Commoditising IT to differentiate your business

Just as offshore outsourcing was greeted with suspicion and scepticism in the late 90’s, the concept of putting business critical applications into the cloud has raised concerns among IT professionals, who worry that this could threaten their own position, as well as risking the ownership and security of their company’s data.

To become an IT professional takes years of training and expertise in operating systems, infrastructure and the quirks of different hardware.

So, understandably, it wrankles when people talk of IT becoming a “commodity”. However, just as many of the original off shoring sceptics came to the conclusion that divesting themselves of routine coding tasks has in fact enabled IT departments to hit increasingly tough targets and remain profitable, using service providers to manage and run routine processes and applications promises significant benefits.

This article will point out the major benefits of using a third party managed service provider to deliver standard services that free up IT resources and enable staff to focus on developing services with unique and differentiating factors that give a business its competitive edge. Often times, because so much effort is placed on keeping existing systems maintained and running it is almost impossible to do the things that will make a difference and help grow the business.

Taking IT to Task

In his latest report, “Taking IT to Task”, Quocirca analyst Clive Longbottom writes that, “IT is just a means to an end. It’s the process that matters and IT is commoditising.” Longbottom argues that businesses are run by tasks and processes and cannot afford to be constrained by technology that doesn’t keep up with changing business demands. This requires a fresh approach to IT. To enable businesses to meet constantly evolving market requirements, IT must be able to serve changing business functions.

The danger is that in-house IT staff and equipment may not be able to keep up with the fluid business environment that places new demands on inflexible systems on a regular basis. Attempting to keep everything on-premise simply leads to, “over provisioning of hardware to serve underutilised functions”. He suggests that, “Pulling required computing power in from the cloud, and aggregating these as open composite applications enables greater business flexibility and market responsiveness”.

He recognises that this has been met with resistance among some IT industry professionals, citing loss of control, loss of data and lack of security as reasons for keeping IT functions and their associated hardware and applications in-house: “The fear of handing over control at both the technological and process level scares many, as they see this as the possibility of handing over their actual job. However, attempting to keep technology in house is possibly a far greater threat to a business in today’s markets. The speed of change is too fast for any small group of people to keep adequate pace with.”

Longbottom suggests that far from doing in-house staff out of a job, putting run-of-the-mill IT tasks into the cloud will shift the balance of the IT budget back in their favour. Commodity processes such as email, internet access, instant messaging, billing, invoicing and telephony, while critical to the business function, are standard across all industries, sectors and countries and don’t help the business to stand out against its competitors. These are things that just need to work efficiently and a dedicated third party provider can make sure they do so better than most small and medium sized organisations can.

It would therefore make better business sense to use services for these commodity processes, freeing up the IT department to focus on meeting the objectives of the business. Longbottom cites research showing that 70 per cent of in-house IT employees’ time is spent on maintaining and upgrading systems, patching, and “fire fighting”, with only 30 per cent being left available to advise the business on new technologies and invest in new services.

By sourcing IT function from cloud-based providers, in-house staff are relieved of basic running tasks that consume time and are distracting. As a result they are able to focus on harnessing existing resources to deliver more business value: “Looking to the emerging cloud to offload commodity technical services and to provide services to higher level composite business processes puts IT back where it should be: at the heart of the business, but not dictating the business”, asserts Longbottom. He recommends that business leaders look at their top three to five business critical processes to find out how they can be improved through commoditising the “base-level” tasks.

Many IT professionals still voice concerns about retaining ownership and access to their data, particularly where this might be hosted overseas. It makes sense to only use service providers with UK-based data centres, to avoid legal issues concerning customer data.

Looking at my own customer base, I can see where managed services are best suited to helping the UK’s small and medium sized business consume critical IT functions as a service in order to help them get more from their existing resources. I have provided four examples of “commodity” services that can benefit from being sourced from the cloud:

1. Email: when Bowman Riley Architects first contemplated using the email service, the decision was a tactical one, to enable one of the directors to work from home. Now, the service has been embraced as part of Bowman Riley’s business continuity strategy. Staff calling in with a request to work remotely from a client’s site, or from home, can be provisioned with secure email access within 15 minutes. This not only helped Bowman Riley to remain operational during heavy snowfall of 2009/2010, but it also allows it to comply with new UK legislation allowing parents of children under 16 to request flexible working conditions.

2. Voice Services: By accessing voice over IP telephony services from a cloud provider, companies can gain the benefits of VoIP with maximised availability. This has the potential to allow organisations to provide staff with services such as voicemail, mobile, data, conferencing and unified messaging, all on a fixed monthly pricing model that allows them to budget more precisely. Utility-based pricing gives them flexibility to add additional users as the company grows, without any capital expenditure on telephony or networking switching hardware.

3. Managed Hosting: Oxfam’s website was able to carry on accepting donations during an humanitarian crisis, while other websites slowed to a crawl, or crashed, as traffic spiked up to 5 million hits. Intelligent ID, is able to use dedicated network management to meet spikes in demand for online identity authentication. These can increase from 2 requests an hour up to 16,000 ID verification requests an hour, as customers’ place bets on the Grand National. This is a perfect example of Quocirca’s finding that “flexibility, scalability and availability, will be better served by third party partners with the investment in the platform technologies combined with specialist integration skills”.

4. Security: Financial industry regulations stipulate that email records of trades must be kept for 5 years (MiFID: article 51). With spam making up 90 per cent of all email traffic, this would entail a completely unnecessary expenditure on storing spam. Therefore, in these industries, filtering email for spam and malware before it gets anywhere near your network makes perfect business sense.

Conclusion

A recent survey of 200 senior IT decision makers and strategists found that 34 per cent believed cloud-based services would free them from low-level maintenance functions. Over time I anticipate that this percentage will increase as more IT professionals move into the boardroom. Only 27 per cent believed that using cloud-based services would not help them to align IT more closely with corporate goals.

Far from threatening the position of IT professionals, cloud computing services represent an opportunity for IT employees to offload the more mundane, but necessary, tasks such as provisioning, patching, networking monitoring and maintenance of hardware and application updates to businesses that specialise in these activities. This will free UK businesses from the grip of the mundane and costly exercise of running inflexible and restrictive IT systems that do not meet business requirements.

Business leaders across the UK are now being empowered to make decisions about the technology that supports them and can quickly and cost effectively adopt new services that yield higher business benefits. Relinquishing commodity tasks to the cloud will put IT staff at the centre of business strategy: co-ordinating services delivered via the Internet, while focusing their time on the processes that promote their differentiation in the market place, helping to ensure that the business accelerates its competitive and profitable position.

Martino Corbelli is Marketing Director of Star.