Let’s begin with a basic definition. Brokers are generally defined as trusted advisors or intermediaries who facilitate commercial transactions. Brokers provide professional services that allow buyers to free themselves from tactical time consuming tasks to focus on strategic goals and objectives.

The concept of brokering services has existed for many years in industries apart from information technology (“IT”). For example, real estate buyers often enlist the help of brokers to market property, qualify interested parties, negotiate agreements, coordinate inspections, and complete a property transition. Buyers incent real estate brokers to provide rapid results by engaging in short-term agreements.

Not unlike the real estate profession, private and public sector organizations are demanding quick results from IT experts with tangible benefits – not multi-year plans loaded with promised potential. Maintaining the status quo of traditional IT sourcing and management is no longer an option for many. The growing demand for change is giving rise to the concept of an IT Service Broker – an entity that can deliver an accessible, integrated, secure and market-differentiating IT solution which solves a business problem in a short period of time.

Industry pundits have given much hype to the concept of an IT Service Broker, especially the closely aligned cloud service broker, but have failed to explain how the role would work in practice. This blog offers my own explanation as to why the role of an IT Service Broker is needed, and how the role can be implemented. I also discuss the benefits of adopting this paradigm shift in IT organizational strategy.

IT Service Broker Role

It is news to no one that change is accelerating in the IT industry. The adoption of mobile access and cloud computing has forever altered IT delivery models. Social media platforms have re-defined communications and collaboration expectations. Short-term pay-by-use service agreements are the new norm of business and contract models. In yesterday’s world where IT product and service choices were limited and slow to evolve, it was possible for fully staffed IT departments to be “all things to all people”. Today and tomorrow, austere IT departments must selectively decide where their time and efforts are best directed to keep pace with the change that is overwhelming most every area of the IT industry.

It’s my personal belief that the primary and retained role of IT leadership inside private and public sectors organizations will be that of an architect whose objectives will be business focused, and not technology oriented. The role of the architect will include strategy, design and governance services. To implement their strategies and designs, architects will call upon the role of the IT Service Broker. An IT Service Broker will serve as a general contractor sourcing services, internal or external, based on the architect’s requirements and specifications. The functions of an IT Service Broker may vary, but can include research, planning, recommendations, sourcing, negotiation, integration, transition and ongoing management of any IT service.

The Benefits

So what’s the benefit of the IT Service Broker role? Professional IT Service Brokers will quickly and objectively source an optimal IT solution that delivers differentiating, flexible and high-quality services at competitive market rates. The role of the IT Service Broker is designed to remove mundane and tedious tasks so that executives can focus valuable time and efforts on strategic and business-oriented programs. Unlike traditional management consulting, the goal of an IT Service Broker is to deliver high-quality results in short periods of time to minimize expense. To use a real-world example, many organizations evaluate market choices with regards to e-mail administration and support. An IT Service Broker can evaluate both internal and external e-mail support options, and recommend a tailored solution based upon architect-supplied business requirements. A professional IT Service Broker will assess and provide recommendations for services in a fraction of the time at significantly less cost than traditional IT sourcing processes. Moreover, by relying on free market principals, IT Service Brokers have the latitude to select solutions that will fast-forward technology adoption along with implementing flexible and favorable business terms.

While the qualitative benefits are intriguing, it’s the quantitative benefits that garner business leader’s attention. Organizations can lower their IT operations costs by a minimum of 10% simply by expanding the competitive base of potential service providers via IT Service Brokers. Typically, IT operational costs are 70% to 80% of an organization’s IT budget, so the potential cost-savings are significant. Once the IT Service Broker role has been implemented along with the architect role, the benefits continue to compound. The IT function can begin to organize more closely with business units and consolidate overlapping roles, thereby realizing additional overhead savings. Should organizations choose external IT Service Brokers, they can further manage their cost by employing IT Service Brokers when needed for the duration of time that is needed – this approach is particularly intriguing for small and medium sized businesses.

Summary

The IT Service Broker role will play a crucial role in sourcing IT and business services. The IT architect will also play a pivotal role in defining the specifications and business requirements that will provide the blueprint for the IT Service Broker. These roles will revolutionize how organizations design, source and deliver IT services. Organizations would do well to remember a quote that has been attributed to both Alan Kay and Peter Drucker who together blend both a technology and business perspective – “the best way to predict the future is to create it”.

The information technology (IT) industry is experiencing generational change where IT services are fast becoming an on-demand commodity that will require a paradigm shift in corporate leadership and management. Because external IT services have, and will continue to, become an integral part of business strategies, it is essential for clients to understand the changing service provider market. These are three (3) trends to watch.

• Today's IT Service Providers Will Change Tomorrow. The IT industry is experiencing its own version of natural selection whereby clients retain desired economic and contractual characteristics, and jettison unfavorable terms.  Case in point - clients are embracing a "pay-as-you-go" model for services, while rejecting multi-year "locked-in" IT outsourcing arrangements.  The end result is great upheaval as traditional service providers try to align tomorrow's unpredictable revenue streams with today's legacy expense models.  Some traditional providers will adapt - others will not.  The best advice for clients who rely on traditional service providers - keep your options open.  The evolution of traditional service providers has yet to be determined.

• Tech Refreshes Now Include IT Service Providers. Supported by an expansion of new shared service models that offer pay-as-you-go pricing together with minimal term commitments, IT services will undergo refresh cycles, similar to traditional IT hardware and software refresh cycles.  The result of this practice will mean a routine evaluation and exchange of service providers (including business process services) whose operating models are architected to support speedy transitions and variable workloads.  A healthy output of this continuous change cycle will be rapid innovation across the IT service provider market.  Clients will need to retain business and IT talent that can exchange and manage information services instead of proprietary IT assets.  Abruptly stated, IT services will become disposable.

• Clients Are The "New" Service Integrators. The days of sprawling account teams inside IT service provider organizations eager to delight their clients are fast coming to an end, unless the client is willing to pay a premium for additional attention, which I might add is often biased and limited.  IT service providers are quickly following their peers who have instituted low-cost self-help in conjunction with commoditized services - think air travel kiosk and on-line banking.  This trend will mean that clients need to integrate and aggregate external self-serve IT solutions into differentiating full-serve business outcomes themselves.  One of the most sought after skills in the client organization going forward will be talent that can build an "app" using commercial-off-the-shelf (COTS) products and services in a matter of days and weeks, not months and years.  That talent may not be located in the traditional IT organization.  Tomorrow's successful client executive will need to co-opt the popular consumer market lexicon - "I have an App for that".

Indeed, the IT industry is truly undergoing a wholesale makeover as evidenced by the changes outlined in this blog. For clients who are able to successfully navigate the rapidly changing IT service market, the future is bursting with opportunity!

Information technology (IT) buyers are discovering it’s not only what you buy from IT suppliers, but how you buy it which can be a differentiating success factor inside a modern organization.

Historically, IT buyers have been drawn into a self-reinforcing game of “carrot and stick” with traditional IT suppliers. Traditional IT suppliers offered buyers elusive benefits for purchasing the next generation of an IT product or service, while punishing laggards who dared fall behind supplier-controlled market cycles. As a result, IT departments often became more concerned with maintaining the “technology power plant” than supporting potential market changing business initiatives. IT buyers became “locked-in” to what can best be termed as the traditional computing model that limited selection and stifled change.

The logical question is - how do you break free from the grip of traditional computing? IT buyers must be willing to re-direct attention from “maintaining the technology power plant” to integrating business technology services. This paradigm shift will likely require new skills and uncomfortable change inside many IT departments. Not only will IT departments be required to focus on technology’s feature and functionality, but they will also need to focus on how a product or service cost can be adapted to expanding or contracting business demand in volatile markets. The term most often associated with this promising approach is adaptive computing.

Adaptive computing is ultimately NOT about technology, but about the economics of technology. Adaptive computing transfers financial influence from suppliers to buyers who decide if, and when, a technology product or service is necessary for consumption. (Traditional technology suppliers loathe the adaptive computing approach which eliminates predictable outsourcing revenues which have been long coveted.) At the core of adaptive computing, IT buyers retain strategic accountability for business process services and delegate responsibility for “technology power plant” services in whatever form may be applicable or desirable (IaaS, SaaS, and/or BPM).

The logical place to begin an adaptive computing assessment phase inside any organization is in IT infrastructure and operations. Not only does IT infrastructure and operations often account for the largest percentage of IT budgets, but the IT industry is filled with competitive service choices that offer viable alternatives to traditional computing service models. Similarly, if your organization’s IT infrastructure and operations is currently outsourced, it does not mean your existing IT supplier subscribes to an adaptive computing model. IT buyers need to challenge the status quo of IT models regardless of in-sourced or outsourced service delivery.

Adaptive computing allows IT buyers to take control of not only what they buy, but how they buy it. By embracing adaptive computing, organizations can expand and expedite market differentiating business possibilities.

It’s a New Year! Today is not too soon to begin your quest towards adaptive computing!

At the close of every year many private and public sector organizations turn introspective to reflect on how their industries have changed with hope of being a bit better prepared to embrace future opportunities and avoid unnecessary obstacles. 2011 offered much for IT professionals to contemplate. Here’s a quick recap of the highlights.

KPMG purchased outsourcing advisor, EquaTerra, in an effort to expand outsourcing and shared service expertise primarily designed for large multi-nationals. Dell continued to build a formidable services portfolio by adding both Compellent, a provider of virtual storage solutions, and SecureWorks, a leader in network security services. IBM’s supercomputer, Watson, proved victorious when matched against humans in the game show, Jeopardy. Amazon Web Services experienced growing pains with high-profile cloud services outages. Microsoft acquired Skype presumably to boost its telephony and presence integration. Microsoft announced general availability of Office 365, business productivity software delivered over the internet. CenturyLink and Savvis joined forces in one of the largest telecom and hosting deals to date. LinkedIn went public to much fanfare. The Wall Street Journal (“WSJ”) reported that Wipro was evaluating options to sell part of its Infocrossing data center operations; the WSJ cited large telecoms as potential suitors. HP announced the spin-off of its PC business, but later recanted citing “a lot of opportunity”. In an effort to transition to higher margin business, HP bought Autonomy, a leader in meaning based computing. Google purchased Motorola Mobility, a dedicated Android partner, thereby expanding its reach into the smartphone and tablet computing market. Apple jousted with Exxon for the title of most valuable company as iPads, iPhones, iPods, and iCloud continued to gain favor with both consumers and companies. Apple, and the rest of the world, sadly bid farewell to Steve Jobs. Oracle purchased RightNow and SAP is set to acquire SuccessFactors in the consolidating cloud software space. Cisco unveiled their unified cloud strategy coined CloudVerse.

So what do all these changes mean for IT buyers? I believe there are three underlying lessons for buyers to consider. 1) IT is becoming a utility that buyers will purchase as a service, and not manage themselves. 2) Big IT companies are getting bigger but solutions talent remains elusive inside supplier organizations, especially for small to mid-market buyers. 3) Buyers should avoid getting locked-in with any IT supplier because the future landscape is yet to be decided.

2011 was an exciting and transitional year for the information technology industry.  Independent Infrastructure wishes you and your organization a prosperous 2012 with IT independence!