IT is currently delivered to you by many different vendors of hardware, software and services in a tangle of relationships with each other. It is complicated so you need people to run it for you. The people are the biggest cost so, assuming you want to keep costs down, you need to find a way to obtain IT that provides the best service with the fewest people. At Airdesk we believe the best way is to buy IT as a service.
It is an interesting question why IT is this way. Cars are not delivered as kits of components requiring mechanics to put together and run. The main reason is that, contrary to perceptions, IT is still immensely primitive. What is classed as innovation is really overcoming basic obstacles. There are still so many basic obstacles that you need skilled people to set everything up and run it. Take, for example, software licenses. Your car uses intellectual property from hundreds of companies, but you don’t have individual licenses from each of them. With IT you have a different license from each vendor, with different conditions. This means that you need more people and technology just to manage the licenses for software you have already bought.
Companies have dealt with the complexity of managing IT in two main ways:
- Contracting for individual services
Contracting for individual services is separating out a discrete set of IT components and contracting for them to be delivered as a service. We have found this to be very cost-effective for certain types of service, if you can find the right company to contract with. For example, Connectria provides a very efficient way to obtain an e-mail service. However there are some problems with this approach:
- Sometimes you just cannot find a company to provide the service cost-effectively. We have come across many situations where the best quote amounted to the sum of buying the hardware and software and hiring the people.
- You still need the expertise in-house to specify the service and, in particular, to integrate it with your other services.
- It can be difficult to pin down responsibility for fixing problems that run across different services. For example, if a service at a remote site is running slowly, is it the service, the network or the client? It takes time even to agree who will investigate.
Business process outsourcing, such as provided by Xchanging, is a variation of contracts for individual services. It has the same advantages and disadvantages. It is a great way to go if you can find the right terms from a provider, and if you have the capability to integrate it into your organization. Of course with business process outsourcing you still have to find a way to run all your other IT.
Full outsourcing refers to taking all the IT components and all the people, and passing the responsibility for managing them to someone else. Instead of an employment relationship with your IT people, you have a contractual relationship. Essentially the components and the people are the same, but your commercial relationship with them is different.
Outsourcing is a counsel of despair. When you outsource IT you are conceding that, not only is your organization unable to run IT, but it is also incapable of managing or trusting people who can. You are not changing anything within the IT service, either the components or the people, but merely the relationship you have with it. It is based on the hope that a third party will be able to manage the same components more effectively than you can. In return, you pay the transaction costs of the relationship.
Outsourcing is usually based on a flawed assumption. The customer assumes that the vendor has expertise that will be applied to managing IT better. In reality the vendor has no such expertise other than that which the customer could obtain in a separate contract for project services. The vendor is simply supplying back the same people and components. The management that is applied is usually management of the customer more than management of the service.
A new way to obtain IT is as a service, which is what Airdesk provides. By IT as a Service we mean taking all the main IT requirements in the organization, like the e-mail mentioned above, and bundling them into one service. The service is provided and charged per user. The organization does not know or care what IT components are used or what people are involved in running it.
This approach has the advantages of contracting for individual services but avoids the disadvantage of integrating services from different providers. Unlike outsourcing it completely replaces the IT components and people with a more cost-effective and better run service.
The services that can be obtained this way are most of the services that most organizations need, like: PC support; software distribution and licensing; backup; networking; file storage; intranet; e-mail; HR and finance systems. This can be done because most of the requirements people have for these services are fairly standard.
It requires a slightly different approach within the organization to the supply of these services. We have been constantly struck by the difference between what people require from their IT department and what they are willing to pay for themselves. The answer to this puzzle is to provide what is standard, and allow people to pay extra for what is non-standard. No-one will pay. So the organization needs to get used to the idea that you don’t specify what you require, but adapt to what is standard (which, as it happens, is very good).
Because the components providing the service are standard, they can be automated to use fewer people, and therefore to cost less. When the standard service costs so little, there is even less reason to depart from the standard.
Some people may think of this as outsourcing the IT Infrastructure. First, it is not outsourcing. The components and people are completely replaced, not passed over to another party to manage. Second, it is not just infrastructure (assuming by that you mean servers, networking equipment, operating systems etc). It is the actual services being provided by these components.
There are some obvious limitations to this approach. If you have a large IT organization you can not just fire it. We think that IT as a service will grow, beginning mainly with startups, small companies, and new sites within large companies.
Second, you would think that larger more complex companies have requirements that can not be met by standard solutions. We feel that this is much less true than at first appears. The history of SAP over the past ten years is of companies adapting themselves to a more standard way of operating. Airdesk uses SAP as a service to deliver standard HR and finance systems to the business. Even more complicated requirements can be met by plugging in non-standard services. For example, a completely custom business system could be run on the same platforms, with the same backup and system management, the same directory service, with the same client deployment methods and helpdesk, as the standard service.
Why would IT as a service work now and not before?
- Hardware and software components are more reliable, so you don’t need lots of mechanics on hand in case they break. For example, the standard office desktop of Windows, Office, Acrobat, Winzip and anti-virus rarely if ever fails if it is set up properly.
- Stable servers rarely fail and have built-in redundancy for failed components or allow switching across multiple servers and sites.
- Cheaper networks, especially with ADSL and SDSL, allow problems to be fixed and service managed remotely.
But on their own these reasons would also enable you to run your own IT more cost-effectively. The key reason for buying IT as a service is automation. There are more and better tools to run services automatically. These require more skill and cost more to set up, but once the service is designed and implemented it can be employed on a large scale. At Airdesk we use Altiris as the core system for service management. With Altiris and a bunch of other related systems we can set up and operate services remotely, on almost any scale. The services are heavily standardized and automated. For example, software can be requested, approved, purchased, installed and configured without involving technicians or visiting the desk at all. As a customer you can buy into the service with one desktop or a thousand. It is substantially the same service. We think this is the way of the future.