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The evolution of

cloud service brokerageThe development of cloud infrastructure has fueled the need for higher bandwidth and converged network infrastructure. Platform, infrastructure, software, capacity, storage, and security are now being offered as services, while the traditional cloud markets for small and medium-sized businesses (SMBs) are also expanding as more enterprise-level offerings move to the cloud.

By David Morrison

As a result, many traditional service providers are reassess ing their IT infrastructure and business models to determine how better to deliver services to customers.

The original cloud software-as-a-service (SaaS) model was structured t o e n a b l e S M B s t o b u i l d a n I T environment without the need to invest in costly infrastructure and support services. As bandwidth accessibility and costs improved, other services such as infrastructure as a service (IaaS) and storage as a service (STaaS) became possible. As this trend continues, it will be possible to deliver almost anything via the cloud. The real limitation will be an organization’s appetite for risk in moving core systems, including the intellectual property, into the cloud. As this risk is likely to be considerable, entities will need to assess the impact cloud will have on their core business before moving fu l ly into a c loud environment. A hybrid cloud model, where some core systems remain in-house and non-core systems are sourced from the cloud, will therefore be the most likely delivery model for interested parties.

So what actually is cloud? t its most fundamental level, the cloud is little more than a transport-layer offering to de l i ve r p roduc t s and

services to customers. In this regard, it is little different to its predecessors such as web-enabled services or secure VPN. Where it differs is in the way it has moved the financial burden (and risk) of infrastructure and capacity away from the customer and toward the service provider, and in the way it is opening up traditional business systems to specialists who will provide certain elements of their business system in a more dynamic way, thereby increasing diversity and functionality.

Why the hype?Cloud is forcing a significant degree of

change in the way traditional IT products and services and services are offered. It is affecting the status quo of traditional IT organizations and challenging them to rethink their approach to delivering existing solutions in the marketplace.

David Morrison is Huawei’s Global Director for Managed Services Cloud & IDC and has over 30 years of industry experience with business development, business change, ICT sourcing, operations management and managed service operations within the global commercial and corporate sectors.

The evolution of cloud service brokerage

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How do we organize for it?

As cloud services evolve in the marketplace, we will see a service segmentation within and across provider organizations. IT departments are increasingly becoming multi-source hybrid organizations. By taking on the role of service brokerage, they will need to manage internal and external services in a unified portfolio that encompasses costing, service quality, utilization, and asset prioritization. As such, hybrid asset management, granular service metering, and chargeback will become critical to this new shape of IT as a service.

By n e c e s s i t y o r d e s i g n , t e l c o s a n d I T organizations will diverge into one or more service categories (Figure 1), forcing them to standardize and commoditize their products and services to meet market demands.

This segmentation will bring about a new paradigm in the way services are delivered in the marketplace. Instead of delivering an entire product or service, a service provider may only provide one component of it.

What is CSB?

The future of Cloud Computing will be permeated with the notion of brokers negotiating relationships between providers of Cloud Services and the Services’ Customers. – Gartner 2009

Cloud service brokerage (CSB) is a business model in which a company or other entity adds value to one or more (generally public, hybrid, and possibly private) cloud services on behalf of one or more consumers of those services.

As cloud services multiply and expand faster than the ability of cloud consumers to manage or govern, cloud services brokerages will be required to enable the trustworthy usage of services by cloud consumers. The CSB will help organizations select, manage and coordinate the various services they require.

The relationship between CSBs and other types of IT service sourcing and delivery models can be confusing as both groups include similar offerings – aggregation, integration, custom development, and governance/management. The answer for IT providers and buyers of cloud services lies in

Service Developer Service Broker Service ConsumerService Provider

Infrastructure Management

Service Management

Figure 1 Service provision ecosystem

Service CreationRole-based

UI Service Access

Service Publishing Service Publishing

Service Analytics Service Analytics

Reporting Security Management

Disaster Recovery

Security Management

Capacity Management

Configuration Management

Provisioning and Lifecycle Management

SLA Management

SaaS Applications Application Catalogs

Self Service Entitlement

SLA Monitoring

Billing & Metering

Reporting & Auditing

Role-based Access Control

PaaS Environment

IaaS Infrastructure

Virtual Machines/ Images

Virtualized Resources (Computation, Storage,

Network)

Hardware

Software Kernel (OS, VM Manager)

Bandwidth

Patch Management

CMDB

Capacity Management

Monitoring

Provisioning

Discovery Years

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The evolution of cloud service brokerage

examining the differences between the models. At this level, CSB can be considered an expansion of the traditional IT multi-vendor management model to include product & service integration and the coordination of the inputs & outputs of multiple services, rather than just the controlling of how the technology is implemented and managed.

CSB goes far beyond current engagement models and service propositions on the market today. It offers a unique opportunity to facilitate the rapid commoditization of the existing service business and build a true service aggregation platform that can leverage a wide range of service portfolio elements. In short, CSB will become a premium service offering for sophisticated service providers. Commoditization is, in this case, the process whereby an organization simplifies and modularizes its existing product and service offerings to enable them to be delivered either partly (hybrid cloud), or wholly from the cloud (public/private cloud).

The CSB market is still in its infancy. Brokerage capabilities vary substantially from provider to provider, but share a common purpose – to help companies more easily and effectively consume cloud-based business functionality and data. CSBs will mature rapidly; Forrester predicts that they will represent the single largest revenue growth opportunity in cloud computing by 2015. The CSB vendor landscape will have grown from dozens to hundreds of providers and an estimated 75% of the top-25 integration service providers will have explicit CSB go-to-market strategies. By 2015, Forrester estimates that at least 20% of all

cloud services will be consumed via CSBs, rather than directly, up from less than 5% today.

How does the broker fit in?

The CSB facilitates the dynamic sourcing of services and capacity; acts as the integrator of services to a customer; and provides workload management, including the traditional ITIL (Information Technology Infrastructure Library-related services), compliance, and governance functions, regardless of whether they are sourced from the cloud or via traditional IT service models.

In the cloud services environment, brokerages are responsible for and must manage the risk of failure, low service quality, inadequate security assurance, and liability between providers and consumers – all through a relationship in which the brokerage is the customer’s single point of contact for multiple cloud services, even where the broker has little control over certain outcomes.

Es tab l i sh ing owner sh ip and re so lu t ion responsibility for a problem is extraordinarily challenging for customers and brokerages alike; it is critical that CSBs keep focused on demand/experience fulfillment and respond to incidents/issues to ensure consistent relationship support through a positive experience.

There are three primary categories of CSB provider – customer-centric, solution-centric and resource/asset-centric (Table 1). Together, these CSBs will bring together the various solution elements to deliver a service offering to a customer.

Category Gartner Term Description

Customer-centric Cloud Service Intermediation

Responsible for fulfilling a customer’s business service requirements with the appropriate business systems. The brokers are also responsible for the governance and overall quality of service delivery to the customer.

Solution-centric Aggregation

Responsible for assembling services offerings from a range of technical services available in the cloud. Ensures the security and integrity of the overall solution as well as the data modeling & integration across all component services.

Resource/Asset-centric Service Arbitrage

Provides flexibility and opportunistic choices for the service aggregator (provides multiple e-mail services through one service provider or provides a credit-scoring service that checks multiple scoring agencies and selects the best score).

Table 1 CSB provider categories

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Editor: Jason jason.patterson@huawei.com

The ar t of c loud service brokerage i s to understand the customer’s business requirements, distil the service and technical requirements from them, and then source and integrate the relevant resources to meet their business needs. In theory, this model allows a single competency or product resource to be replaced or changed at any time, though in reality this capability will be limited to non-core business services.

Why should you care about CSB?

IT is increasingly focusing on a cloud-centric portfolio. IT buyers will want the choice of public, modular, near-cloud application cloud services and in-house proprietary systems. Vendors and service providers need to figure out how to commoditize their systems, services, applications, and products in order to maintain/increase their return on investment and stay ahead of their competitors.

As a telco provider, you are responsible for much of the underlying infrastructure required to support this trend; you have a reach to the end user that is unparalleled in any other industry. You are well placed to capitalize on this and establish a service delivery platform from which other vendors can launch their cloud offerings. The potential business benefits of this are huge; failure to act or complacency in your approach could see you either niched into a specific service provider role with little scope or ability to move beyond it, without considerable investment, or worse, being totally eclipsed by a competitor who has replaced your offerings with a more dynamic cloud service.

Change is coming

Cloud wi l l become the new operat ional paradigm for IT services. Conventional packaged software and component supply will sustain the product, application, and service communities for some time; however, the key growth opportunities (multiplatform, big data) will be about cloud.

The cloud service buyer is becoming an IT broker of physical/virtual applications and services. Service providers can gain by giving IT buyers new choices for integrating and managing across public, private, hybrid and legacy environments. To this end, you will need to commoditize and cost/price your services accordingly.

CSBs will adopt a supply-chain model to track and trace multi-vendor service provision. At the same time, they will be responsible for

complex product and service integrations to meet a customer’s overall business needs.

How can Huawei help?

Huawei has decades of telecom experience, a global track record, and a profound understanding of the demands of both the industry and the evolution of cloud computing. We provide the integrated solutions and services you need to succeed in the cloud era

While the concept of cloud is simple, determining how cloud best fits your organizational needs can be incredibly complex. But one thing is certain – the cloud model changes the way business and technology interact at a strategic level. There are many different cloud computing solutions and it can be daunting to figure out what exactly your company needs. Our cloud computing experts know this and can help you formulate a plan for your cloud implementation.

Huawei helps senior leadership teams make sense of the cloud in the context of strategic, C-level decision making. Our solutions address the business value of cloud adoption, implementation scenarios (including risks and benefits), and the technical implications of cloud, along with their impact on the enterprise.

Cost impact – Huawei assesses TCO reductions during cloud adoption.

Business impact – Huawei identifies business opportunities in the cloud and possible disruptions during cloud adoption, while calculating real cloud-enabled time-to-market gains.

Implementation risks – Huawei provides guidance regarding strategic decisions on location and security of data, which applications are suitable for a cloud environment, regulatory restrictions on cloud adoption, and operational maturity required for cloud operation.

Huawei also helps enterprise clients implement their cloud environment. We offer a range of services to help you install, configure and deliver cloud computing to your business and customers. These services cover everything from “Cloud-in-a-Box” solutions to application portfolio assessments, data center modernization & virtualization solutions, and ICT transformations to achieve your desired cloud solution. We welcome the opportunity to partner with you to meet your challenges together.