Content Copyright © 2008 Bloor. All Rights Reserved.
Much has already been written about the technologies that will underpin the move to a services based infrastructure. But at the same time it is vital that the IT vendors operating in the infrastructure sector start to face up to the complete change in business model that is coming their way. The way that they do business with customers needs some subtle but significant changes as they switch from selling technology products to selling services, particularly where pay-per-use service delivery models become more important.
One company addressing these issues head-on is the Infrastructure Services operation of Fujitsu-Siemens, which is developing new business models off the back of its strong position in the European and EMEA marketplaces—where interest and uptake is well advanced in how traditional IT infrastructures need to change and develop to provide the greater operational flexibility companies require. For example, the company is now developing a service catalogue approach to the provision of infrastructure services.
The company has a history in the old ‘break and fix’ market for infrastructure services, but is leaving that behind and moving towards the provision of managed services. But this is not just looking at the old model of complete, packaged outsourcing. Rather, it is targeted on taking over tasks related to the ITIL framework and competencies. In this way, as enterprises adopt ITIL to manage and improve their processes, so Fujitsu-Siemens can offer infrastructure services that map onto that process, moving up the value chain and taking over from the customer those tasks that are not core to its business, but are still required. This also allows customers to keep what they consider core and strategic to their business in their own hands, together with important issues such as governance and compliance.
This is significantly different from the traditional outsourcing model of taking over the complete IT function on a sales message of offering a percentage reduction in running costs. In practice this usually carries the future problem of paying high charges to incorporate the changes and developments inevitably needed after a year or two of operation. In the company’s view, that old outsourcing business model is actually dead, but just hasn’t realised it yet.
One area Fujitsu-Siemens is targeting is the management complexity of the typical datacentre environment, which normally includes contracts with a range of different companies, each responsible for the service management of a part of the infrastructure. One of the most common problems here is that they are nearly always working to different Service Level Agreements and providing different reports. Reducing this level of complexity not only boosts operational efficiency but also brings the side benefit of cost reduction if this can be brought under the banner of a single managed services contract.
Under Customer Control
Managed Services from infrastructure vendor
Fig. 1 The Infrastructure Business Model
Figure One outlines the fundamentally simple model the company is now working to.
The rectangle represents everything that can be included under the banner of ‘infrastructure’. At one end Fujitsu-Siemens and the infrastructure services it provides. At the other end is the customer. There is no clear, single line where responsibility for the customer’s infrastructure is divided between them. Fujitsu-Siemens can provide it all, or the customer can provide it all. The dividing line between their areas of responsibility is entirely ‘flexible and bendy’. It can be, and should be, moved as and when the strategic or tactical position of the customer—and/or the service provision capabilities of Fujitsu-Siemens—requires it to be changed.
Fujitsu-Siemens has developed this model to the point where a single account manager is now able to manage the total relationship with the customer, covering the level of service provided at any one time by both the company and its service provision business partners. This means the customer gets one person to talk to about any changes in service demands.
This model also allows customers to make the changes as and when they feel appropriate rather than waiting for a time-dependent contract point or, worse still, a rip-and-replace option. Most users will already have at least the fundamentals of the datacentre infrastructure in place, and will wish to start the process of change through adding services, or by targeting one department, division or business function.
From the Fujitsu-Siemens point of view, this flexible model also maps onto its objectives as vendor and services provider. At its own end of the model lies the hardware and basic systems software—essentially, the commodity end of the business. The further any vendor can move towards the customer end of the model the greater the margin generated. The trick, which Fujitsu-Siemens is pitching at with its Service Catalogue approach, is to provide a simple way for customers to choose what services to move to managed services. In effect, the customers can experiment with determining what they can successfully off-load from their own responsibility and what needs to be retained as part of the core competence of the business.
In effect this process offers Fujitsu-Siemens the ability to industrialise the IT infrastructure. This approach is built on standardising both hardware and software components as far as possible, coupled with ensuring that the components will work together, where appropriate standard components can be selected and integrated into the required solution. This can range from a complete, onsite infrastructure through to a fully hosted service with SaaS delivery, significant contributions from third party partners, and full consultancy development and support services. The customer is the arbiter of where the divide in responsibilities will lie at any time.
There is also a ‘green’ component to all this, of course, and the remote management component complements this, particularly in areas such as resource utilisation. In Japan, for example, it is standard practice for under-utilised servers to be shut down, whereas in Europe this is rarely allowed. The remote management service can easily manage this capability. The hardware side of the business offers the most energy efficient server or also a ‘Zero-Watt’ monitor, which switches power off to 0 Watt in “standby mode” when not being used. In a 1,000-seat environment, that can mean a real saving.
One direction that this approach can lead to for Fujitsu-Siemens Infrastructure Services is as a service aggregator to its customer base. As Utility computing starts to grow the service aggregation capability will become one of the most important service offerings available. This is the ability to pull together services—from tools, utilities and business process components, through to the provision of infrastructure—which itself can now mean a wide range of services from full utility service provision through discrete SaaS-based services to onsite infrastructure, coupled with the consultancy services needed to determine where the lines are drawn between those extremes.
This will expand the business model by bringing the channel partners—the brand masters in specific service capabilities—into the forefront of a wide range of service packages the company can then offer.