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IT as a Service

|In: Industry Commentary|Last Updated:

KJR’s ITaaS series (IT as a Service, the old run-IT-as-a-business mannequin dressed up in a new suit) has been longer than a bad shaggy dog story. So it’s time, and maybe past time for the punchline. But it’s a two week punchline. Ready?

Start with the business model. I snuck the best one in (or at least, best in most situations) several weeks ago when you weren’t looking. It’s called Landlord/Tenant, and it solves many of the most egregious problems with product-focused, catalog-oriented versions of ITaaS that dominate industry discussions of the subject.

With this business model, IT takes on rights and responsibilities equivalent to a landlord (hence the name). But not just any ordinary landlord. We’re talking about a high-end landlord who provides lots of valuable services for tenants beyond just providing a roof and four walls.

Our high-end landlord provides three types of service: Core, metered, and custom.

Paying the rent buys tenants all core services — niceties like kitchen appliances, bathroom fixtures, a parking space, garbage removal, and, in this day and age, telephones (local calls), basic cable, and internet service. They’re built into the rent even for renters who don’t want one or more of them, on the grounds that most renters do and it’s cheaper and easier to provide them universally at a single fixed price than to provide them as a la carte options.

Their IT equivalents might include PCs, file and print services, email, telephones, and the never-popular time entry system.

Real landlords also take care of snow plowing, grounds keeping, and building maintenance. IT landlords run the data center and network infrastructure.

The tenants’ rent also has to cover their landlord’s costs of running the business itself. IT has parallels for these too — in particular, the cost of maintaining a coherent technical architecture. More about this later.

Our high-end landlord also provides metered services, whose cost depends on usage. HVAC is an obvious example. Long-distance calls, too.

For IT, metered services might include “How-do-I?” help desk calls and long distance charges. Maybe mobile phones, and tablets, too. Metering doesn’t just mean services consumed in fine-grained increments.

The thing about metered services is that they’re standard and available to everyone, just like core services, but unlike core services they’re optional.

The third class of service is custom services. For actual landlords these might include custom painting or wallpapering, premium lighting fixtures, or replacing the standard kitchen appliances with higher-end alternatives.

For IT-as-landlord they might include application development and enhancement … or these might be provided as metered services; there’s no right or wrong answer to this.

Package selection, configuration, and integration will probably be delivered as custom services too, but again, this depends on how the CIO wants to run the IT-as-landlord business.

Turning IT into a landlord has an interesting and useful property: While “the customer is always right,” tenants aren’t. Landlords have well-understood rights that renters aren’t allowed to violate. For example:

Tenants don’t get to install their own window air conditioners. They use the building’s central air conditioning, just as managers don’t get to install answering machines on their telephones — they use the enterprise voicemail system, like it or not.

Tenants don’t get to install their own satellite dishes. They use the building’s cable connection. That’s because, in addition to the poor aesthetics that would result from lots of individual dishes attached to the side of the building, tenants would have to drill holes through the outside wall to run a cable from the dish to their televisions. That’s called “damaging the landlord’s property” and it’s not allowed.

And so on. Landlords have responsibilities beyond giving each tenant what that tenant asks for, in the form the tenant asks for it.

IT-as-landlord is in a similar situation. It provides the capabilities each “internal customer” (shudder) needs, but that’s different from providing the exact make and model each manager prefers.

That’s as it should be, because IT is responsible for more than a catalog of services. It’s responsible for maintaining a coherent enterprise technical architecture … for the enterprise integration of these services, so they make sense as a whole and not just as independent parts.

Which also, by the way, means there’s no competition. If a business tenant wants something, whether it’s custom or metered, that tenant has to work through the IT landlord … and unlike real tenants, IT’s tenants can’t move to a different building.

Which goes to show that every analogy has its limits.

* * *

Next week: Chargebacks. Hey, everyone needs something to look forward to.

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|In: Industry Commentary|Last Updated:

Are you sure you want to go through with this?

We’re still taking about IT as a Service (ITaaS) — the shiny new buzzword for the well-worn idea that CIOs should run IT as if it is an independent business. And as in past weeks, rather than railing against it, we’re trying to make it work.

ITaaS proponents don’t really think you should run IT like an independent business, possibly because many don’t know what’s needed to run an independent business. Doing it for real would deeply distress just about everyone, both inside and outside IT.

It’s just a metaphor. As with all metaphors, you shouldn’t push it too far.

Last week’s column explored the boundary:

  • Growth — real businesses want it; few CEOs want IT to do it.
  • Sales and Marketing — real businesses do it; no CEO would want IT to do it.
  • Competition — most real businesses have it, but not all — there are monopolies, both de jure (by statute) and de facto (they just are). ITaaS’s proponents might want IT to give up its de jure monopoly, but the long-term impact is likely to be a race to the bottom, culminating in a shoddy and poorly integrated systems environment.

Here’s one more metaphor boundary challenge: affinity. I nearly said loyalty, but as employer loyalty toward employees has gone out of style, they can hardly expect employees to feel loyalty to them in return. (Many executives do expect this; why is an ongoing mystery. But I digress.)

The question is whether you want your company’s IT professionals to feel a sense of affinity for the whole company, or only for the part that falls inside the IT organizational chart. That will determine whether they base their day-to-day decisions on what’s best for the business as a whole, or on what’s best for the IT department.

After all, while vendors try to provide value for their customers, they try harder to maximize their own profitability.

Why should ITaaS be any different?

Let’s get to it. Every business has to deal with ten areas of endeavor. Five face inward: People (who does the work), process (how they do it), technology (the tools they use), structure (who is responsible for what), and culture (the unwritten rules of how we do things around here). Whether you run IT as a business or as a department you’ll need to deal with these, so we can mostly ignore them as ITaaS differentiators.

It’s the five outward-facing areas we need to think about right now:

  • Products: What you provide to customers that they pay for, including bundled ongoing support.
  • Pricing: Not only what you charge for products but also contract terms and conditions, and your pricing philosophy (for example cost-plus, value-delivered, or what-the-market-will-bear).
  • Customers: Who you sell to. More precisely, your true customers … the people who make or influence buying decisions; plus the consumers who use your products and services and the wallets who pay for them.
  • Marketplace: The business ecosystem you operate in — your suppliers, partners, distributors, competitors, population of potential customers, and their interconnections and interplay.
  • Messages: Everything you want customers, consumers, wallets, and your marketplace to know about your company and its products and services.

Once the ITaaS singing, dancing, and tuba-playing is done, its proponents are really recommending that IT be explicit about products and pricing — that it should establish a service catalog. All the rest lies on the other side of the metaphor line-drawing boundary.

Also, just in case you’re wondering, this is a clear case of vocabulary inversion. Once upon a time, what you sold for a profit was called a product, and we had to distinguish between “services” that were products in that we sold them and made a profit on them, and “service,” which was something we did at no additional charge to support our products.

Now, in IT, everything is a service, so instead of talking about the ERP suite as a product we provide to the business, we talk about providing the ERP suite to the business as a service.

That’s okay, so long as everyone uses the vocabulary the same way. Service catalog it is, and like all catalogs it should provide the name of each service, its price, and promotional copy that entices the reader to want the service so much they can taste it.

Oh, wait, no … that’s sales and marketing, which we aren’t supposed to do. The IT service catalog should describe each service in the dullest possible terms so only people who really, really need it will ask for it.

Or maybe just describe it with clarity.

* * *

Can you take one more? Next week — the ins and outs of creating and pricing a service catalog, and also whether it’s really possible to carve only products and pricing out of the business metaphor and still have something that makes sense.

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