Wednesday, February 13, 2019

Why enterprises should approach procurement of hybrid IT in entirely new ways



The next BriefingsDirect hybrid IT management strategies interview explores new ways that businesses should procure and consume IT-as-a-service. We’ll now hear from an IT industry analyst on why changes in cloud deployment models are forcing a rethinking of IT economics -- and maybe even the very nature of acquiring and cost-optimizing digital business services.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy.

Here to help us explore the everything-as-a-service business model is Rhett Dillingham, Vice President and Senior Analyst at Moor Insights and Strategy. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:

Gardner: What is driving change in the procurement of hybrid- and multi-cloud services?

Dillingham: What began as organic adoption -- from the developers and business units seeking agility and speed -- is now coming back around to the IT-focused topics of governance, orchestration across platforms, and modernization of private infrastructure.

There is also interest in hybrid cloud, as well as multi-cloud management and governance. Those amount to complexities that the public clouds are not set up for and are not able to address because they are focused on their own platforms.
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Gardner: So the way you acquire IT these days isn’t apples or oranges, public or private, it’s more like … fruit salad. There are so many different ways to acquire IT services that it’s hard to measure and to optimize.

Dillingham
Dillingham: And there are trade-offs. Some organizations are focused on and adopt a single public cloud vendor. But others see that as a long-term risk in management, resourcing, and maintaining flexibility as a business. So they’re adopting multiple cloud vendors, which is becoming the more popular strategic orientation.

Gardner: For those organizations that don’t want mismanaged “fruit salad” -- that are trying to homogenize their acquisition of IT services even as they use hybrid cloud approaches -- does this require a reevaluation of how IT in total is financed?

Champion the cloud

Dillingham: Absolutely, and that’s something you can address, regardless of whether you’re adopting a single cloud or multiple clouds. The more you use multiple resources, the more you are going to consider tools that address multiple infrastructures -- and not base your capabilities on a single vendor’s toolset. You are going to go with a cloud management vendor that produces tools that comprehensively address security, compliance, cost management, and monitoring, et cetera.

Gardner: Does the function of IT acquisitions now move outside of IT? Should companies be thinking about a chief procurement officer (CPO) or chief financial officer (CFO) becoming a part of the IT purchasing equation?

Dillingham: By virtue of the way cloud has been adopted -- more by the business units – they got ahead of IT in many cases. This has been pushed back toward gaining the fuller financial view. That move doesn’t make the IT decision-maker into a CFO as much as turn them into a champion of IT. And IT goes back to being the governance arm, where traditionally they been managing cost, security, and compliance.

It’s natural for the business units and developers to now look to IT for the right tools and capabilities, not necessarily to shed accountability but because that is the traditional role of IT, to enable those capabilities. IT is therefore set up for procurement.

IT is best set up to look at the big picture across vendors and across infrastructures rather than the individual team-by-team or business unit-by-business unit decisions that have been made so far. They need to aggregate the cloud strategy at the highest organizational level.

Gardner: A central tenet of good procurement is to look for volume discounts and to buy in bulk. Perhaps having that holistic and strategic approach to acquiring cloud services lends itself to a better bargaining position?
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Dillingham: That’s absolutely the pitch of a cloud-by-cloud vendor approach, and there are trade-offs. You can certainly aggregate more spend on a single cloud vendor and potentially achieve more discounts in use by that aggregation.

The rebuttal is that on a long-term basis, your negotiating leverage in that relationship is constrained versus if you have adopted multiple cloud infrastructures and can dialogue across vendors on pricing and discounting.

Now, that may turn into more of an 80/20-, 90/10-split than a 50/50-split, but at least by having some cross-infrastructure capability -- by setting yourself up with orchestration, monitoring, and governance tools that run across multiple clouds -- you are at least in a strategic position from a competitive sourcing perspective.

The trade-off is the cost-aggregation and training necessary to understand how to use those different infrastructures -- because they do have different interfaces, APIs, and the automation is different.

Gardner: I think that’s why we’ve seen vendors like Hewlett Packard Enterprise (HPE) put an increased emphasis on multi-cloud economics, and not just the capability to compose cloud services. The issues we’re bringing up force IT to rethink the financial implications, too. Are the vendors on to something here when it comes to providing insight and experience in managing a multi-cloud market?

Follow the multi-cloud tour guide

Dillingham: Absolutely, and certainly from the perspective that when we talk multi-cloud, we are not just talking multiple public clouds. There is a reality of large existing investments in private infrastructure that continue for various purposes. That on-premises technology also needs cost optimization, security, compliance, auditability, and customization of infrastructure for certain workloads.

Consultative input is very valuable when you see how much pattern-matching there is across customers -- and not just within the same industry but cross industries.
That means the ultimate toolset to be considered needs to work across both public and private infrastructures. A vendor that’s looking beyond just public cloud, like HPE, and delivers a multi-cloud and hybrid cloud management orientation is set up to be a potential tour guide and strategic consultative adviser.

And that consultative input is very valuable when you see how much pattern-matching there is across customers – and not just within same industry but across industries. The best insights will come from knowing what it looks like to triage application portfolios, what migrations you want across cloud infrastructures, and the proper set up of comprehensive governance, control processes, and education structures.

Gardner: Right. I’m sure there are systems integrators, in addition to some vendors, that are going to help make the transition from traditional IT procurement to everything-as-a service. Their lessons learned will be very valuable.

That’s more intelligent than trying to do this on your own or go down a dark alley and make mistakes, because as we know, the cloud providers are probably not going to stand up and wave a flag if you’re spending too much money with them.
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Dillingham: Yes, and the patterns of progression in cloud orientation are clear for those consultative partners, based on dozens of implementations and executions. From that experience they are far more thoroughly aware of the patterns and how to avoid falling into the traps and pitfalls along the way, more so than a single organization could expect, internally, to be savvy about.

Gardner: It’s a fast-moving target. The cloud providers are bringing out new services all the time. There are literally thousands of different cloud service SKUs for infrastructure-as-a-service, for storage-as-a-service, and for other APIs and third-party services. It becomes very complex, very dynamic.

Do you have any advice for how companies should be better managing cloud adoption? It seems to me there should be collaboration at a higher level, or a different type of management, when it comes to optimizing for multi-cloud and hybrid-cloud economics.

Cloud collaboration strategy

Dillingham: That really comes back to the requirement that the IT organization partner with the business units. The more business units there are in the organization, the more IT is critical in driving collaboration at the highest organizational level and in being responsible for the overall cloud strategy.
Remove Complexity
From Multi-Cloud
And Hybrid IT
The cloud strategy across the topics of platform selection, governance, process, and people skills -- that’s the type of collaboration needed. And it flows into these recommendations from the consultancies of how to avoid the traps and pitfalls. For example: Avoiding mismanagement of expectations and goals in order to drive clear outcomes on the execution of projects, making sure that security and compliance are considered and involved from a functional perspective all the way through, and on down the list.


The decision of what advice to bring in is really about the topic and the selection on the menu. Have you considered the uber strategy and approach? How well have you triaged your application portfolio? How can you best match capabilities to apps across infrastructures and platforms?

Do you have migration planning? How about migration execution? Those can be similar or separate items. You also have development methodologies, and the software platform choices to best support all of that along with security and compliance expertise. These are all aspects certain consultancies will have expertise on more than others, and not many are going to be strong across all of them.

Gardner: It certainly sounds like a lot of planning and perhaps reevaluating the ways of the past. 

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Hewlett Packard Enterprise.

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