Shopping for an as-a-service solution

Five questions government departments need to ask before visiting the as-a-service supermarket.

Some people are born shoppers. They love to browse every shop, admire every window and sip lattes in between. My wife would tell you that I am not one of those people. I am the guy who wants to walk into a store with a short, clear list in hand… and walk out again, purchase complete, as quickly as possible.

With recent changes in technology strategy at the Commonwealth and state levels, many government departments are shopping for an as-a-service solution this year. If you represent one of them and have been charged with developing that short, clear list, then consider these five questions first.

1. Are you ready to transition?

These days, you can consume almost anything as-a-service, from infrastructure technology to the family car (using pay-per-use solutions such as Flexicar and GoGet).

But as you travel the as-a-service continuum - from a basic, discrete point solution (such as storage) to more business-critical and core services (such as the essential services your department provides) - you will encounter greater complexity and risk. It takes a very brave department to dive in to the right-hand side of that continuum first.

No matter where you start, it’s essential to have independent advice - if not from a reputable analyst or consultant, at least from another department that has travelled the journey before (and preferably, both).

2. Problem or opportunity?

One reason many people consider transitioning to an as-a-service model is that their current model for a particular process or technology is broken: it’s not delivering the outcomes your department needs or expects.

If you are looking to transition a business process in this scenario, most experts will advise you to take a phased approach. That is, don’t try to both re-engineer the broken process and transition it to a partner at the same time. If you do, you run the risk of muddying the waters: is the problem because of the process or the partner?

Instead, you may want to ‘lift and shift’ the process exactly as is, stabilise it and then look to streamline and re-engineer over time. Or, if there are sensitivities about the process that you don’t want to expose to an external entity, you will want to ‘clean house’ first.

Perhaps your process isn’t exactly broken, but you want to tap into new possibilities - for example, using a cloud-based solution so that all your team members can access a particular tool anytime, anywhere, or improve your cost basis by paying only for what you consume. Having a clear view of your drivers will help you:

• build your business case more effectively;
• determine the right transition approach;
• maximise the value you are looking to drive in the new as-a-service solution.

3. Are you willing to cede control?

Transitioning to as-a-service means you are almost certainly working with a third party, or at least another group within government. Getting the best value from working with that partner will mean that you relinquish at least some control over some aspects of your process or technology in exchange for a commitment that you will gain a better outcome.

Some people (and agencies) will be quite comfortable with this idea, but most will need to work through what is absolutely non-negotiable, and what is okay for the partner to control.

For example, you might decide that a particular software platform is a mandatory element of your solution, because you want to maintain an easy transition to a different partner in future years if necessary. For compliance reasons, you might require that you want only Australian citizens to have access to your data. Other controls that you are used to having - such as managing day-to-day payroll processes - might be something you are willing to let go.

The more flexibility you have, the greater likelihood you will be able to reap the best practices and cost, capability and capacity advantages you are seeking in an as-a-service solution.

4. How do you want to pay?

More precisely, how do you want to pay for the transition to the service? Depending on your budget situation, you may want to ‘backload’ the cost of transition by having your partner build it into the ongoing operating costs of the service. Bear in mind that this is likely to increase costs associated with ‘termination for convenience’ as the partner will need to recoup transition costs one way or another.

If you have access to capital budgets, paying for transition up front will reduce your ongoing operating expense.

Once you are past transition and move into business-as-usual, do you want to pay for just the services you consume or do you want a predictable cost budget? Pay-as-you-go can appear attractive but be mindful the partner will expect a minimum volume guarantee. If you want predictable, pre-agreed annual costs, be mindful that you may really be wanting a managed service model (where you really own and control everything) versus an as-a-service model. It is possible to keep the pay-as-you-go model with a formulated annual price that is adjusted every year.

5. Do you have the right backing?

Any change is bound to encounter some resistance, but the further right you go on our as-a-service continuum - from discrete solution to core business process - the more stakeholders who are going to have an opinion about it, including the government of the day. Will your transition affect jobs? How would a change in government impact your strategy? Do you have buy-in from your Secretary and the government?

If you’ve thought through these five questions, congratulations! You’re ready to embark on an as-a-service journey - with time to spare for a latte