A buyer’s guide to IT as a Service

11/06/19

The benefits of as-a-service for organisations that aren’t specialists in IT can be substantial if done right. It’s worth investing the time and effort up front to ensure the service runs smoothly and the customer gets the outcomes they envisage, recognising that moving to a service model is a big step, particularly if it’s the first occasion for the buyer. In a world where as-a-service is still relatively new, it’s easy to get shoelaces tangled in the transition.

As the name suggests, by adopting IT ‘as a service’, an organisation no longer owns and manages IT products. It may be clear about what tasks it no longer wants to execute itself, but it must have equal clarity about its intended business outcomes.

For managers within these organisations, the nature of their work changes. Traditional functional roles – which focus on domain expertise and operational execution – must be put aside and replaced with the role of a ‘service broker’, conversant with service levels and commercial frameworks. Service brokers must think in terms of performance and supplier management, seeing results delivered through dashboards and reports rather than having visibility and control over a team that performs a function. It’s a very different discipline.

In our experience, dialogue is the best preparation and certain topics are key, bearing in mind that what applies to one service offering may not apply to others. Nevertheless the process should begin even before it’s certain the parties will be working together.

The key steps are:

Technical due diligence – a good supplier will know what level of detail is needed before contract and what can be left to implementation. Technical due diligence needs to be conducted. There’s a lot to share and understand: what are the technical and security pre-requisites (and there will be plenty); how the service will interact with other suppliers; the decisions that need to be made about the pre-existing technologies and data; and how the customer’s user community will interact with the service provider.

Roles & responsibilities What are we going to do and what is the supplier going to do? What’s it going to feel like working with the supplier each day? Individual responsibilities within the customer organisation that need to be understood. There will be organisational issues – and it’s far better to flush them out before the contract is signed. Trouble potentially awaits any organisation which does not spend serious pre-contract time with the supplier’s service delivery team.

What management information do we need? Think carefully here; you’re now paying for a service so how much do you actually need? The stuff going on under the bonnet really shouldn’t be of interest any longer, so avoid the temptation to ask for too many reports. That said, consider whether new views of what you’re consuming – perhaps by business unit or geography – might be useful. It may be necessary to provide the supplier with data mappings to achieve this.

How do we get stuff? The proper term for this is of course service management. But will it come in the form of a self-service portal, like many public cloud services? Or do we call or email to raise issues and requests? Can we integrate our own service management system with the supplier’s, or do we have to raise tickets direct with the vendor? Consider also whether your users need training before go live; for certain types of service this will be more relevant than others.

What happens when things go wrong? There’s more to this than having the service desk contact number and knowing the escalation path. As awkward as it may feel, talk through a few scenarios with the provider to get a sense of how their incident response matches how the customer team acts today. When things go awry, outsourcing can lead to customer people feeling out of control and wanting near-continuous updates. If that’s really what you want, is it what you’re going to get? Ask for customer reference calls to validate the answers; this is one area where a really good supplier will demonstrate differentiation.

How easy is it to expand the service? To new territories, acquired businesses, different business units or adopting and integrating with new technologies. Ideally the contract should cater for this to a reasonably foreseeable degree; the last thing you want is to go through a new round of negotiations just to extend what should be a substantially common service. Where possible agree a standard rate card for the situations that are most likely to arise; it doesn’t need to go into minute detail, sensible bands are fine.

Commercials As-a-service is typically charged on a utility basis, though not always. Ask the provider to provide a real example of what the bill will look like along with any volume or component reporting from which the charges are calculated. Discuss how the bill will ramp up if it’s not all-or-nothing. If there are setup fees, what are the acceptance criteria? If charges can flex in both directions, are there any restrictions before they can move in the customer’s favour? Do service level breaches result in credits? Will they be applied automatically or do they have to be requested? How far would service have to deteriorate to make the customer seriously consider terminating? Commercials are a huge topic which can barely be done justice here.

What happens at the end of the contract? This can be a delicate discussion, but it shouldn’t be swerved because the implications of getting into a deal that’s unexpectedly hard to get out of are grave. We’ve worked with customers that have found themselves tied into lengthy ongoing liabilities despite believing they were no longer using or receiving any benefit from an outgoing service provider, or worse still have ended up taking legal action.

There are two parts to this discussion. First, if the contract comes to a natural end and both sides are still on good terms. This should be the easier part of the dialogue, but don’t assume that a supplier will make exiting too easy. Then there’s the scenario where the customer terminates due to a formal breach or a breakdown of the relationship and there is effectively no assistance from the supplier beyond what can be negotiated pre-contract.

Supplier insolvency is an entirely different ball game and depends on the circumstances. The best that can be hoped for is that the service is a going concern in its own right and can continue under new ownership with minimal disruption.

Executed in this way, the contract becomes an affirmation of everything that has been established and agreed. The last thing a buyer wants is for its team to identify after the fact all the real-world stuff that the contract doesn’t talk about or, worse still, contradicts.

There are many other considerations of course but, with an emphasis on careful preparation, the transformative benefits of as-a-service can be realised, helping firms spend more time and effort on the things they’re good at.

Barnaby Mote