Stop fiddling with your old IT services architecture to be cloud native

The Situation: The days when organizations procured monolithic contracts for infrastructure, applications, and networking to run their IT operations are long gone. Organizations seek a more granular approach to balancing proven and innovative IT solutions, services, and delivery models. Top of mind are hybrid sourcing models and support for more agile and collaborative methods to adapt to ever-changing environments. Against this background, we are outlining how HFS will drive its coverage of IT services.

The elephant in the room is that delivering those cloud services introduces enormous complexity in the near and medium term for operations teams. We need much better insights into how new target operating models could look, how organizations transform operations, and how organizations procure these new breeds of services. Furthermore, the talent that can deliver those services is scarce and expensive. One of the biggest challenges for most organizations is retraining staff to achieve the digital fluency necessary to deliver new services.

Lastly, as “software is eating the world,” strategic priorities are fundamentally changing for most organizations. While Marc Andreesen’s dictum that every company has to become a software company has become a bit of a cliché by now, the shift in strategic priorities for organizations is leading to reevaluation of the classic make-or-buy decision. As a result, companies are increasingly insourcing software development and the integrations for coordinating sourcing. HFS will drive its coverage of IT services in this context.

The HFS research agenda for IT services

Exhibit 1 summarizes the focal areas of our IT services research. What keeps HFS up at night is figuring out how to understand, conceptualize, and explain operational change. Beyond the topics that we will cover throughout the year, the infographic also highlights the change agents and enabling technologies driving the change to become cloud native and deliver transformation outcomes. The context for organizations is the progress toward the OneOffice and the OneEcosystem. Those goals are not linear but concurrent developments. The common denominator of our research is to replay the experiences of organizations that have successfully managed that operational change. What can we learn from them? What are the gaps and unsolved issues? How can we better understand technology innovation and align it with strategic sourcing decisions? Fundamentally, we want to foster discussions with our community and learn from one another.

Exhibit 1: HFS’ IT services coverage is all about operationalizing the OneOffice and ultimately the OneEcosystem

Source: HFS Research, 2022

The thought process behind our research agenda

Cloud native delivery makes the convergence of IT and business operations a necessity
When organizations run their applications or processes containerized, siloed operations are no longer feasible. IT and business operations must finally move closer together, if not converge completely. HFS’ OneOffice research coverage has long advocated the necessity to overcome the many organizational siloes and stovepipes. We have evangelized the need to overcome the boundaries between the front, middle, and back offices to deliver on increasingly experience-led outcomes, and now we will bring IT operations further into those discussions.

To progress toward the OneOffice, organizations must become cloud native and design their workflows in the cloud. As our friends at Container Solutions have aptly described it, cloud native transformation is more about a set of architectural and cultural principles than it is about technology capabilities. Ultimately, cloud native is about how we create and deliver, not where. The heart of cloud native is cloud-based services. This is the platform upon which organizations build, launch, and operate their distributed, containerized, and automated modular application empire.

Operationalizing the OneOffice and ultimately the OneEcosystem

As we continue to explore organizations’ progress toward the OneOffice, we will focus more on IT operations as part of those OneOffice discussions. The advancement of DevOps, at times even coupled with dreams of NoOps, has helped organizations to bring IT and business operations closer together. With increasing maturity, AIOps and observability provide the insight necessary to run the new complexity of cloud native operations more effectively. Yet, ultimately, progress toward the OneOffice is dependent on the ability to drive cultural change through the organization.

Command centers and help desks are increasingly taking an enterprise-wide view and looking to manage the accompanying new complexity and granularity. Mature organizations are adding a bot or machine-first Level 0 support to their incident management. They are adding data services and project services such as DevOps to what were once the monolithic pillars of infrastructure, applications, and networking. Again, to be able to deliver experience-centric outcomes—whether customer, employee, or partner ecosystem experiences—an organization’s willingness and ability to drive change is more important than its technology capabilities. To learn more about change management and transformation, look for us diving deeper into business consulting and engaging with the likes of McKinsey, Bain, and Boston Group.

We want to better understand how we can help organizations envision their operational future. How can they transform their IT operations and delivery? How can they deliver innovation through cloud transformation? How can becoming cloud native enable business model transformation? How can service providers provide quality assurance to deliver those outcomes? These are the big questions driving our coverage in IT services. In the following section, we provide more details about our focal areas within IT services.

Focal areas for IT Services

Throughout 2022 you will see us covering the following areas:

The journey toward cloud native
Hyperscaler services have transformed both outsourcing and IT services at large, yet most organizations migrated predominantly to infrastructure services. The real problem is deeper. Many organizations followed the marketing noise and eliminated their data centers but lacked an enterprise-wide cloud strategy. All too often, costs exploded and organizations encountered serious issues due to a lack of security and controls.

Therefore, we are launching an inaugural Top 10 report on cloud native transformation that shifts the emphasis from cloud migration to operating model and business model transformation. We want to learn from the experiences of organizations that have successfully achieved that transformation. As part of this research, HFS will take snapshots of how the three major hyperscaler ecosystems (AWS, Azure, and GCP) are evolving.

Digital trust and security
Organizations and their stakeholders need to connect to create value. To build long-lasting business relationships, organizations must also be able to provide trust for their stakeholders, then sustain it. Compromising that trust could be costly—or it could end their operations entirely. You will see us going deeper into our new “Digital OneTrust” framework, where people, intelligence, processes, and infrastructure converge into one integrated digital risk and cybersecurity management unit, allowing organizations to effectively respond to emerging cyber threats across their ecosystem. Our goal is to better understand how organizations are managing the skills shortage, automating and orchestrating end-to-end processes, and, last but not least, boosting intelligence to better identify new threats and solve highly complex challenges.

Quality assurance of transformation
To progress on their operational journey, organizations must overcome organizational silos and design the business assurance to guarantee the envisaged outcomes. Therefore, HFS will focus on two key areas. First, we’ll zoom in on orchestrating quality assurance in DevOps and Agile scenarios, examining the operationalization of quality assurance rather than describing capabilities or functional testing. Second, we’ll cover the assurance of change agents like automation and AI. We are trying to better understand how these change agents innovate assurance capabilities.

IT operations and automation
We are moving our focus from IT operations to how IT and business operations are converging. We are trying to better understand client examples and outcomes that have been supported by converged operations. You will see us going ever deeper into the ServiceNow ecosystem and how it is fitting in those strategies. Last, we will try to translate the discussions on AIOps and observability so that stakeholders with more of a business context can assess and take advantage of those innovations.

Progressing toward the OneEcosystem
In line with HFS’s overall research agenda, we will look at how all those operational topics and change agents enable organizations to not only overcome internal organizational siloes but to collaborate with partners outside of the boundaries of an organization. The pandemic shock requires us to cooperate and develop new models to succeed as a society. Hence, charting the journey toward the OneEcosystem will be the cornerstone of our research.

The Bottom Line: To help organizations to manage the new complexity of cloud native operations, we need to learn from organizations that have successfully transformed their operating model by adopting a cloud native culture, with digital trust at the core.

Driving that change is more about people and culture than it is about capabilities, as is taking an enterprise-wide view to overcome organizational silos and increasingly enable organizations to find new sources of value in complex ecosystems.