April 20, 2011

Next Level IT Sourcing: The New Data Center Model

Valery Herrington

Next level sourcing is a term that refers to a strategy used to source the best IT services from the available service providers operating in the market today.  It is the active research, evaluation, selection and deployment of IT services from external cloud service providers. 

This model has been used in the past by very large corporations where the option of sourcing from several internal, specialized IT divisions or IT departments was feasible.  (e.g.  division leaders, sub-corporate entities, dealer groups and separate corporate IT departments).   Taking this model and applying it to external cloud service providers is really the core concept behind next level sourcing.  

Next level sourcing for cloud service providers is growing in popularity with the recent investments and advancements in cloud computing.  This progress has resulted in a robust layer of cloud service providers operating in the market space today. Today’s cloud service providers offer a more robust, competitive mix of IT services with a highly competitive cost model that beats both the current internal operating scenarios in standard sized organizations and past internal IT divisional or departmental models found in very large corporations.

This means companies have better options for handling their IT services, reducing overhead and operating costs and increasing ROI that drives value for shareholders and investors.  

Migration to New Models

So, how does a company migrate IT services to the new cloud-driven next level sourcing model?  They start with an evaluation and assessment of existing services and solutions that make sense for migration.  This can be done internally, in collaboration with potential service providers.  This list of service providers is obtained by researching the list of cloud service providers available for their suite.  This list of service providers is extensive.  A list of several of the top-tier and mid-tier providers is included in the “Providers” section at the end of the article.  Some of the top providers include Accenture, HP, IBM, Google, Microsoft and more.

Once the list of internal services is narrowed down and finalized the cloud service providers can provide their cost structures for evaluation.  The customer has the option of deciding which cloud service provider will handle their services.  Once a service provider is selected, the client will work closely with their provider to finalize the list of services that will be moved to the next level cloud service provider model.  

From this point on, cloud migration support and deployment details are primarily handled by the service provider.  However, there is joint responsibility and hand-off when it comes to finalizing the transition to the cloud service provider’s data center.  If the customer is switching between cloud service providers then coordination and planning will need to take place with each provider to ensure a seamless migration.

Ideally the integrated team should be comprised of on-site client IT and executive leadership and cloud service provider leaders. This team will then connect to develop and finalize a cloud service migration plan.  This group of professionals makes up “The Players List” for the cloud migration.  This list is described in detail below.

The Players List:

1)    Internal Players:  A group of professionals is represented by corporate IT leaders, Corporate Executives, and corporate legal professionals who work internal to the client or customer’s organization.  Professionals from these groups become closely involved with cloud service migration activities and deployments.  They frequently interact with one or more cloud service providers to ensure timely and accurate migration.

2)    Top Tier Players:  An extensive and growing list of the top cloud service providers.  Reference to several of the industry top tier service providers is contained at the end of the article under the “Providers” section.

3)    Newer Players:  Emerging teams that include new organizations that will help facilitate migration and deployment with clients, other service companies and services providers.  A few such organizations are listed at the end of the article under the “Providers” section.

Once the migration plan is reviewed and finalized, the integration team moves to the deployment phase.  This phase is typically executed by program leadership from both sides with the oversight and assistance of technology experts from both teams.  Test and verification activities are included in even the most complex migrations to ensure stability and integrity once the migration is complete.

A New Role for Data Centers?

Existing data centers have been updated to provide support for next level sourcing and the new cloud computing model.  Network, server and routing capacity has all been updated to provide allow for an on-demand services and support cloud model.  The data centers at all of the service providers have now changed from being just a remote, off-site facility where only very large legacy systems were  housed to a real-time, high-speed, cloud-integrated services facility capable of dynamically provisioning environments and quickly supporting business critical IT services. These “new hat” data centers come fully equipped with integrated active monitoring and helpdesk support services providing customers with the ability and capacity to grow their requirements for services on-demand.  Customers get the added benefit of full-time data center system availability, disaster recovery, support and redundancy that typically requires teams of people several years t o install, configure, test and perfect.

Cloud Service Provider Model Considerations

The cloud model has a different meaning for different market players.  It is still an evolving model that will continue to have new content and uses. It currently has the strongest appeal for high-growth companies looking to save on IT costs and increase organizational ROI.  For these types of companies that invest in a cloud model, it provides a large boost to their organizational efficiency and the potential for significant return to shareholders and investors.

To achieve this type of success with a cloud model, the company must have the foresight and flexibility to migrate to the new model quickly. This minimizes downtime, transition time and impact to the business life-cycle and allows the company to eliminate costly service models quickly. However, the company must be prepared to engage with new cloud service providers.  

The company will need to adopt the new framework that is put in place by their cloud service provider and adjust internal corporate procedures to work successfully under the new cloud service model. In some cases the organization may also be required to use a hybrid SAAS model where some applications remain in-house and others are ported to a cloud service provider.  

A Few Conclusions

By adopting a cloud service approach to IT services, the organization can more fully engage in a “Back To Business” approach.  This means that more internal company resources can focus their time and expertise on the success of daily, core business activities that generate and complete business transaction processing for the company.  Better, more complete business transaction processing is a large advantage to companies operating in a competitive market space.  This allows them to rapidly gain market share and increase their organization’s competitive edge.

With a cloud service model in place for some or all of a company’s IT services, the cloud service provider has primary responsibility for providing the same or better level of IT services.  IT services are much more transparent, allowing more corporate users to interact directly with the business. Fewer skilled internal resources are required to manage the cloud service provider’s delivery of IT services.  These skilled resources can now focus on the success of the business in a variety of more productive ways.

To help you with overall understanding of some of the terminology used in this article, here is a Terminology Quick List:

Terminology Quick List:

•    Next Level Sourcing – a strategy used to source the best IT services from the available service providers operating in the market today.

•    High ROI  – significant return on investment through savings or lower operating expenses

•    Dynamic Provisioning  – the technical activity of rapidly creating new computer systems and environments that will house customer IT applications and services

•    Transparent IT – information technology services that are provided but, the end users are not directly aware of the service origins

•    IT On-Demand – information services that are available when needed and remain “in hibernation” when not in use

•    Service Levels and Beyond – the latest service levels associated with cloud vendor models and any future offerings or services that are in the process of becoming available

•    Back-To-Business – an approach with providing the business a “business only” focus


Top Tier:

Accenture Cloud Services

Microsoft Cloud Services

HP Cloud Computing

IBM Cloud Services

Amazon Cloud Services





Horizon DCS

Small to Mid-Market Tier (“Newer Players”):

Freudenberg IT


Blue Clone


About the Author

Valery Herrington is CEO of Herrington Technology. She is an enterprise technology leader with Tier 1 Global Technology and a trusted executive advisor and consultant with successful project deployments at over 25 large-scale enterprise organizations. Ms. Herrington specializes in emerging technologies, enterprise architecture, program and project management, and in rapid deployments for the finance, pharmaceutical industries, among others. Ms. Herrington can be found on the web at http://www.herringtontechnology.net

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