR firms for internal communications, they do need to market and evangelize their services internally. It's not just about promotion. It's about understanding the needs and pains of your customers, whether they're business executives or developers, and effectively communicating your value prop.

4. Demand Management

If your organization offers users and developers a true choice, it might initially be difficult to predict demand for internal services. This is particularly true of private cloud IaaS and PaaS services. A variety of factors will drive usage, including features, capabilities and chargeback pricing. Demand forecasting and management are critical to avoiding bad capacity decisions. Although capacity planning has always been a core IT skill, effectively forecasting demand in a competitive environment is a capability few marketing organizations even possess.

If this all sounds suspiciously close to product marketing and management, it is. IT departments must effectively become cloud service providers themselves if they're going to compete as such. While many organizations have considered the technology implications of this choice, few have fully considered the required business skills.

We're looking forward to exploring these and other issues at the Cloud IT Executive Summit, to take place Oct. 21 to 23 at Cloud Connect in Chicago. As one of the Summit's track chairs, I hope to see you there.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
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David F. Carr
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David F. Carr,
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8/13/2013 | 2:08:46 PM
re: IT As Cloud Service Provider: New Skills Required
IT might not need to hire a PR agency, but if the organization has an internal comms team, making some friends there would be a good idea.
D. Henschen
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D. Henschen,
User Rank: Author
8/13/2013 | 3:21:56 AM
re: IT As Cloud Service Provider: New Skills Required
I'm thinking either-or isn't as good as a competitive climate in which there are internal an external options. Great if the internal option is competitive price wise, but there better be some value-added differentiation. Lower-cost, third-party options should be there to keep things honest and offer choices when the value-add advantages IT offers just don't matter. Competition is key, not just having IT mimic commercial-service pricing plans.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
8/12/2013 | 11:44:21 PM
re: IT As Cloud Service Provider: New Skills Required
IT can take this "we're a service" thinking too far, though. If IT starts acting like a completely arm's length organization -- billing out piecemeal for every bit of work, asking for detailed requisition forms, and generally not being a spin-your-chair-and-help-out kind of teammate -- well, then it's training business units to think of internal IT as no different or better than an outside provider. Yes, benchmark against outsiders, but go well beyond.
RobPreston
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RobPreston,
User Rank: Author
8/12/2013 | 2:35:19 PM
re: IT As Cloud Service Provider: New Skills Required
Pricing of internally provided cloud services is key. If the internal provider can't keep up with the likes of Amazon and Microsoft on that front, then its value proposition will wane, especially as the security and reliability of the external providers become less of an issue.
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