Industry Shift:From IT Services to Services Aggregator

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In Brief 3

Who is this paper for? 3

New Ways of Working 4

Change and Opportunity 5

Buildingonstrength 6

CollaborativeShift 7

From IT Service Company to Cloud Services aggregator 7

ServicesAggregatorSnapshot 8

ServiceProfiling 9

Whyaggregate? 9

Networkdifferentiation 10

Benefits and Recommendations 10

About the author 11

Table of content

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Industry Shift:From IT Services to Services Aggregator

The boundaries between cloud and non-cloud are not rigid. As enterprises embrace new ways of working in which the divisions between private and professional lives begin to dissolve, they need service partners with a new perspective for a new age.

In BriefEvery now and again the continual day-to-day changes we are used to in business and technology are overshadowed by a bigger shift. The big shifts are never the result of single social, economic or technology events – it’s only when these different influences align that the way we do things tomorrow really becomes different from the way we do them today.

We are experiencing such a shift right now – and the cloud is at its heart. But in addition to the emerging commercial and technological viability of cloud service delivery we also see the impact of globalization and the transformative effect that digital technology has had on lifestyle – both in terms of social interaction and in terms of our expectations of every product and service provider.

Delivery “as a service” is central to this shift: the cloud is transformational and changes the rules both of ownership and expectation.

In this paper, we are going to look at how this shift impacts roles and responsibilities inside the enterprise – particularly for the CIO and CFO teams. We will also ask how the traditional role of the IT service partner is transformed, and show how KPN has anticipated and prepared for that change.

The KPN Corporate Market team is redefining itself, shifting its focus from IT services to business service aggregation. In this new role, we are ready to engage in all critical business discussions relating to cloud and delivery “as-a-service”.

Who is this paper for?We hope this paper will be especially useful to members of the CIO and CFO teams. This is not a document to be read in private. These roles will demand increasing collaboration in the new cloud landscape and in some cases may even see these two enterprise functions fusing into one.

In our role as Services Aggregator, we would welcome the opportunity to discuss the themes and issues raised in this paper with you.

We are particularly keen to share ideas and opinions on:• The growing complexity of vendor and contract management• The challenges of running cloud and non-cloud operations

concurrently • The need to set performance metrics in the cloud• The impact of cloud delivery on security, regulation and

compliance

If you would like to talk about what the shift means for you, please contact me directly.

Maurice Remmémaurice.remme@kpn.com

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New Ways of WorkingEven though the emergence of cloud invites us to examine how an enterprise manages and sources IT and business services, it is worth starting from a different perspective: look at how people work – and ask how best to equip the workforce in a world of changing practices, attitudes and regulatory obligation.

When the economic climate is tough and people are concerned about job security. It’s easy to overlook the fact that people do have choice – people work for you because they have chosen to work for you. The success of any enterprise, in public or private sector, rests firmly on the goodwill of its employees – and on their desire to continue to contribute positively and to the best of their ability.

For this to happen, every enterprise must understand how the services it delivers to the workforce will, above all, empower them to excel. Everything else is secondary. Sure, you need to drive the costs out of operation; you need to increase process efficiency; you need to minimize risk and respect regulatory obligations; and you need to strengthen and sustain the bond with customers – but you cannot do any of this effectively without the commitment of your workforce.

Figure 1: Personal Perspectives and New Ways of Working

AutomationEvery digital experience must be designed to help - we don't want to be "form fillers".

ContinuityDevice are disposable (responsibly) - but service must be continuous.

Global HorizonsWe work and live in a globolizad economy - offshore is everywhere for everybody.

Pay-per-useWhether it's movie downloads or phone contracts - we want service transparency.

Digital Maturity With 2 Billion internet users worldwide, we are (almost) all digitally adept.

Social Networking In both our private and professional lives we expect to be connected and collaborative.

SecuritySecurity and compliance to be "built in" - too complex for the individual.

SustainabilityEthical and Environmental responsibility is part of me.

MobilityWe expect information to come to us - wherever we happen to be.

Personal Perspectives

and New Ways of Working

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In Figure 1 on page 4 we see some of the perspectives which shape the individual’s experience of a lifestyle influenced by digital information and communications. With every one of these influences, cloud and virtualization now act as experience- shapers: the digital lifestyle shown here would simply not be possible in a world of locally-held, device-dependent data.

What employees know in their private lives, now creates clear expectation in their working lives:

• People expect to be able to work productively without being chained to a single device or location

• They expect to be able to connect and collaborate with colleagues, partners and customers easily and appropriately

• They expect to be able to “click and pick” with immediate access to services and utilities

• They need to be protected from risk and from the possibility of error

These expectations are not confined to the “knowledge workers”. Whatever your job, these factors come into play. A team of railway service engineers, for example, needing to identify and fix an electrical problem in the middle of the night need easy access to communication and collaboration tools just as much as the planners who convene virtually in daylight for their next strategy meeting.

Every CIO and CFO team responsible for sourcing the business and IT services today’s enterprises need, is now examining the implications of cloud models. The quality of that examination will always be boosted by those who start by placing cloud in the context of the new world of work – and asking how the potential of cloud seen in private use of digital technology can be appropriately adopted for the enterprise. At KPN we take this analysis a stage further, and encourage our clients to evaluate cloud scenarios for their individual enter-prise according to the PESTEL model. This exercise invites critical and candid examination. The value gained will be proportional to the breadth of professional interest around the table, with CIO and CFO teams essential contributors.

Change and OpportunitySo what does the cloud challenge? It challenges entrenched notions of how IT works and how its associated services are procured and delivered. It also challenges the operational and organizational roles which have served the enterprise until now.

The CIO team have, to a large extent, been the gatekeepers for all IT provisioning. When a business unit has needed processes and technologies to support a new business development, the CIO team have been responsible not just for delivery. They have also been responsible for:

Political The political implications of cloud adoption will differ from country to country and from sector to sector. What regulatory issues will affect the individual enterprise, for example, with regard to data location?

Economic Cloud offers a basic shift in economic practice, as enterprises minimize capital investment in favour of pay-per-use service models, but how best to compare costs across cloud and traditional IT systems?

Social Internet and mobile technologies change the ways that employees, partners and customers communicate and collaborate, but how does this shift affect your business process and culture?

Technological The emergence of cloud models will not change traditional IT practice overnight. What are the implications of cloud in terms of business continuity and new models phase in and older ones phase out?

Environmental Every organization needs to make CSR part of its business value. Can you quantify, for example, the extent to which new cloud models could help shrink the current data centre carbon footprint?

Legal Pay-per-use service models demand new kinds of business contract – often with new kinds of service provider. Is your understanding of cloud contract good enough to assure continuity and security?

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• Ensuring that new developments are integrated with existing systems and practices

• That the rules of standards and governance are applied, and where necessary, refined to accommodate the change

• Making sure that every innovation is cost-justified, and managed within budget

These obligations have been made continually more challen-ging in recent years in the face of relentless pressure to reduce IT spend and in the need to achieve ever greater degrees of flexibility – delivering in shorter timeframes, and being able to scale up and down as business conditions change.

Even though the CIO team may be fully conscious and sympathetic to the influences of the new world of work described previously, the challenge of simply maintaining an acceptable degree of operational continuity at acceptable cost has often outweighed the desire to create new and more dynamic working practice. The arrival of cloud as a viable model for sourcing and delivery now makes it essential for every CIO team to review current practice, and to ask how these new approaches can be managed to co-exist with the heritage landscape for the foreseeable future.

This reappraisal is not primarily about technology choices. It is about the operational relationships between established business functions:

• When business units can buy services on the open market, independently of the IT function, how is the authority and influence of IT affected?

• When the CFO team and procurement functions can buy services on a pay-as-you-go basis, how is the relationship with IT affected – and how is the IT budget realistically allocated from now on?

For the immediate future, the CIO team has an indispensible con- tribution to make to cloud strategy – specifically with regard to:

• The need for ongoing integration of cloud and non-cloud approaches

• The impact on overall security, governance and regulation

If the CIO team takes ownership of this inevitable move to cloud-based delivery, then they will continue to be in a position to make an essential contribution to the evolving enterprise. If, on the other hand, they attempt to stand against the tide, then they will rapidly be marginalized within the enterprise. Their authority and budget will soon be eroded as other functions, and the CFO team’s in particular, step in to fill the gap.

Building on strengthThe cloud impacts your organization from technological, legal, organisational, physical and financial perspectives. The depth of experience of the CIO team in all of these areas makes their contribution critically important, particularly with regard to the need to sustain concurrency and integration with existing systems and processes.

KPN has observed a change amongst its own customers, not so much in focus as in attitude. When IT “owned” the technology and the resources, it was able to take a position of controlling authority over everything from hardware purchase through to Internet security policies.

This position of authority is no longer sustainable in the face of cloud. The stance now becomes one of collaboration and advice. The snapshot below gives an idea of how the CIO team position will change – although the ability to run all heritage systems and practices continues to be a parallel requirement throughout the shift to cloud.

Focus CIO Team Position

Pre-cloud Cloud

Technological Holds approver rights for all enterprise technology choices Manages the implications of technology-independent service choices

Legal Designs IT practice to meet externally specified compliance and regulation

Works proactively with legal and compliance to safeguard service decisions

Organisational Accepts and executes commissioned work from within the enterprise

Builds and promotes the overall repository of enterprise service practice

Physical Runs and/or manages the physical infrastructure either themselves or through third parties

Manages the crossover between cloud and non cloud resources and practices

Financial Holds and presents IT budgets, usually with significant capital investment

Minimal capital investment. Develops new financial forecasting based on service rather than license/ownership.

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Collaborative ShiftAs cloud now becomes mainstream for the enterprise, every successful CIO team will become more consultative and less proscriptive. The management and evolution of the enterprise IT estate has always been a means to an end – and the end has always been the provision of business services.

With the arrival of cloud, a significant tranche of the IT element disappears altogether, as the focus shifts to pure business service. When, for example, an enterprise is able to take an HR management system directly as a cloud-based service rather than as a series of applications and databases which need to be physically hosted, managed and maintained, then the enabling role of the CIO team changes accordingly.

This shift from IT manager to service enabler also has a significant impact on a company like KPN. Until now, the KPN Corporate Market function has been focused on IT service provision. We have managed desktops, data centers and networks because that is what our clients have needed us to do.Just as the cloud forces a shift from IT to business service provision for the CIO team, so it does for KPN Corporate Market – and every other IT services provider:• When the enterprise desktop is virtualized, and “bring-your-

own” becomes a viable reality, the IT service provider is no longer required to deliver traditional locked-down desktop services.

• When the enterprise is able to take advantage of storage and processing “on-demand”, then the focus on outsourced management of the enterprise data center shifts to the provision of scalable storage and processing resource.

• When all services, fixed and mobile, are delivered via the Internet, then the critical demands on the network and the ability to source and manage the best deal and the best performance from telecommunications service providers becomes a priority.

From IT Service Company to Cloud Services aggregatorEnterprises and their business partners grow together. As needs and circumstances change, so does the partner’s own position. Close examination of this shifting scenario with our enterprise clients over the last two or three years has lead KPN to redefine its own enterprise IT position.

Rather than thinking of ourselves as an IT services company, we now see our role very much as being a cloud-driven services aggregator.

Rather than attempting the impossible task of taking ownership of all cloud-sourced services for our enterprise clients, we act as a service coordinator, able to bridge the gap between traditional and cloud delivery for our clients. In this role, we are able to bring our clients the maximum value of our experience in IT and telecommunications, while extending these capabilities to embrace the management of the full array of third party cloud provision.

In this respect, we are also acting from a position of experience. Many major IT service contracts require the prime contractor to manage multiple specialist third parties, while presenting a single and transparent progress, performance and pricing view to the client. The same skills in managing and aggregating reporting data in complex enterprise IT service contracts are directly transferable to our new role as Services Aggregator.

In addition, because we span both the traditional world of owned and outsourced IT service and the new world of virtualized business services, we are in an excellent position not just to help clients take full advantage of these new delivery models, but also to safely transition to them.

This is important. No organization is starting from zero: every enterprise must continue to build on current investments, even if in the longer term target much of the current base will be decommissioned. All our clients have data centers, legacy systems, standardized infrastructure and custom applications. As a Services Aggregator, we will help clients leverage these investments, creating a service mix based on workspace, connectivity and data center domains, designed to enable the New Way of Working described at the start of this paper.

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As shown in Figure 2, in its role as Services Aggregator, KPN Corporate Market established a simplified single interface to the hybrid worlds of legacy and cloud delivery, and most importantly, is able to act as a rationalized gateway to third party cloud services.

Services Aggregator Snapshot In the new world of cloud service provision, the boundaries become much freer. As an IT Service provider, we were keen to deliver a comprehensive and clearly documented framework of services.

As a Services Aggregator, we are no longer working to a “fixed menu”: whatever our client chooses to source using cloud-based provisioning can potentially become part of the mix. We offer a combination of services targeted at large and midsized enterprises, conceived and presented according to the professional profiles of the different communities within the enterprise.

The overall service catalogue is tiered, allowing KPN Corporate Market clients to decide how they want to serve and equip employees:• Enterprise profiles – what services do you want every

member of the extended enterprise to be able to use? These may include enterprise social networking and communication programs, for example.

• Departmental profiles – what do specific communities within the enterprise need to excel? Even though different commu-nities need different toolsets, we need to understand how access to common data boosts innovation and efficiency across increasingly interconnected departmental functions.

• Team and taste – teams are dynamic and personal tastes and preferences are individual. How can we make it easy and safe for teams and individuals to set their preferences across a range of cloud-based business services?

Services Aggregator

Data Centers

3rd Party Cloud ServiceCloudStandardLegacy

ConnectivityWorkspace

Client

Billing Access Security Integrated ServiceManagement

Figure 2: KPN Corporate Market Services Aggregator

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Service ProfilingBy designing access to services according to specific profes-sional profiles, the Services Aggregator approach simplifies all aspects of access and administration. Access is managed via a suite of portals, implemented for each enterprise client and then presented to the different communities within the client organization according to professional need.

Service profiles will fall into one of eight broad categories, each of which can then be tuned in turn according to the needs and preferences of those to whom it is addressed.

Why aggregate?As a Services Aggregator, KPN Corporate Market is able to help rationalize cloud adoption which, without this degree of intelligent service profiling would soon become so fragmented that any overall view of trend and usage would become impossible to achieve.

An integral and associated benefit is seen in the ability to maximize the efficiency of billing and account management. Without this service aggregation function, each service used by the enterprise would be billable individually. This is clearly not sustainable in terms of either the ongoing management burden or in terms of understanding usage and costs.

Portal Type Function and characteristics

1 End-user Every employee of the client enterprise can shop – browsing, requesting and managing different services, from acquisition through to service termination. End users can personalize both their environment and their access support preferences.

2 Budget Holder Budget holders can set the limits of end-user profiles, typically indicating the range of authorized services for each end-user and approving or declining service requests which fall outside the agreed service set.

3 Customer Store Portal: ICT Manager

Each enterprise customer has a dedicated service store, from which employees and employee administrators can define and administer profiles. The portal’s ICT Manager toolset allows the client technology team to order, monitor and scale ICT services to meet changing user requirement.

4 Customer Store Portal: System Administrator

The system administrator portal provides the tools needed to define user groups, manage all universal services, and personalize the default environment to the specific enterprise.

5 Customer Portal:ICT Manager

The customer portal ICT manager view provides a comprehensive technology view of all cloud-usage across the enterprise.

6 Customer Portal:Sales Manager

The customer portal sales manager provides a corresponding view of the commercial usage of enterprise cloud usage. This makes the service costs of changing monthly usage clearly auditable and delivers an essential guide to trend and consumption.

7 Customer Portal:System Administrator

The customer portal system administrator can create, personalize, manage, and remove store portals at both a departmental and enterprise level.

8 KPN Corporate Market:Portal Administrator

The KPN Corporate Market portal administrator is the counterpart of the customer portal system administrator, and will ensure that the client’s cloud service requests and preferences are professionally managed. This function also delivers the comprehensive log files used tocheck technical and functional performance and support targets.

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By providing the means to aggregate cloud service invoices into a unified service statement, KPN Corporate Market will eliminate the need to manage multiple, complex and highly fragmented service charges.

The advantages of working through a Services Aggregator are not, however, limited to transparency in usage, trends and billing. It also makes a significant contribution to best practice in governance and security.

Without a highly structured and intelligently automated means of creating accounts and commissioning services, the enter-prise is soon left with an uncontrolled situation in which it is impossible to discriminate between active and ghost accounts.

Because KPN Corporate Market team is able to assume full responsibility for the Identity and Access Management process, we are well-positioned to rationalize the shift to cloud in terms of governance and security. The benefits extend fully to the user experience: by managing single sign-on across multiple service accounts, for example, we eliminate the need for individual members of the workforce to adopt and remember multiple passwords.

The physical depth of our position as a Services Aggregator then becomes the final element of the proposition. KPN Corporate Market owns and operates a network of Tier 3+ data centers, ensuring physical control over all data relating to Identity and Access Management, with scalable resource for all storage, back-up and archival requirements.

Network differentiationAs enterprise cloud adoption gathers momentum, we are unlikely to see simple single delivery models adopted uniformly. The diversity of culture and regulation found in different industries and different geographies is not going to disappear.

The broad combination of on-premise, off-premise, private and shared, hosted and co-located cloud delivery models is set to remain in place for the foreseeable future. Across all these models, however, dependence on high-performance and high-resilience networking remains absolute: any network compromise results in a corresponding dip in the performance and reputation of cloud services.

Membership of the KPN Group helps differentiate the KPN Corporate Market positioning as a cloud Services Aggregator. Every aspect of connectivity is fully backed both in terms of skills and investment in fixed and mobile, wired and wireless networking. This is not just true in the KPN European heartland: extended global alliances deliver parity of network perfor-mance and reliability right around the globe.

Benefits and RecommendationsInitial reactions to the KPN Corporate Market proposition as a cloud Services Aggregator from both clients and analysts have been positive. Indeed, in the Forrester1 report, “Cloud Broker — A New Business Model Paradigm”, KPN is recognized as “one of the most sophisticated in the market and among the first full cloud brokers globally”.

Because of our dual enterprise IT service and telecommunica-tions heritage we are well-positioned to enable organisations to bridge existing legacy/IT with new, cloud-based technolo-gies. Our depth of experience in workplace services is particularly valuable in the transition to cloud-based delivery: the profile-driven approaches to ensuring that the workplace fits the professional needs of the individual employee translate directly into the value of cloud delivery.

Few enterprises today rely on a single provider for all IT services. As cloud delivery comes to account for a larger and larger proportion of the “IT service spend”, this diversity of supply is set to increase even further.

The benefits of the shift to cloud have been explored in depth in recent years, with the ability to scale according to demand; the ability to minimize capital expenditure; and the ability to rapidly source and adopt innovation without excessive risk all identified as critical characteristics.

The benefits, however, will be compromised if the cost of adoption lies in increased administrative and management burdens, and in the failure to sustain responsible models of governance.

The Services Aggregator model is very new, and it is largely untried. However, by considering partnership with a services aggregator – and especially one with the depth of IT service and telecommunications expertise as KPN Corporate Market – you stand to gain the agility and cost benefit of cloud while main- taining the overall vision and transparency which both CIO and CFO teams have strived so long to achieve.

In terms of practical next steps, KPN Corporate Market has developed a Cloud Migration Framework and a range of introductory and consultancy services designed to allow you to explore, and trial the options. These include:

• Cloud readiness assessment, business case, roadmap and transition services

• SaaS selection analysis – examining the options including Google vs Microsoft

• Cloud quickstep with Rapid Deployment eXperience (RDX) for Office 365

• Cloud Integration Services – exploration and analysis

1 Cloud Broker — A New Business Model Paradigm, Forrester Research, Inc., August 10, 2011

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About the authorMaurice Remmé is Director Customer Advocacy at KPN Corporate Market and has over 12 years of experience in the ICT industry. He is actively involved in the development and implementation of the KPN Services Aggregator and cloud strategy.

More informationYou can contact Maurice Remmé directly via e-mail: maurice.remme@kpn.com or via Twitter: @MauriceRemme.

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