There's a new business model brewing in the ranks of the enterprise IT marketplace. In some ways it's a new idea; in other ways it's a linear extension of familiar concepts.
As with any emerging model, you'll hear it described in many different ways: a cloud services broker, ITaaS-as-a-service, a new variation on the outsourcing model, front-desk-and-back-office, and so on.
The core idea is conceptually simple: a new, external IT service that makes other external IT services easier to source and easier to consume by the broader enterprise.
An "IT services concierge" service, if you will.
Will some IT leaders be interested in such a thing? Inevitably.
Does the model have long term growth prospects? That's more debatable.
The Big Idea(s)
There seem to be two variants of the model floating around.
One emphasizes the back-end brokering of IT services -- creating a marketplace of service providers, much like you'd see in the energy business or travel industry. It presumes that external IT services ("cloud" if you must) are fungible entities with low switching costs.
The other flavor focuses more on the consumption model between IT and the business: the creation of self-service storefronts that make IT services easy to discover and consume: both for the business and the IT organization itself. Setting up a vending machine for the IT service catalog, if you will.
A few try and span both as an integrated offering: back-end brokering and front-end storefronts.
If you've ever had the pleasure of staying in a top-shelf hotel, you'll appreciate why I'm starting to call these "concierge" models. The concierge listens patiently to what you need, suggests some different alternatives, makes all the arrangements, and then checks in to make sure you were happy with everything. A very nice service -- if you can afford it!
Make no mistake, concierges get compensated for this valuable service, and I'm sure I'm paying for it in one form or another: an explicit gratuity, rebate from the service provider, cost of the hotel room, etc.
Concierge-style IT service models can potentially be interesting propositions, to be sure -- but let's look deeper.
The Immediate Appeal
Without looking too closely, I can see the surface-level attractiveness.
The emergent model for IT organizations is simple: be the internal IT service provider of choice. Expose IT services that the business finds attractive and wants to consume, and then either build or broker those services as appropriate.
What sounds simple and obvious at a high level can be exceptionally difficult to achieve in reality.
You're re-wiring the basic construct of IT: how IT services are produced and consumed.
The technology model changes.
The operational model changes.
The consumption model changes.
The governance model changes.
The financial model changes.
The process, roles, skills and measurement of the IT organization changes.
And all of this re-engineering needs to be done without disrupting business as usual.
A daunting task, to be sure. But not impossible.
I've met more than enough progressive IT organizations who are gearing up for the transformational task either through desire or necessity.
Their motivations are a combination of carrot and stick: they see an opportunity to deliver strategic value to the organizations they serve, while realizing that there's probably no other way forward.
Others I've met aren't so fortunate.
The need is there, the resources (money, people, etc.) aren't, or maybe there isn't the confidence that the IT organization can pull off a serious transformation. Much in the way outsourcing was attractive in years past, this new variant has appeal because the appearance of heavy lifting is greatly reduced.
The potential answer? Smart people come in under your direction, set up the storefront, drive consumption, and satisfy demand with externally brokered services. New processes are put in place around chargeback, governance, security, assurance, etc.
No need to transform, simply consume the results of the transformation as a service.
In Search Of True Value Generated
Any time I encounter a new business model, I always try to find where sustainable value is being created, and this newer concierge-style of IT service delivery is no exception.
If we focus on the IT organization itself, the theoretical potential for value creation is immense: IT gets out of the business of delivering IT services, and focuses on a consultative relationship with business consumers of IT. Or that's the theory, anyway.
But let's be honest: these usually weren't the most proficient IT organizations to begin with, and making the leap to owning the business relationship through a consultative engagement requires its own non-trivial skills-and-talent leap forward.
Besides, several of the newer players in this space have their own substantial consultative capabilities they can bring to bear, meaning that IT doesn't have a monopoly on this aspect either -- they've got to earn their new place.
Some of the back-end players are touting the idea of providing an efficient market for brokering of IT services: the best service for the best price. One immediately thinks of kilowatt-hours, airline seats or hotel rooms.
While there are certain categories of IT inputs that lend themselves to this market-based approach (networking capacity, for example), the model certainly is hard to apply for business-critical IT services where a high degree of trust and control are part of the expectation.
There's not a cost-based market for doctors, lawyers and tax people for a reason -- the relationship is based on trust and expertise, not who can do the job for the lowest cost. Besides, what's to prevent the IT organization from engaging directly with their preferred IT service providers, and cutting out the middleman?
Back to my hotel example, the concierge is of high value when I'm new in town, time is short and I don't know what's available. But once I do get the lay of the land, I can make my own informed choices about what to do.
And I don't need to pay for the concierge's services.
Put simply, over the long term it's hard to see where substantial value accrues to both players.
Yes, IT can move up to play a more strategic role, but that's not necessarily an easy thing to achieve. And, yes, the IT services concierge has a ready market for supplying IT services, but those services will have to be differentiated and stand on their own merits vs. being simply convenient to consume through a portal.
But that doesn't mean that there isn't real value here ...
The Value Is Really At The Beginning
For me, the value of these newer concierge-style services are all up-front. These engagements can potentially get an IT organization delivering (and consuming) attractive IT services far faster than a home-grown organic approach.
And, based in what I've seen, there seems to be no shortage of IT organizations that need to flip their model sooner than later.
A consulting-led engagement that can (a) make the case to the business, (b) stand up processes for continually improving the services catalog, (c) drive consumption, (d) implement the required financial and chargeback model, (e) source those services intelligently, (f) create processes that mitigate risk and provide assurance, etc. etc. -- there's amazing value in all of that.
But, in my mind, what we're really talking about is a consulting / SI engagement, and should be valued as such. Could a professional service be offered for the continual operation, management and enhancement of the IT services factory? Sure. Could a "cloud sourcing" engagement be offered that provides either advice or program management on how best to work with external providers? Sure.
But in each of these cases, you're funding the model by paying for expertise -- and preferably not by marking up the long tail of IT services provided by external entities.
A quick example? Recently, I've discovered I really like KIND snack bars, sold at the local Whole Foods for $1.99. Through their web site, I discovered that I can drop that to $1.49 by working with them directly.
I'll still be shopping at Whole Foods, I just won't be buying any KIND bars from them anytime soon.
But there's more at work here. My financial adviser is always suggesting investments to me, and I break them into two categories: those that he gets a fee on, and those he doesn't.
I'm more than willing to pay for his services, just not that way.
A New Prediction For 2013?
My 2013 IT predictions are already out there, so I shouldn't be going back and editing them.
But I'm willing to suggest a potential new one: in 2013, we'll see a new wave of these concierge-style services being offered in the marketplace. Some will find traction, others won't.
I think the ones that do well will do so because they bring valuable expertise -- and they charge for it -- up front. The ones that try and fund their model through arbitrage of other, external IT services -- well, they'll run out of steam before too long.
Because, much as I'd like to pay a concierge to meet my every need 24x7x365, I really can't afford it :)
May be this prediction is getting an improvement in IT.
Posted by: IT development | January 04, 2013 at 12:54 AM