Cloud services

Cloud computing is one of the hottest trends in technology at the moment. Some companies are already using it and it is predicted that many will be by the end of 2012.

In the cloud model, ‘services’ are provided via a network, usually the internet. The services can be categorised as follows:

•	infrastructure services (Infrastructure-as-a-Service, IaaS) which provide server resources
•	platform services (Platform-as-a-service, PaaS) which provide services such as a database
•	software services (Software-as-a-Service, SaaS) which provide whole applications or business functions

Users do not need to know how the service is provided or where from, or own any of the equipment used to provide it to do their job. The service sits in the nebulous ‘cloud’ of a network.

What are the important questions?

If your organisation is considering using some form of cloud service, you need to answer:

•	What benefit are you likely to get from using cloud services?
•	Do cloud services suit your business?
•	How do you choose a service provider?
•	How should you engage with a provider?

What benefit are you likely to get from using cloud services?

For the business, the key benefits of the cloud are cost reduction and flexibility.

Cost Reduction and Economies of Scale
The service provider builds their infrastructure to support hundreds of customers and hence many thousands of users. This scale allows fixed costs (e.g. the data centre housing the infrastructure) to be shared amongst a large user base, lowering the cost to each. This scale also allows the provider to use solutions that would be unjustified for individual businesses.

Flexibility
Cloud services are commonly available on a ‘pay-as-you-go’ basis. Where a user makes variable use of the service, e.g. due to seasonal fluctuation, they pay only for what they use, rather than constantly paying for idle capacity which is designed to support the peak demand. This also allows businesses to turn services on and off, with no long-term liabilities.

The delivery of services via a network allows you to consume those services wherever you need them, not just at specific locations. This greatly increases the flexibility of the businesses and can significantly reduce the cost of implementing flexible and agile workforce capabilities.

Do cloud services suit your business?

Many companies are trying to reduce their IT spend and so cloud services sound attractive. There are a number of points to understand before joining this trend to make sure you fully understand the benefits you can actually achieve.

Which of your requirements are common and which are unique?

Cloud services work best where the provider can aggregate the demands and costs over a large number of businesses. It follows that standard business or technical services are the prime candidates to be sourced from the cloud because:

•	They provide a user base large enough to support a number of reputable service providers, allowing user choice and competition
•	They have established user bases, reducing the chance of problems
•	They have well understood interfaces and boundaries, reducing the cost and risk of integration with other parts of the business
•	Using the same service provider as a direct competitor is unlikely to reduce your competitiveness

A typical result of this, especially with software as a service, is that while you easily identify services that could be replaced, potential providers just don’t seem to fit in with the rest of your business. However, this problem may actually be an opportunity for you because more standard ways of working may be better, or cheaper, and changing your business processes to match the cloud services model may bring other benefits. Adopting cloud services may initially be championed by IT, but fully identifying the opportunities requires a combination of business and technical direction and analysis.

Can you realise the benefits of adoption?

Adopting cloud services may remove the usual capital costs of implementing new services and thus enable them to proceed, in terms of the business case. However, the prime candidates for cloud services are common capabilities that are already established. Therefore, to understand any benefit you may get from cloud services you will need to answer the following questions:

•	Do you actually know the true costs of what you do now? Our experience shows it is rare for a business to know this
•	By how much and when can you cut the current costs? If you choose to stop an existing solution, some immediate cashable benefit will be realised, e.g. lowering energy bills. Other benefits may only be realisable in the medium to long term, e.g. a reduction in the building space used is delayed because of a contractual commitment

Do you care where the service provider is based?

A key feature of cloud services (at whatever level) is that where they are provided from is immaterial. However, there are exceptions to this:

•	Many services do have elements which are physical, such as dispatching or receiving postal mail
•	All organisations have a legal obligation under the Data Protection Act. If customer data is to be sent to countries outside the EU Economic Area, additional safeguards are required and data owners may need to be informed
•	There are legal ramifications with the use of cloud services and the legal obligations of the provider in the country where they are based need to be understood e.g. the USA Patriot Act.

How do you choose a Service Provider?

There are a number of questions you should ask when you assess any service providers.

How easy is it to switch from the service provider?

The ability to switch from a provider, should their service become inappropriate, is an important safeguard for your business. Two factors can make this more costly:

Compatibility

Providers often supply services in non-compatible ways. You should ensure that any provider uses a well-known standard, preferably an open standard, as this will make it much easier to find a compatible service from another provider. Reducing the integration of the service with other systems will minimise integration costs (the number of times you have an integration problem will be reduced).

Data Access and Management

Many services are simple transactions, where all the information needed to complete the service is provided when it is invoked. Some services, however, rely on having contextual information available to complete them, e.g. customer details or account histories, which are impractical to send with each invocation. In these cases, switching provider means moving this data and you need to ensure that you can access your data in a useful format and on appropriate media. It is essential to agree any charges for the retrieval of data, and to be able to periodically retrieve all data, allowing you to keep a local backup of your data and to check that the extract process works.

Will the provider still be here in a year’s time?

A key factor in the selection of any provider is their stability, and the risk is heightened with cloud service providers. The market is relatively young, and is still seeing large numbers of entrants, many of which have no established track record, and a large number of service providers either shutting down or reducing the service they provide. You should perform a due-diligence exercise and avoid new entrants to the market.

How reliable will their service be?

The first factor in the reliability of the service is its technical solution and you should perform a technical due diligence exercise. Ask the supplier questions about the levels of resilience within their data centre and how they use multiple data centres. Higher levels of resilience may have higher costs, and you should judge what is sufficient for your business and choose appropriately.

Secondly, the service is only as reliable as your own network access. The loss of a single connection can make the service completely unavailable. Therefore users should ensure they have resilience in their internet connectivity, potentially investing in diversely routed connections. It is also important to ensure that sufficient bandwidth and latency is available to use the service.

How should you engage with a provider?

Once you have chosen your provider, how do you engage with them?

Run a pilot

A pilot is essential if you plan to adopt Cloud services. It will test the service, the performance levels you receive and the provider’s management and reporting processes. The pilot should be sufficiently long to assess all of these factors and would typically be over two or three months. Pilot users need to include enough variation to show feasibility for all situations.

Choose your price mechanism carefully

During the pilot and early stages of adoption, running a ‘pay-as-you-go’ model is an effective strategy. You have no long-term commitment and can use the period to assess your actual usage of the service. Once this is established, it is sensible to consider other pricing methods. Committing to an extended contract or transaction volume is very likely to reduce charges from the standard ‘pay-as-you-go’ model. Even if your provider doesn’t offer these as a standard pricing structure it is worth requesting them, as most providers will consider such an offer.

Buyer beware

Organisations rely on new IT services and systems to meet the ever-growing challenges of improving performance and cutting costs. Pressure to outsource or adopt shared services is greater than ever.

But imperative as these procurements are, they still go badly wrong when the buying organisation lacks the in-depth skills to manage them. For example:

•	an unrealistic business case is used to obtain funding, but the benefits are disappointing or the project is cancelled because it overruns
•	the technical requirements are poorly specified leading to massive extra cost and delay when corrective changes are made later, or the resulting system is not fit for purpose
•	the contract is driven by commercial and legal people without any input from an experienced project team, so procedures like change control or acceptance are unworkable, leading to delays and additional cost, or setting the supplier and buyer at odds
•	the procurement strategy, supplier evaluation and engagement ignore risk indicators, or overlook worthwhile options in favour of apparently ‘safe’ choices that prove not to be
•	a mechanistic, ‘box-ticking’ approach to supplier management is adopted, without the experience to prioritise what is most important

Most organisations undertake these types of procurements infrequently, but their suppliers sell them for a living and the customer lacks the supplier’s experience. What’s more, many organisations have slimmed-down their ‘intelligent customer function’ too much and any major new procurement over stretches their internal resources and knowledge.

The right level of technical input is vital from the outset if a complex IT procurement is to achieve a successful outcome.

As the procurement proceeds, the organisation’s commitment grows steadily – to a business outcome, a specification, a supplier, a contract, and finally a new operational service. The organisation must be ready for all these stages, to plan and take the action required. It must have the understanding to make sound decisions promptly and independently. It must lead, not follow the supplier.

Clearly, technical skills are needed to prepare requirement specifications, evaluate suppliers’ proposed designs, test deliverables and so on. But this is not enough. Good technical procurement advice can bring the best out of suppliers, business managers, delivery programmes, operations, and finance and legal teams. It has the insight to know where the risks and issues lie, and the mature judgement to recommend proportionate responses. To take a few examples, it can:

•	determine the performance/cost balance that gets best value from the market
•	define the few critical service levels that capture what the organisation needs, and motivate the supplier to perform, not to manipulate reporting statistics
•	shape an acceptance approach that detects problems early, can distinguish between critical faults and lesser ones, and get a fit-for-purpose solution sooner

In fact, good independent technical advice can make the difference between a successful procurement and a failure.

Case Management Systems

Workflow and Case Management are strategically important capabilities in a diverse range of organisations, including financial services, legal firms, health care, government regulatory bodies and local authorities.

The Business Problems

Business processes are a sequence of linked operations that require information to be passed to different parts of the process and the wider organisation. There may be targets for a process, and a need to report against these targets.

Case Management systems can significantly improve and control the flow of this information. The problems and challenges that they are used to overcome include:

•	The same processes are performed in different ways in different parts of the organisation
•	Customer-facing processes can generate a large amount of paper-based documentation that needs to be logged and filed whilst remaining easily accessible
•	Information flowing through the processes is not stored in a standard way and can get lost or be difficult to find
•	Management information about the processes needs to be collated manually, which is time-consuming and introduces errors
•	It can be difficult to track what the current status of a process is, i.e. identify the person responsible and how long it has been stalled
•	Simple manual steps are not automated and the processes are inefficient

What are Case Management Systems?

A Case Management system is a system that combines process automation with collaboration and decision-making. It holds information about customers (or members of the public) and customer enquiries, and it tracks the progress and actions that relate to each enquiry. It serves a single point of reference for all the information used and generated by the associated business activities.

It is particularly relevant to businesses that are performing the same process many times per day, and each instance of the process is referred to as a ‘Case’.

For example, an insurance company claims department will handle many claims simultaneously, and each claim is considered as a separate case.

Each case will include information about the case (referred to as ‘Metadata’) and documentation about the case (referred to as ‘Content’). The process automation within the system ensures that the appropriate process steps are followed in the correct order, and that the case is the responsibility of a specific person at each step. Simple decisions can be automated, improving the efficiency of the business process.

Potential Pitfalls of Case Management Systems Implementations

Organisations implementing new Case Management systems often struggle to realise the potential benefits that the solution should be able to deliver. Typically, they encounter one or more of the following issues:

•	It can be very difficult to map the complexities and behaviours of ‘real work’ to a workflow solution. A significant amount of configuration or modification may be required to the system to meet the business needs, and even once complete, it may still seem ‘clunky’ and not be accepted by the users
•	Different organisations often do the same thing in very different ways. For example, a system designed to manage legal cases may be a very close match for one firm of solicitors, but it may need significant development for to meet another firm’s specific style of operation
•	It can be very difficult to identify the right product to meet the requirements. A solution that has been developed for a specific business area may not be flexible enough to continue to meet business needs as the organisation develops, whereas a more generic solution is likely to require significant modification and configuration to meet requirements
•	A system that meets the current business model may not be able to adapt sufficiently over time to meet longer-term evolving needs

 

How to Avoid the Pitfalls and Maximise the Benefits Have a business strategy – by identifying the strategic direction of the organisation over the next 3 – 5 years, you can ensure that your workflow solution can adapt to support the changes. Get the requirements right – this is the most important part of your implementation project and should take around 25% of the project duration. Really understand the processes potential improvement – it is critical to understand the business processes and identify any possible areas of improvement and efficiency gain before the new system is implemented. Failure to do so will mean that the old inefficient processes will be replicated in the new system, and benefits will be undermined as a result. Don’t underestimate the need for training and communication – users can often feel threatened by the introduction of a new system and may continue to work off-system unless they receive sufficient training and communication.

 

Building the Business Case

The main business improvements that a Case Management system can introduce are:

•	more efficient and consistent business processes that are fully auditable
•	increased throughput capacity of the processes
	better operational and performance management information
•	reduced staffing levels
•	reduced information storage costs

These improvements should deliver a better service and experience for customers or members of the public.

 

Types of Case Management Deployments in Different Industry Sectors

•	Healthcare Systems – Patient Administration Systems, Radiology Information Systems, Accident and Emergency
•	Insurance Systems – Claims Handling
•	Legal Systems – Wills, Property Purchases, Lettings, Divorce
•	Customer Services Systems – Customer Relationship Management
•	Finance Systems – Loan applications, Debt Management
•	Children’s and Social Services Systems – School Management, Integrated Case Systems, Common Assessment Framework

Failed new initiatives cost you money and possibly your job!

More people are now using pilots to test out the viability of a new idea before spending significant sums of money recruiting new people, and developing new systems and processes.

However, pilots require careful planning and monitoring to make sure you really know if it will work when you scale it up.

Why use pilots?

Pilots are generally considered to be a helpful and cost-effective way to establish in a small-scale and controlled environment the feasibility of a more widespread change to an organisation’s business or technical practices and processes. They enable assumptions to be validated in a more risk-free and less public environment without the threat of widespread disruption or excessive cost and they offer project team members the chance to gain experience and learn lessons to feed into a full implementation.

What are the different types of pilots?

Pilots can be used in a variety of scenarios:

•	Market viability – trialling new ideas, products and services to check the market really exists before building the people, process and systems infrastructure to deliver volume. This will demonstrate validity and expose any potential implications translating it into the production environment
•	Customer facing and back office processes – trialling new or changed processes with a selected group of users to understand potential bottlenecks or dead-end flows, improve awareness and handling of exception conditions and monitor the speed and efficiency of the flows compared to existing processes
•	Demonstration – to give decision-makers the opportunity to evaluate a new or enhanced system under near operational conditions
•	Prototype – to develop key aspects of desired functionality to a sub-production level to assess design/operational feasibility and quantify likely benefits

How to execute a pilot successfully

Regardless of the purpose behind running a pilot, there are common principles which need to be followed.

Get the objectives clear

The objectives of the pilot should be clearly defined.

•	gather or clarify requirements?
•	assess the ‘real world’ impact on the organisation?
•	provide tangible evidence of the potential sales and likely costs and benefits involved in a wider deployment?
•	define the best approach to business change?
•	help resolve perceived operational issues?
•	demonstrate the technical feasibility?
•	validate assumptions, obtain experience and learn lessons prior to wider deployment?

Once the objectives are clear, the criteria to be used to assess the performance of the pilot must be determined. These will be considered together with the measures and means by which they will be recorded and evaluated and the format of the final output, such as a report, recommendation or business case.

Throw it away or build on it?

It must be clear whether the pilot is a ‘one-off’ piece of work to validate a hypothesis or whether it is to be created to form the basis, or initial phase, of a full production capability should the pilot’s objectives be met. If the latter, then the pilot is likely to require more time and effort to set up, involving the risk of having to write off more cost should it prove unsuccessful. In such a case, the pilot should also include defining what is required to move the pilot to a production service, especially as a successful pilot may result in significant pressure to realise as quickly as possible the benefits from a wider deployment.

How long is long enough?

The duration of the pilot must also be agreed. It should be long enough to ensure that the information obtained is valid and sufficient to inform an assessment of the performance of the pilot against its objectives. However, this must be balanced against cost and the natural tendency as it progresses for it to drift into a ‘business as usual’ operation, making it more difficult to determine the end point.

Plan and manage it properly

Finally, the pilot must be as tightly planned and managed as any other project. Given its ‘investigative’ or ‘pioneering’ nature, it is likely to encounter unforeseen problems, difficulties and scope changes. These can be of great value because that is what the pilot is for. However, without sufficient control they can divert the pilot from its original objectives and prevent it from delivering meaningful results. Roles, responsibilities, processes and procedures must be defined, methods for recording data and information established, timescales must be agreed and the reporting and communication channels set up.

Likely points of failure Pilots are vulnerable to all the usual risks of failure that generally affect projects, such as: • poor definition and management of scope • inconsistent stakeholder expectations • political interference There are also risks which are specific to pilots, for example: • insufficient time allotted to gather meaningful data/experience • wider impacts of scaling up (eg network capacity/bottlenecks) not taken into account when assessing results • pilot becomes part of ‘business as usual’ by default but may not have been designed to support this, leading to high future operating and maintenance costs

When failure is a success!

It should be stressed that a pilot that demonstrates the hypothesis it is testing is flawed or that expected benefits are unachievable or that technology is unworkable, should not be viewed as a failure. Quite the contrary – a pilot which, for a comparatively small investment, stops an organisation from wasting significant sums of money or losing its reputation on a doomed initiative should be seen as a great success.

Industry examples of pilot use

The versatility and value offered by pilots is evidenced by their use across a wide range of industry sectors:

•	retailers use pilots in certain stores to assess the success of new product ranges or store layouts before rolling out nationwide
•	local authorities are using pilots to assess the feasibility of collaboration between themselves to reduce costs
•	the energy industry is running pilot projects to test technical and business models associated with implementing smart grid networks
•	the telecommunications sector is increasingly using pilots to validate the potential for new mobile phone applications (eg. mobile financial services)

 

Please contact us if you would like help setting up and managing a pilot.

Smart metering – what are the problems for consumers?

There are many substantial and vital solution design questions and issues which need to be resolved during the UK smart metering implementation programme. However, alongside the technical questions about the metering and communication technologies and supporting IT systems, the programme needs to bear in mind that consumers will not be a passive element in the process.

Rather than worrying about the customer after all the other implementation work is completed, a customer focus can and should be embedded in the roll-out from the start. Even at this early stage, the UK programme may learn some lessons from the recent experiences of US energy companies trying to roll out smart meters.

The New York Times summarised the US problems as follows, “because of faulty technology in some cases, and more often through general shortcomings in consumer education and customer-service support by many utilities, smart meters are leaving many customers dumbfounded.” (Smart meters draw complaints of inaccuracy’, New York Times, 12 November 2010).

The experiences in the US have highlighted the following issues.

Pre-roll-out consumer problems • “What’s in it for me?”: Smart metering is not a priority for many consumers • Health concerns, particularly about radiation levels from wireless data transmission • Security and data protection     Consumer problems during roll-out • Allowing subcontractors into their homes • Problems with meters not working correctly after rapid roll-outs     Post-roll-out consumer problems • Getting the most out of smart meters – understanding that long-term behavioural changes are required to benefit from having a meter • Understanding the bill • Understanding the new smart meter-enabled tariff structures • Getting helpful responses from Customer Service

Mitigating customers’ problems starts now

The UK smart metering roll-out programme needs to focus on the customer and their problems right from the start. The main aspects to think about are:

•	The best risk management approach to the design and implementation of the new business processes. Exception handling needs to be robust and efficient, and instil confidence in the customer
•	Careful design of the forms and communication touch points needed for customers to be able to interact with retailers about all aspects of their meters e.g. acquiring a new meter, switching supplier, complaining about or querying a meter, reporting faulty meters, disconnections and reconnections
•	Business process management solutions should be considered to help streamline customer service operations e.g. fault and complaint processing across front and back office teams
•	Stakeholder management must include ongoing, pervasive and meaningful communication with individual customers, customer advocacy groups and the general public
•	User acceptance testing of new customer service processes and systems must be comprehensive. Problems cannot be discovered or highlighted by customers or by the contact centre staff when customers are on the other end of the phone
•	The application of revenue assurance controls and principles along the data flows from the meter through to billing and collections, to ensure that all consumption data is accurately captured and processed through to the bills. Controls should automatically trigger alerts for investigation of exceptions which exceed preset thresholds to help ensure that anomalies are resolved before the customers see them on their bills
•	Contact centres and other customer contact channels should be fully briefed on the correct messages and new processes required to help customers resolve issues they have with the new technology, new bills and new pricing. These should be resourced up to cater for the likely peaks in contact volumes
•	Timing the introduction of new tariff structures and price changes should factor in a need to bed in the smart meters before introducing increased billing complexity

As Ofgem has said, “consumers lie at the heart of the smart metering programme.” (Smart Metering Implementation Programme: Consumer Protection, Ofgem, 27/7/2010).

Failure to resolve consumer issues could substantially increase the overall costs of the implementation, damage the reputation of individual companies, and leave them with higher churn and increased cost-to-serve.

It could also lead to the bigger problem of smart meters not being used effectively to reduce our global energy consumption.