Cloud // Infrastructure as a Service
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8/9/2013
02:35 PM
Scott Bils
Scott Bils
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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.

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RajS627
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RajS627,
User Rank: Apprentice
10/15/2013 | 12:31:02 AM
re: IT As Cloud Service Provider: New Skills Required
Historically, CIO's had the responsibility to acquire technologies, deploy them and to provide break/fix support. Today, cloud services may in fact be the best solution for the business - the CIO should help determine that without any concern about job security or losing control. The chief information officer's role has evolved to be the chief innovation officer - which means determining the best technologies and solutions that will provide a competitive advantage for the business and drive revenue/profits. Oh, and they can still be the provisioner of technology without acquiring it, deploying it and providing break/fix support!

Raj Sabhlok, ManageEngine - a division of Zoho Corp
cbabcock
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cbabcock,
User Rank: Strategist
8/13/2013 | 6:36:16 PM
re: IT As Cloud Service Provider: New Skills Required
Yes, some IT infrastructure wants to migrate outside: servers for marketing campaigns or test and dev. But there's a lot of existing IT responsibility that isn't going anywhere. There will be a "legacy" data center for years to come, and IT is going to need to acquire the service management capability as it maintains the legacy data center, IT used to be caught between increasing legacy complexity and the need to innovate. Now it's positioned between continuing legacy complexity and the need to manage innovations going on outside its doors. Charlie Babcock
David F. Carr
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David F. Carr,
User Rank: Author
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.
Dale Bracey
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Dale Bracey,
User Rank: Apprentice
8/12/2013 | 8:15:26 PM
re: IT As Cloud Service Provider: New Skills Required
You are 1000% correct (yes, one-thousand) on the points toward Public Cloud. Have you looked at our Rackspace Private Cloud (RPC) Offering though? There are three major offerings when it comes to RPC: 1) Host with us. We will deploy and manage the infrastructure for you. Our Support Staff will be on-hand 24-7 for the backend, so you can focus on your application. 2) Host in-house, with Rackspace Support on top. You can deploy the RPC OpenStack software yourself, or have one of our RPC Engineers come on-site and deploy for you. Your gear, your site, your security, our Fanatical 24-7 Support. 3) Download the free RPC Software (http://www.rackspace.com/cloud..., and get community support from the free Private Cloud Forums. https://privatecloudforums.rac.... What's better, with this installed, if you decide you want to add paid Rackspace Support later, you can always call in to become a customer for the environment.

More information on Rackspace Private Cloud: http://www.rackspace.com/knowl...
ANON1244583120671
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ANON1244583120671,
User Rank: Apprentice
8/12/2013 | 6:54:34 PM
re: IT As Cloud Service Provider: New Skills Required
Product Marketing with built int IT economics in all product offerings is critical for Enterprise IT to restructure itself as a modern IT organization. Without this approach survival will become very hard as external providers are going to continue to deliver better services at competitive price points.

Enterprise IT has to build a broker operations capability and ask business users to compare prices between internal or external services. The better service with a better price point and value will win.

Enterprise IT can ask for additional dollars to business units to help them design the best solutions, select the best fit providers, consume all the services from a single point while ensuring that the internal and external services are secure, metered, tracked for performance (SLA) and handles all admin issues related to provider management, billing and payment.

This is the NEW IT that CIO and CFO should establish in collaboration with business partners and cloud providers.
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.
Multicloud Infrastructure & Application Management
Multicloud Infrastructure & Application Management
Enterprise cloud adoption has evolved to the point where hybrid public/private cloud designs and use of multiple providers is common. Who among us has mastered provisioning resources in different clouds; allocating the right resources to each application; assigning applications to the "best" cloud provider based on performance or reliability requirements.
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