Procurement demands an integrated, end-to-end approach built on deep insights and intelligence to drive informed source-to-pay decisions.
Far beyond just automating tasks and transactions, procurement today is a strategic function that demands an integrated, end-to-end approach built on deep insights and intelligence to drive informed source-to-pay decisions and actions that enable businesses to adopt a true business ecosystem-wide digital strategy.

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Gartner recently reported that by 2020, the “cloud shift” will affect more than $1 trillion in IT spending. The shift comes from the confluence of IT spending on enterprise software, data center systems, and IT services all moving to the cloud.

With this enormous shift and change of practices comes a financial risk that is very real: organisations are spending money on services they are not actually using. In other words, wasting money.

The size of waste

How much is actually being wasted? Let’s take a look at the cloud market as a whole. According to the Gartner study, the size of the cloud market is about $734 billion. Of that, $203.9 billion is spent on public cloud. Public cloud spend is spread across a variety of application services, management and security services, and more – all of which have their own sources of waste.

Within the $22.4 billion spent on infrastructure as a service (IaaS), about 2/3 of spending is on compute resources (rather than database or storage). But roughly half of these compute resources are used for non-production purposes: development, staging, testing, QA, and other behind the scenes work. The majority of servers used for these functions do not need to run 24 hours a day, 7 days a week. In fact, they’re generally only needed for a 40-hour work week at most (even this assumes maximum efficiency with developers accessing these servers during their entire workdays).

Since most compute infrastructure is sold by the hour, this means that for the other 128 hours of the week, companies are paying for time they’re not using.

Should managed service providers (MSPs) help in reducing this waste? If so, how?

Cost reduction as an element of total value

The concept of an MSP helping customers save money on cloud services is a tricky one. If customers purchase cloud services through the MSP, won’t reducing the amount the customer spends also reduce the MSP’s revenue?  Besides, is “saving money” really an outcome customers seek from their service providers?

I’ve been grappling with some of these questions lately as I’ve considered potential partnerships with MSPs and cloud consulting firms. When I talk to them, I ask questions about their clients’ key priorities and how they seek to deliver additional value.

I pay particular attention to how they prioritise helping their customers save money. It appears that while cost reduction for clients is seen as important, it is often framed as a way for users to get more bang for the buck – not as a reduction in total spend. MSPs report that their clients typically have annual budgets that can be spent across all cloud or IT services. Therefore, staying within budget across all services is the primary goal. But any dollar saved on cloud compute services can then be put to work in other areas of the business. This keeps the end user satisfied by giving them more value per dollar. The MSPs are satisfied by providing more, and stickier, services to their customers.

In addition to cost savings, MSPs want to deliver productivity gains to clients. This can be done by directly implementing solutions on clients’ behalf. Increasingly, however, MSPs prefer to put tools in place that their clients can then use to optimise their own cloud infrastructure. Many small businesses don’t have the technical expertise necessary to migrate their technology infrastructure to the cloud, though once they are up and running, they are often able to self-manage parts of their own infrastructure.

As one MSP recently told me, “we could probably write custom scripts for our customer to turn things on and off, but that really doesn’t scale. To be honest, I think they would prefer controlling their own environment.”

The key to MSP success in the cloud

As the role of the traditional MSP continues to evolve, the most successful providers increasingly seem to understand the following:

• Helping customers optimise their cloud spend is very important
• Providing customers with self-service tools to better self-manage their own cloud environments is key to sticky customers.

Although there will be many goals against which MSPs and cloud consultants are measured, it seems clear that reducing/optimising cloud spend and empowering customers with the right tools to manage cloud are two side of the same coin and a real key for MSPs to succeed.

In case you haven’t heard, the new hotness in app architectures is serverless. Mainly restricted to cloud environments (Amazon Lambda, Google Cloud Functions, Microsoft Azure Functions) the general concept is that you don’t have to worry about anything but the small snippets of code (functions) you write to do something when something happens. That’s an event-driven model, by the way, that should be very familiar to anyone who has taken advantage of a programmable proxy to do app or API routing and rewriting or executed inspection of requests or responses for malicious content.

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Cloud infrastructure giant Amazon Web Services (AWS) has announced plans to launch a data centre region in Paris, making it the fourth zone after the UK, Ireland and Germany.

It’s worth noting here that AWS’ UK plans are just that at the moment, with the company confirming at a recent event that the UK data centres were going ahead despite the Brexit referendum vote. Yet according to Werner Vogels, Amazon CTO, writing in a blog post, the company’s expansion in France, as well as the growth in AWS in general, has led to this move.

“Over the past 10 years, we have seen tremendous growth at AWS,” Vogels wrote. “We have announced several additional regions in Canada, China, Ohio, and the United Kingdom all expected in the coming months. We don’t plan to slow down or stop there. We are actively working to open new regions in the locations our customers need them most.”

Among the customers AWS bundled into the press materials – the company named Schneider Electric, Lafarge, and Dassault Systemes as key customers in France – was Veolia Water France, which is aiming to adopt an industrial Internet of Things (IoT) project with the help of AWS. “By moving a large part of our IT system from our old IBM mainframe to AWS, we have adopted a cloud first strategy, boosting our power of innovation,” said Benito Diz, CIO of Veolia Water France. “We couldn’t have launched this industrial IoT project without the AWS flexibility.”

Earlier this month, AWS announced it had signed a criminal justice information services (CJIS) agreement with the State of Oregon, while plenty of other vendors are expanding their European operations. Microsoft recently launched its UK data centre with the Ministry of Defence (MoD) on board as first customer, as well as expanding its German operations, while IBM and Interoute launched Norwegian and Swedish data centre zones respectively.

AWS was seen as a particular target by Oracle at its OpenWorld event in San Francisco, with the release of the software giant’s next generation data centres prompting CTO Larry Ellison to exclaim that Amazon’s lead was “over” in the IaaS space.

You can read Vogels’ blog in full here.

Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday’s debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some form of XaaS – software, platform, and infrastructure as a service.

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As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the age of connected vehicles.

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Modern IT departments have enormous budgets and there’s a veritable feast of technology out there to choose from. IT spending worldwide will total $3.5 trillion this year, according to Gartner. The challenge lies in selecting the right technology to drive your business forward and successfully integrating it into your stack. The proliferation of new cloud services, with countless small niche players working to maximize cloud value, has led to a serious management challenge.
Thankfully, IT departments do have a way out – they can look for vendor partnerships that do some of the integration legwork for them, or they can consider service orchestration and work with a systems integrator.

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In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises.
The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a leader in the space, it’s necessary to accommodate, incorporate, and exploit the new breed of enterprise technologies — cloud, Big Data, and APIs.

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According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.

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