Notes from Gartner IT Sourcing Forum – Dubai May 2014

by | July 25, 2014

I had the opportunity to attend a Gartner briefing on IT Sourcing in Dubai in May 2014.  I found the session very valuable and it has made me think about some new approaches as we continue to be pressured to cut costs in higher education IT service delivery.   Frank Ridder and Alexa Bona were the speakers and both provided me great ideas and concepts to think about.   Here are my notes:

Succeed with Outsourcing at the Intersection of the Nexus of Forces – Frank Ridder

  • IT projects were focused on cost containment and reduction since 2005
  • Now need to shift the focus to delivering value
  • NOF Example – Cleveland Clinic – connecting cancer patients – implemented a cloud hosted calendar for scheduling treatments for a patient, then added blogs to provide information on the illness and treatments, used social apps to build a self-help groups, and finally created a mobile application = very successful because it puts the patient in the centre of the process  *** this is good to develop a scorecard of our projects
  • Survey of EMEA C-Level Priorities – business priorities translate to CIO priorities = 1) Business Intelligence Apps 2) Mobile Technologies 3) Cloud Computing 4) Collaboration Technologies

Nexus of Forces (NOF) Challenges for Outsourcing

  • Social – Explosion of options, linking digital strategies, many (new) platforms
  • Information – Information protection, information source, information quality
  • Mobile – new skills required, security approach, New IT services
  • Cloud – Inadequate terms, struggle to integrate, (Still) struggle to accept standards

IT Services Sourcing – Nexus can be a brake or an enabler

  1. Sourcing Strategy – review Gartner toolkit to see if we can document our sourcing strategy – Why, What, Who, How, Where?
  2. Evaluation and Selection
  3. Contract Negotiations
  4. Sourcing Management


  • Assess your situation. Do you see demand for implementing the Nexus of Forces
  • Analyze how demand governance has to change
  • Align and capture thoughts from key stakeholders
  • Plan for changing the game
  • Implement demand governance that considers all end-user generations
  • Start Over and assess what you need to change again

CIO Guide to Cloud Contracting: What are the real costs and risks and can they be mitigated? – Alexa Bona

  • the majority of cloud contracts are one sided in the favour of the cloud provider instead of the user
  • Gartner’s Definition of Cloud – service based, scalable and elastic, shared, metered by use, internet technologies
  • Cloud is different than Hosting – this is important to consider especially when negotiating contracts
  • Strongly consider that long term deals may not be the best choice as technologies are set to change by 70% over the next 3 years
  • Public Cloud is being deployed to support agility – other 12%, quality 10%, Innovation 13%, cost 14%, agility 50%

Hidden Costs

  • Check that you can transfer your existing licensing to a cloud provider – this is key if you cannot do this, it is a hidden cost
  • Double check the costs in virtualized shared environment
  • if moving licences, see if you can terminate maintenance costs
  • put license controls in place
  • be sure you can track and manage compliance in a hybrid environment – challenge of match per device and per user license models
  • if cloud doesn’t work, calculate the cost of moving back
  • usage based pricing only exists for IAAS not for SAAS – this is a key item to check
  • there doesn’t seem to be price protection for renewals of contracts
  • cloud payments start on day one of the contract – this could be a huge cost especially if you are doing a staged rollout with few users to start
  • Suggest starting small and negotiate increases as users come online
  • Negotiate payment holidays if it will be 3 to 6 months before going live
  • Sandbox Costs? are they included?
  • Storage is sometimes limited in SAAS pricing
  • Be aware of costs for Premium maintenance – this is usually very expensive and still limited
  • Verify pricing metric changes – does your per user per month change?  On renewal the cloud provider decides to charge per all employees not per users
  • contracts are opaque and non-committal because the terms are stored on a website with many nested website links – negotiate “not to diminish” clause into your signed agreement
  • Switching costs are high and termination for convenience is a myth
  • clarity on service levels are critical and need to be clearly articulated – focus on RPO and RTO – need to put meaningful penalties in place which should be 100% of fees for a month for missed SLAs
  • Need an option to exit for chronic and/or repeated failures
  • Information Security is vague at best especially for SAAS offers
  • Conduct an impact analysis – Data Sensitivity – low, med, high vs Forms of Impact – monetary loss, customer defection, market share, privacy breach, competitive breach – *** This is really good to determine should we use a cloud offering or not = sourcing strategy
  • Insist on security standards – SAS 70 Part 2 and SSAE 16 (SOC 2and SOC 3) and ISO 27001 and 27002 certification
  • Check out Cloud Security Alliance, The Shared Assessments Program, Common Assurance Maturity Model (CAMM), FedRAMP (US Federal Government)
  • How easy can you get out?  Ensure you get at least 60 days to get your data out of the cloud provider, how will you get your data out, where will you move the data to???

9 Things to consider when deciding to use a cloud service

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