Is your Operating Model Ready for an Anything as a Service Environment?

Veeral Solanki, Ash Forrester, Business Design and Operating Model Experts, PA Consulting and Pamela Nasr, Business Design and Operating Model Expert, PA Consulting
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Veeral Solanki, Ash Forrester, Business Design and Operating Model Experts, PA Consulting

Enterprise solutions are migrating to “Anything as a Service” (i.e. XaaS) models across all industries. “XaaS” includes software, platform, and infrastructure as a service. To succeed in this new XaaS landscape, the IT organization must shift from a service provider to a service broker.

XaaS solutions afford scalability and flexibility compared to legacy systems, however, they introduce complexity. To address the anticipated organizational, capability, and accountability changes a shift in the operating model is needed. The model must ensure the new and complex XaaS environment can be managed without introducing any undue risks or service degradations.

XaaS environments require unique support. Below we outline our four-step approach to creating a XaaS operating model that prepares the IT organization for the shift.

1. Maintain alignment with overarching business and IT goals

First, the IT organization must align with the overarching strategic pillars of the business, and accordingly, define IT’s strategic vision, which will inform the design principles for the target operating model. The design principles should convey how the operating model will deliver on the strategic vision, address opportunities for improvement, incorporate industry best practices and insights, and serve as a reference while making key decisions. They should be pragmatic, achievable, and serve as clear guidelines. During the implementation of a XaaS operating model at a large US healthcare organization, the target operating model was designed to achieve communicated IT goals, one of them being early involvement of the IT organization in the creation of vendor contracts. The latter was intended to ensure alignment on operations support such as service level agreements.

Next, these principles must be socialized and agreed with key stakeholders from both the business and IT to ensure alignment with the goals of the wider organization; therefore, it is essential to have a good understanding of the stakeholder landscape. It is also important that expectations from different stakeholders are clarified along the evolution of the XaaS operating model. This approach was applied recently at the implementation referenced above. The delivery partners and key stakeholder groups across the IT organization, including application support, infrastructure support, the application portfolio management team, and the business were engaged throughout and their input was iteratively incorporated to ensure alignment of the operating model with ongoing programs and operational support efforts.

2. Define governance for the XaaS operating model

Well-defined design principles are of no use without a governance structure that cohesively drives the target operating model with clear accountability and responsibilities. Such a structure is especially crucial in a XaaS environment where an organization is just beginning to understand the new ways of interacting with its XaaS vendors. The governance structure should ensure the XaaS operating model is implemented and sustained long-term with firm support and sponsorship from senior executives within the business and IT, and the Office of the CIO. It should clearly address and incorporate the following aspects:

Instead of designing governance from scratch, leverage existing governance structures where possible.

Pamela Nasr, Business Design and Operating Model Expert, PA Consulting

Since vendors will play a critical role in XaaS governance, engage them in timely, and sometimes difficult, conversations on new ways of working and the impending cultural shift. Internally, align with groups such as Architecture, Financial Management, and Service Portfolio to define governance policies, processes and roles. Additionally, enable all organizational levels to identify changes required in vendor management and procurement processes, and communicate those recommendations upstream to senior executives.

Good governance of XaaS environments minimizes the risk of losing control of operations, and quality and reliability of services in a fast-moving environment. For example, a global client in the insurance sector that was adopting XaaS services established their governance structure with cloud vendors such that their identified benefits were realized without any diminution in service quality.

3. Adapt the organization to XaaS requirements

While governance is taking shape, the capabilities, roles, and responsibilities should be redefined to reflect a shift from operation of services to management of services. The new organization should have a customer, service, or technical alignment (or a hybrid thereof) depending on what your future needs dictate.

When designing the capability model, consider how you organize and how you are resourced. The capability model must clearly define the responsibilities of vendors via an accountability structure and change management practices, which minimize disruption to services. The accountability structure should in turn reflect changes in the “who,” “what,” and “when,” and facilitate a clear understanding of the changing environment. For instance, the enterprise IT group of a large US healthcare organization identified disparate accountability structures for their XaaS landscape, varying both in intent and perspective. As part of the implementation of their XaaS operating model, the XaaS requirements were harmonized into a single enterprise-level accountability structure, reflecting the capabilities and underlying activities supported in a XaaS environment.

The capability model forms the anchor of the target operating model, the governance, and organizational structures which must be set in place for XaaS. It is essential for long-term success of the XaaS operations that capability and skill gaps are addressed through training available internally or externally.

4. Accommodate new technical requirements

The IT environments of organizations are becoming increasingly more complex as they shift to multi-vendor XaaS landscapes with differing deployment schedules across vendors. This evolution necessitates an integration architecture to ensure interoperability of data and tools between the organization and vendors.

Facilitate integrated service management with internal partners and vendors, and collaborate with vendors to define, monitor and track crucial operational performance metrics which influence business goals. Tools for these tasks already exist to help monitor, test, and report with the central knowledgebase and service catalog helping to understand and govern processes.

Establish rules and policies working with internal partners and vendors for aspects such as access, security requirements, criticality and underlying architecture so that activities and tasks are allocated accordingly.

In the end, businesses that deploy XaaS using existing operating models are less likely to harness the true benefits of this new technology. IT organizations need to define an operating model that is rigorous yet nimble and forward-looking to support requirements unique to XaaS environments. This includes staying current on XaaS deployment models, redefining existing IT services to accommodate XaaS technologies, shifting the IT organization from a traditional service provider to a service broker, and breaking legacy silos by instituting service teams to build and deliver services to customers. IT organizations will be well-positioned to address the unique characteristics of a XaaS ecosystem while realizing the full potential it offers by incorporating the steps outlined above.