A DIGITAL ENTERPRISE REQUIRES 'IT AS A SERVICE' The Journey to ITaaS. A CSC Whitepaper

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1 A DIGITAL ENTERPRISE REQUIRES 'IT AS A SERVICE' The Journey to ITaaS A CSC Whitepaper CONTENTS Introduction 1 The journey to ITaaS 2 and beyond The disconnect between 3 IT and business processes How plan-build-run 4 impedes innovation Modernising your 4 IT function Be prepared to fail 6 to succeed Moving from plan-build- 6 run to plan-consume Wave 1: Optimise 7 Wave 2: Modernise 8 Wave 3: Transform 9 Getting started on ITaaS 10 Step 1: Sell the vision 11 internally Step 2: Build a business case 11 with a self-funding pathway Step 3: Think big 11 but start small Conclusion 12 INTRODUCTION Businesses and IT organisations are undergoing unprecedented change. New value is increasingly being created outside firms as a result of collaborative commerce, crowdsourcing, big data and other external sources. To exploit these trends, businesses are turning to open-source software, and co-creation and collaboration with customers, partners and other external participants. These innovations are changing corporate and by necessity IT strategies. IT is increasingly being delivered and consumed as a service and it is looked to as a source of innovation rather than being thought of as an expensive burden. These changes are also driving the delivery of corporate information and applications over the Internet, with interfaces that allow employees and partners to execute business processes more efficiently and seize new opportunities. In addition, open architectures are enabling IT organisations to integrate with Software as a Service (SaaS) providers and public cloud operators to access new functionalities and resources on demand. This move from closed to open business models is paving the way for IT to take a more strategic role in corporate operations and to lead the way in organisational transformations. This is a critical development, as many business managers are yet to realise the impact this new IT as a Service (ITaaS) model will have on their processes, cultures and outcomes. For Chief Information Officers (CIOs), this is a vast change from the traditional approach of running a static IT portfolio with most applications sourced internally, and employees and intellectual property managed in-house. The CIO now becomes a partner to help deliver innovation to the business consumer; participate in open communities to acquire services from cloud and SaaS providers; and maximise value to the business from a broad community of partners, employees and customers. At CSC, we ve developed a road-map to help your business move to ITaaS and beyond regardless of the current state of your IT function. We can help you free up funding and transform your business into an agile, innovative, externally focused operation. If you would like to learn more after reading this paper, please don t hesitate to contact us. SONIA ELAND Sales Director, GBS CSC Australia and New Zealand

2 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 2 The truth is that a committed business can make great strides towards implementing IT as a Service in two years... (the result is) your company will be agile, innovative and well positioned to seize new opportunities before its competitors do. THE JOURNEY TO ITAAS AND BEYOND Imagine running a business where: Your IT team can access thousands of applications from application marketplaces enabling your business stakeholders to trial their new product ideas in hours, rather than days or weeks Developers bear the cost and risk of creating these applications and making them available through the marketplace Your business leaders can easily view the IT resources and services their teams are consuming, and manage the cost to the organisation You can automate policies incorporating relevant cost, risk and servicelevel agreements for deploying application workloads across your infrastructure as efficiently as possible You can fine-tune this environment, improve performance and control costs by clicking a few buttons on a dashboard, rather than by requiring the IT team to spend time spinning machines up and down Your workers can access and update customer information on site; executives can use their smartphones to obtain detailed real-time insights about clients and their businesses; and predictive solutions can be pushed to users as and when required Work becomes an activity rather than a place end users work experience is the same as their working from home experience You can use social media, location and mobile data, sensor information and enterprise application data to analyse trends, identify opportunities, optimise operations, react to market circumstances and gain a competitive edge You can use the Internet of Things to gain even deeper insights into the operations of your business and your customers, and to predict outcomes and automate functions. This helps you to reduce costs and enable field workforces and other teams to deliver amazing customer experiences. This may sound like a utopian version of your company, or maybe a scenario that is at least a decade from reality. The truth is that a committed business can make great strides towards implementing this model in two years or even sooner. While the scope and scale of the organisational change required may seem daunting, the benefits are considerable. Your company will be agile, innovative and well-positioned to seize new opportunities before its competitors do. The key is to think big, but start small. By breaking this journey up into bitesized chunks, a business can allow the bigger picture to evolve, which will ensure that people, process and technology changes happen at the same time.

3 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 3 By running these supplementary applications in their own infrastructure, businesses are adding complexity and cost to their technology environments and fostering frustration among business users. THE DISCONNECT BETWEEN IT AND BUSINESS PROCESSES For most companies, the first steps on the journey to ITaaS and beyond involve taking stock of the IT function. This should include an honest assessment of the relationship between IT and the business with a particular focus on opportunities for improvement. Most companies support the business processes that workers use to complete activities such as fulfilling customer orders with applications like enterprise resource planning (ERP), customer relationship management (CRM), customer experience and billing systems. However, there is typically a disconnect between workers activities and these underlying systems. For example, ERP systems use standard processes for purchase orders, accounts receivable and accounts payable. This is at odds with the need to customise processes to differentiate companies from their competitors and provide value to clients. As a result, many businesses are forced to supplement their systems over time with a plethora of spreadsheets, databases and home-grown applications. By running these supplementary applications in their own infrastructure, businesses are adding complexity and cost to their technology environments and fostering frustration among business users. Inefficiencies that arise from this approach include: Costs being opaque and not tied to IT resource consumption, increasing the risk of capital expenditure decisions that leave technology assets stranded or underutilised Failure to aggregate data from disparate sources and integrate applications so businesses cannot use predictive analytics for decision making Scarce resources and budgets being invested in maintaining and upgrading customised applications IT environments featuring legacy and customised applications that cannot be moved to the cloud or accessed from mobile devices IT team leaders diverting time and resources away from projects that add business value to managing vendors and contracts, and that control spiralling license, maintenance and release upgrade costs A siloed approach that limits information-sharing between teams and individuals, causes waste and duplicated effort, and politicises budgeting and project procedures A limited ability to provide partners with role-based access to systems, inhibiting the chance to increase efficiency

4 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 4 Businesses are capping IT budgets while demanding technology teams keep the lights on, execute projects and enhancements... placing immense pressure on IT teams to find ways of increasing productivity and becoming more efficient. How plan-build-run impedes innovation Frustration among business users is exacerbated by the fact most IT operations still use a siloed plan-build-run model. For example, the plan function works with business teams to identify priorities, secure funding, and establish short- and long-term road-maps. Once this program is approved, the procurement function sources suppliers that can deliver the necessary components. The build function then works with internal and external teams to build, test and implement new applications. Finally, the internal run function maintains ongoing services, and manages licences and contractors. Even if these activities are outsourced to a managed services provider, they still exist in a separate silo, isolated from the remaining functions. We find that moving from plan to build and then on to executing an idea can take anything from one to three years. Businesses that have not figured out how to change their model and continue to take this approach as a result risk losing ground to their competitors and eventually becoming irrelevant. MODERNISING YOUR IT FUNCTION Businesses are taking steps to modernise their IT function to address some of these issues. However, while these efforts are adding value to IT, they are piecemeal and focus primarily on ensuring that IT delivers more for less. In other words, many businesses are capping IT budgets while demanding technology teams keep the lights on, execute projects and enhancements, and find ways of funding transformation. This is placing immense pressure on IT teams to find ways of increasing productivity and becoming more efficient. At CSC, we have identified five internal modernisation drivers for business and IT organisations today: Reduce costs, lower technical debt (the accumulation of technical inefficiencies in a software project, derived from using shortcuts and suboptimal processes) and apply a portfolio-wide total cost of ownership Simplify the business and application portfolio to reduce costs, improve ease of maintenance and gain operational efficiencies Lower business and operational risk by limiting reliance on scarce programming language skills and preventing expensive outages Become more agile to hasten responses to market changes; improve flexibility and speed to market; and increase competitive advantage Delivering growth by aligning IT with the business s strategic needs. This helps provide greater agility, more innovation, increased use of new channels such as mobile and capabilities such as big data analytics, better cost containment and reduced capital requirements. The modernisation journey requires significant organisational change involving scrutiny of enterprise architectures and application portfolios.

5 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 5...the starting point for each organisation will be different but selling the vision, building a self funding pathway and thinking big but starting small provide the path to success. In many cases, this will involve establishing a dedicated team to manage change, value delivery, the overall project and its impact on architecture. This team will be charged with remaining true to the ITaaS vision and remaining above the fray of internal politics within the company s internal IT function and business as a whole. The team becomes the champions of the journey to the ITaaS. While the starting point varies based on the maturity of the business and its IT function, it is typically a two-year journey to transition businesses from a traditional 3-stage plan-build-run IT model to an ITaaS-aligned 2-stage plan-consume business and IT model. In this dynamic model, the IT organisation gives business stakeholders access to innovation on demand via public/private enterprise Apps stores (plan), and then orchestrates workloads and optimises consumption, providing transparency of usage and costs (consume). Figure 3 below illustrates a typical two-year journey from plan-build-run to an ITaaS-aligned plan-consume IT model. The Journey Model First 3 weeks Years 1-2 Years 3-5 FUTURE Wave 0 Visioning Wave 1 Preparation Wave 2 Get Fit Wave 3 Foundations Wave 4 Transformation & Next Gen BUSINESS VALUE Wave 5 As a Service Modernisation NOW Accelerate Get Fit Implement Foundations Portfolio Transformation IT as a Service Maintaining proper governance of this program is key to unlocking its value. To ensure this happens, governance needs to be a joint activity between business and the IT function. A project management office needs to drive activity across the entire program. Figure 4 illustrates how best to structure an ITaaS team needs to be structured to deliver the project effectively. Executive Sponsorship CSC Client PMO Benefits/Value Management Architecture Office Change Management

6 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 6 The ultimate objective of the ITaaS journey is to move a company from a plan-build-run IT model to a plan-consume IT and business model. This model turns a laborious three-stage process into a dynamic two-step process that drives rather than impedes innovation. BE PREPARED TO FAIL TO SUCCEED For many businesses, the key to a successful transformation is to make a lot of changes and be prepared to fail but recover quickly. Where the changes are successful, measuring that achievement is crucial. This approach to failure may initially be threatening, so managing cultural change will be an important component of the transformation project. Fundamental to this approach is implementing the DevOps software development method to enable fast prototyping and movement of applications into production. Making an effective transformation to ITaaS also means a company needs to truly understand its business and value chains from an operational perspective. This enables the company to make correct decisions about which applications typically ERP systems with finance, procurement and human resources functionality can run functions across the business, and which applications are best dedicated to individual teams. These decisions enable the company to rationalise its application portfolio and start exploring as a service for components of its architecture. This exploration should take no more than a week or two for each component. From there a business can move with greater certainty towards ITaaS. MOVING FROM PLAN-BUILD-RUN TO PLAN-CONSUME The ultimate objective of the ITaaS journey is to move a company from a plan-build-run IT model to a plan-consume IT and business model. This model turns a laborious three-stage process into a dynamic two-step process that drives rather than impedes innovation. The IT organisation focuses on orchestrating workloads and optimising consumption, giving business stakeholders access to innovation on demand. This is a far-reaching change and requires businesses to retrain or recruit employees with new skills. In many cases, technology and process skills developed and honed over many years will be surpassed by newer, more relevant knowledge. To complement their reviews of relevant skills, businesses need to use techniques such as DevOps to modernise and mobilise their applications. They also need to restructure their infrastructure and business processes to resolve the previously mentioned disconnect between the systems and the workers who use them to deliver value. This enables businesses to reverse traditional inside-out models where value is created and managed internally in fixed models to outside-in collaboration where employees, partners and management work together to find and leverage external value opportunities. Apps Mall The outcome is a service-enabled environment that gives IT teams access to applications from application marketplaces. By sourcing applications from marketplaces rather than developing them themselves, IT function enables business teams to trial new product ideas in hours rather than months or years.

7 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 7 Once the trial is complete, an application can be moved to an application storefront from which business users can consume or reject the application. By using DevOps to develop applications, or by sourcing applications from marketplaces, businesses can reduce the time to market. Automating the migration and testing processes, allows IT teams to deliver enhancements continuously rather than through large and complex releases. The migration to a plan-consume model is a journey. For most businesses, it can be undertaken in three waves optimise, modernise and transform and they can surf these from any stage of IT maturity. This flexibility is ideal as every business has different requirements, a different IT operation and a unique culture. Figure 5 illustrates the components of each wave. Elastic Foundation Application aas Foundation Continual Innovation Framework Drive Innovation Ecosystem AGILITY High Plan the journey Hybrid cloud DevOps Open source SaaSenablement Cloud brokerage Application modernisation App marketplace Social Develop > Deploy Crowd source THRIVING DIGITAL ECONOMY Low Wave 1 Wave 2 Wave 3 As such, the descriptions of the waves below particularly Wave 1 and Wave 2 are indicative rather than prescriptive for many companies. WAVE 1: OPTIMISE The first step on this journey for a business to focus on collaboration and innovation is to get fit. This involves freeing up funding from within existing budgets, and establishing a sound IT base from which to transform. This process involves optimising staffing and rationalising vendor contracts. Traditional IT roles such as system administrators need to be adapted to cloud and as a service delivery models, while agreements with vendors whose technologies are outdated, unnecessary or ill-suited to new environments should be terminated. The plan-consume IT model requires businesses to establish a consume team to operate alongside the plan-build-run teams until the transition to a plan-consume model is completed. This ensures early moves to implement cloud orchestration, consumption and governance are managed properly. As these functions and activities flow through each of the waves, businesses need to implement a sound base in the Optimise stage and build on these through the Modernise and Transform stages. This minimises the risk of business and IT teams forging ahead with ITaaS activities without having the necessary technical base and framework in place.

8 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 8 At this stage, IT organisations should start implementing Infrastructure as a Service, Software as a Service (SaaS), Platform as a Service and Application as a Service, and position themselves as a cloud broker for the business. At this stage, IT organisations should start implementing Infrastructure as a Service, Software as a Service (SaaS), Platform as a Service and Application as a Service, and position themselves as a cloud broker for the business. This will maintain their value to the business in an environment where any manager with a credit card can purchase cloud services from a third-party provider. It will also give the business the flexibility to support peaks in demand while scaling down as required during usage troughs. Getting fit also involves modernising legacy systems that continue to provide value but impede activities such as completing end-to-end IT projects. To minimise the disconnect between its processes and its ERP, CRM and billing systems, a business should add a business process management layer to its environment. This enables customised business processes to be implemented without making hard-to-maintain changes in ERP environments that increase costs and the IT team s workload. These processes could be applied quickly and without the IT department making code changes. For example, a company may need to amend the total cost of travel that has to be approved by a senior vice president during an economic downturn. This layer would allow that change to be made instantaneously. This process alone can remove 90 per cent of labour costs in teams where these tasks have traditionally been completed by manually screen-scraping data from one system to another. This layer would also enable cloud services to be integrated easily into a company s environment and would allow applications developed using application programming interfaces (APIs) to operate seamlessly with existing systems and processes. IT teams can also look at novating some enterprise application licenses to as a service deliverables as part of a broader review of which applications and testing portfolios can be moved to a cloud or as a service model. They can also start reviewing cloud computing services and cloud orchestration of workloads, as well as piloting applications in private application stores. Finally, they can implement the DevOps software development method to maximise collaboration between development teams and IT operations, bringing new applications and products to market more quickly. WAVE 2: MODERNISE The second wave requires organisations to modernise their IT environments. This entails adding an orchestration, brokering and management layer to tie together the various pieces of the company s technology architecture. Business processes are orchestrated and managed so the needs of applications drive the IT infrastructure, and policies for protecting an organisation s intellectual property are defined at a granular level.

9 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 9 Taking this step would enable companies to align IT more closely with their broader business roadmaps. Business objectives would drive IT investment priorities, transforming IT organisations from gatekeepers into business and innovation enablers. Sensitive corporate information can be limited to residing on-premises in a secure private cloud, while other datasets can easily be shared with partners, driving further efficiencies throughout the business. For example, releasing selected supply-chain information could enable a company and its partners to identify opportunities to streamline procurement processes, cutting days from the time needed to acquire a new part or piece of equipment. This orchestration layer would also help a company centralise its IT resources and apply billing, metering and chargeback based on business team s consumption. To maximise value from this approach, the business would apply it to any cloud or as a service model as well as internal infrastructure resources. Taking this step would enable companies to align IT more closely with their broader business road-maps. Business objectives would drive IT investment priorities, transforming IT organisations from gatekeepers into business and innovation enablers. These organisations also need to review their portfolios of applications and implement roadmaps for future development. This process involves rationalising existing applications and modernising those applications the company plans to retain. It also further frees up funding for transformation and investment in new innovation programs for the business. To balance risk, costs and business impact during this change process, companies need to implement a governance regime that involves stakeholders from technology, business teams and senior management. Involving executive team members and business leaders in committees and review processes also ensures technology projects remain on track and business priorities take precedence over IT wish lists. In addition, key ITaaS suppliers should be integrated into the company s plan and consume teams to maintain a robust governance framework for the ITaaS project. WAVE 3: TRANSFORM Completing Wave 1 and Wave 2 positions a business to embrace ITaaS and move fully from a legacy plan-build-run architecture to a more agile, lowercost plan-consume model. The IT organisation s priorities are tied closely to the business s innovation needs, and its IT operations are focused on orchestrating workloads and optimising consumption. In turn, innovation becomes accessible to business users on demand, revolutionising the company s culture and delivering a competitive edge. Under this model, business teams view IT as an agile, responsive and value-formoney partner, rather than a cumbersome, expensive obstacle to delivering new products and revenue streams. Organisations application markets would be in full flight, with the ITaaS model also giving them easy access to public markets and the ability to deploy applications on demand.

10 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 10 Under this model, business teams view IT as an agile, responsive and value-for-money partner, rather than a cumbersome, expensive obstacle to delivering new products and revenue streams. These internal marketplaces would provide Business Unit Applications as a Service as well as Business Systems as a Service, and back these with Infrastructure Management as a Service. They would provide access to innovation in just a few clicks of a mouse. Business teams would be able to turn applications on and off, trial them to see if they meet their needs, and send them live quickly and easily. A whole ecosystem of industry-relevant application designers will have access to the application marketplace and software licences would become a thing of the past. All other IT costs will be aligned with consumption, and companies will gain completely transparent views of IT resource usage and costs. This will enable business leaders to move from being charged a flat fee for internal IT to being able to closely monitor consumption and charges, and decide whether or not to ramp up their use of IT services. Upgraded application portfolios featuring modern, integrated, cloudenabled and mobilised applications would see organisations improving efficiency, lowering costs and increasing profitability. Machine-to-machine technologies and mobile devices would be integrated with business systems to ensure IT teams can manage and report on their entire technology environment. Users would have access to business systems via smartphones and tablets, enabling them to update customer information while on location rather than having to return to the office. This would increase the productivity of sales and field force teams, and minimise the risks inherent in business systems, including incomplete or out-of-date information. In addition, with security built into applications, the risk of data leakage or unauthorised access will be minimal. With core systems modernised, the testing bottleneck for connecting systems would disappear. And, by federating their storage rather than retaining data in individual silos, businesses could use fast, large-scale analytics to accurately identify trends and support decision making. Eliminating silos would also enable organisations to operate a single service desk to deal with all IT queries. GETTING STARTED ON ITAAS Getting started on an ITaaS project begins with a three-step process. Because not every business is starting from the same point one business may be running 20-year-old applications on ageing servers, while another may have migrated core applications into the cloud and restructured its IT department to support an as a service model businesses should tailor each step to its specific needs.

11 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 11 To maximise approval for the ITaaS business case, the project sponsor needs to free up funding from within the IT portfolio for modernisation and transformation. This means appointing people from within the business or an external consultancy to lead this process. STEP 1: SELL THE VISION INTERNALLY Customers are demanding better experiences, shareholders are demanding speed to value at higher margins, which is why so many Executive teams and Boards are focussed on 'digital'. This step involves bringing internal stakeholders on board through storytelling - illustrating the utopian vision of how an ITaaS enabled enterprise is critically connected to the ability to delivering these digital goals. The team charged with marketing ITaaS should sell the project as delivering a fit-for-purpose, contemporary IT architecture that can provide stability, agility and variability. The business will be able to move workloads to different providers as it sees fit, adopt a budget-friendly operating expenditure-based IT model rather than a cumbersome capital expenditure approach, and launch new products and services quickly using a plan-consume rather than a plan-build-operate approach. We believe ITaaS can reduce total cost of ownership by at least 30 per cent. STEP 2: BUILD A BUSINESS CASE WITH A SELF-FUNDING PATHWAY To maximise approval for the ITaaS business case, the project sponsor needs to free up funding from within the IT portfolio for modernisation and transformation. This means appointing people from within the business or an external consultancy to lead this process. For larger organisations, it may also involve establishing a dedicated team to manage change, value delivery, the overall project and its architecture impact. Typically this will involve a critical assessment of IT budgets, scrutinising the enterprise architecture, application portfolio and costing to identify opportunities for savings. For example, application development could be undertaken overseas at a lower cost. This team is charged with remaining true to the ITaaS vision and being agnostic about internal politics of the company s IT function and overall business. It also controls the bucket of savings and where funds are injected to spur the ITaaS program. For some project components where the funds required exceed those available and the returns may not be delivered until later in the project cycle, this team would develop separate business cases to obtain extra financial support. STEP 3: THINK BIG BUT START SMALL When developing a transformation road-map, IT teams will need to break it down into bite-sized chunks where possible. The actual starting point will be based on the maturity of the business s systems and the logical point on any of the waves described earlier. For many businesses, the key to transformation will be to make a lot of small changes. Not all will work so be prepared to fail but recover quickly. This approach to failure may initially be threatening to many businesses, so managing cultural change will be an important component of the transformation project. The transformation also requires a company to truly understand its business and value chain from an operational perspective. This enables it to make correct decisions about which applications typically ERP systems with finance, procurement and human resources functionalities can run functions across the business and which applications are best dedicated to individual teams. These decisions enable the company to rationalise its application portfolio and start exploring as a service for components of its architecture. This exploration should take no more than a week or two for each component. From there, a business can move with greater certainty towards ITaaS.

12 IT AS A SERVICE TRANSFORMING IT AND BUSINESSES 12 CONCLUSION Many businesses are continuing to run traditional, inflexible, capital-intensive IT service delivery models. As more flexible, dynamic IT models enter the market, these businesses risk losing ground to their competitors. The future is bright for businesses that adopt ITaaS. While the transformation might seem intimidating, taking a think big start small approach can help secure early wins and position the organisation for the journey ahead. Using an ITaaS model, businesses can innovate quickly and efficiently; align IT priorities and investments with broader business plans; optimise infrastructure to meet application demands; and improve employee productivity and performance. Recognising that additional funding is rarely granted for modernisation, most organisations need to consider releasing funding from within existing budgets. Once they do so, they can set themselves up for the future rather than patching up an already fragile IT environment. Doing so can position organisations for market leadership and help forge an energetic culture of creativity and collaboration. We should stipulate that while ITaaS represents a considerable step forward from the current status of most businesses, it is not a destination in itself. As the digital economy becomes a reality, IT is poised to move from an enabler to a driver of business value. Adopting ITaaS provides businesses with a robust foundation to take this next step. Worldwide CSC Headquarters The Americas 3170 Fairview Park Drive Falls Church, Virginia United States Asia, Middle East, Africa Level 9, UE BizHub East 6 Changi Business Park Avenue 1 Singapore Republic of Singapore Australia 26 Talavera Road Macquarie Park, NSW 2113 Australia +61(2) Central and Eastern Europe Abraham-Lincoln-Park Wiesbaden Germany Nordic and Baltic Region Retortvej 8 DK-2500 Valby Denmark South and West Europe Immeuble Balzac 10 place des Vosges Paris la Défense Cedex France UK and Ireland Region Royal Pavilion Wellesley Road Aldershot, Hampshire GU11 1PZ United Kingdom +44(0) Computer Sciences Corporation. All rights reserved /2014