XaaS: Making the shift to services-oriented IT

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When Srini Koushik talks about shifting to internal IT services that employees can access in a self-service model — sometimes referred to as “everything as a service” (XaaS) — he likens it to the saying: “The more things change; the more they stay the same.”

Healthcare is an evolving target, says Koushik, CIO and CTO of Magellan Health, and the need to do things faster, better and cheaper is always at the forefront of everything IT does. XaaS isn’t a new concept — just a growing one, he adds. “It’s the same thing we’ve done before.” But now, “the underlying technology allows us to improve productivity and speed to market. Those are still the key drivers.”

Continuously improving business processes has long been an IT mandate, but now, the ability to mimic the cloud services model and provide services in-house is changing the IT paradigm, thanks to software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS) and a myriad of other as-a-service offerings.

“We couldn’t do faster, better, cheaper 20 years ago, but you can today, and as a healthcare organization we have embraced it starting with SaaS,’’ which is used in all of Magellan’s business units because of the ease of use it provides, says Koushik.

More organizations are making the shift to offering internal services on demand now because all the necessary pieces have come together, notes George Westerman, a senior lecturer with the MIT Sloan School of Management.

“We have enough bandwidth, the right kinds of APIs and the software services [organizations] are buying are very, very good, so it’s become very clear it’s better to buy from someone than do it yourself,’’ says Westerman, who is also faculty director for Workplace Learning at MIT. “So a wonderful convergence is making this possible.”

Almost six in 10 enterprises now use IaaS, according to February 2019 data by ESG. Continuing the shift to XaaS makes sense because it enhances business agility and increases operational efficiency, according to Deloitte’s "Accelerating agility with XaaS" report.

The firm says XaaS delivers competitive advantage by “democratizing innovation,” because cloud-driven capabilities are less expensive and easier for a broad range of users to access. Seventy-one percent of companies are using XaaS for more than half of their organization’s enterprise IT, according to the report.

Today’s XaaS offerings are also designed to be modular and self-updating and have emboldened IT to build upon them and integrate them with other systems, observers say.

“Just about every company I know has a deal with Amazon, Google or Microsoft,’’ says Westerman, and they’re also using application services from providers like Salesforce or Workday. “I am seeing this really becoming an important element of the offerings of any organization’s [tech] portfolio.”

The impetus for XaaS is largely driven by the demand for consumption models rather than IT having to buy equipment that has to be installed, says Laura Fay, vice president of Research and Advisory, XaaS Product Management, at TSIA. There is also the risk of rolling out an expensive system only to find it doesn’t work the way the business hoped.

“You get the business outcome you want with a subscription and if it doesn’t work out, you can flip to another vendor,” says Fay. “Companies don’t want to spend large amounts of their capital equipment budgets on purchasing technology any more. Buyers are moving from IT to lines of business. The customer is demanding outcomes.”

Providing services in ‘an Amazon-like experience’

Magellan Health’s journey to XaaS began four years ago with PaaS, SaaS, IaaS, Amazon Web Services (AWS) and an internal hybrid cloud, Koushik says. IT now offers 300 services in a catalog that is easily searchable — a must for ‘as a service’ to work, like in the cloud services model, he says. A service might include ordering a computer or terabytes of storage.

The idea was to make it possible for Magellan’s business users to have self-service capabilities and “have an Amazon-like experience,’’ he says. The catalog, known as Rita, for real-time IT agent, was deployed in August 2018.

Another requirement was to streamline the order process and minimize the number of approvals. 

“So we’ve taken the requests and made sure they can be fulfilled with one or no approvals,’’ and now about 75% require one approval or less, Koushik says.                            

The last step in the XaaS process is ensuring provisioning becomes automated, he says. Right now, about 90 services are delivered using automation with no human intervention while the rest require some engineering. “We’re trying to push that automatic provisioning to 50% to 60%,’’ Koushik says. “It will make significant improvements in speed and effectiveness.”

While the stack of services started with IaaS, PaaS and SaaS, IT has added Magellan-specific processes on top. These are new services that tend to be requests for units of consumption at a much higher level than “‘Give me a server and make sure the server has WordPress installed,’” Koushik says. “We know the server, infrastructure and security profile our customers need so those individual services get combined to a more macro level to take away complexity from end users.”

Just as AWS will ask a user purchasing a cloud instance questions about the amount they need, one of the new Magellan services is a set of questions and the automation and workflow behind it, he says. The idea is to reduce complexity and make the ordering of services faster, high quality and standardized so they can be delivered for less money, he says.

Yet, that intellectual property “is heavy work, and it takes time for us to extract knowledge, simplify, streamline and automate,” he explains.

The more questions a user has to address in the ordering process, the longer they spend away from their work, Koushik adds. “The more we make it easier for employees to do their job without having to worry about the details of how things get put together, the more successful we are in IT.” That leads to more empowered employees, he says.

BPM offered as a service

Like Koushik, Bob Pick, sees the concept of everything as a service as “a replay on everything old is new again.” Pick is senior vice president and CIO at TMNA Services, which provides shared services, including financial, legal and IT to the insurance writing subsidiaries of Tokio Marine North America.

It’s the nuance and sophistication of delivering XaaS that is new, he observes.

TMNA has rolled out a service called “user acceptance,” which he says grew out of basic user acceptance testing. Now IT has created a user acceptance framework, which is a comprehensive methodology for ensuring business user engagement throughout the development and implementation lifecycle of a system.

“This is as a service like IaaS, but the service we provide to the business is to give them tools and … methods to stay engaged with product development and to also prepare them to write the test cases, execute them and do everything needed for multiple phases of testing as opposed to throwing a ball over a wall,’’ Pick explains.

Similar to what Magellan is doing, he views XaaS as the structuring a particular catalog item in an “as a service” delivery mode, which in TMNA’s case also includes some  business-centered services  that are independent of any individual project or system.

For example, “IT shops do project management all the time, but we can package project management as a service to help one of our businesses do things that are not all IT-oriented,” like new product development, or to facilitate business process outsourcing, he says. IT is the often the repository for skills and expertise surrounding project management; those skillsets have increasing value outside IT, Pick says.

“IT almost always underpins everything a business does, but when doing BPM [business process management], it’s about organizational change management and understanding business processes and efficiency. So IT is providing BPM services to shepherd one of our businesses going through the optimization or outsourcing of a business process,” Pick says. “In our industry a business process might involve claims handling or billing, or intake of a new application for coverage.”

Providing packaged BPM services to their four Tokio Marine group companies requires a substantial amount of effort, technology, training and non-tech process knowledge around change management, as well as robotic process automation (RPA), he says.

“Predominantly, this is done on demand when a group company says, ‘We have a need,’” Pick adds. IT began offering BPM as a service about three years ago after TMNA’s architecture team “recognized we had skills internally, we just hadn’t been harnessing them,” he says. The RPA component was added last year.

Now their group companies don’t have to reinvent the wheel or go externally to gain expertise and BPM insights. XaaS is a trend, Pick says, but “in the shared services game, this is what we have always done and now there’s a new name for it.” 

Mirroring services from mobile app to smart mirror

At Oral Roberts University, IT is taking XaaS to the nth degree, moving from a mobile app offering a concierge-like set of services for students and faculty, to introducing a 52 inch-by-22-inch smart mirror to deliver all IT and university services from all areas of the campus. 

The concept is called “Smart Mirror Reality” and users will soon be able to speak or press different commands to receive self-service on everything from fitness and wellbeing to academic and career achievement services, says Mike Mathews, vice president of technology and innovation. Students can request IT-oriented services as well as access the university’s learning management system, their financial aid package, degree plan — even their Fitbit.

The mirror uses the Raspberry Pi computer, which interfaces with Amazon Alexa.

“Instead of having vendors provide cloud services and charging $25,000 to turn on an API library to interface with other things … we said to ourselves, ‘We own the strategy behind integrating everything on campus, so let’s build our own ecosystem,’’’ Mathews explains. IT developed its own set of APIs it calls its “Geovision Ecosystem.” 

It behooves IT to make services available in a seamless manner in a variety of different form factors, including a wearable device, he adds. Four years ago, IT received approximately 1,000 calls a month to the help desk and that has been cut by 75% by integrating all services together.

“In essence, [we] are making a subset of the ‘smart campus’ and providing ‘everything-as-a-service’ from our own ecosystem,’’ he says. “We have given students intelligence to drive and navigate their journey through education. We have integrated all the services and data … in a very practical, everyday manner.”

At least one early tester likes the idea of a smart mirror. “IT has reinvented what it means to give concierge service around the clock for everything students and faculty need,” says James Russell, a business professor at ORU. “IT has reimagined the service of campus technology.”

With the smart mirror set to launch in the fall, Mathews has redeployed half of his staff “into innovative, rather than traditional, IT operations.” That means the ability to work on cutting-edge technologies like virtual reality and AI, “instead of us having to run around fixing broken parts.” Smart Mirror Reality also has monitoring capabilities and will notify IT any time a system is close to failing, he says.

This has changed the perception of IT from a cost center to innovative partner, Mathews says, noting that five years ago his title was CIO. Now, with his title change to vice president of innovation and technology, “the proof’s in the pudding. People think of IT not as ‘information’ but ‘innovation’” providers.

Making the shift to services

Organizations thinking about moving to XaaS, should start by evaluating the cost, Mathews says. “Some people may not have it in their budget or have the skillsets,’’ he says. “If I didn’t have two key employees I wouldn’t have been able to do it.” He says there has been no cost to ORU to deploy the smart mirror because he is “working on corporate partnerships.”

Additionally, don’t look to your vendors for help, he says, since their focus is on selling their product. “You’ll have to design [an] ecosystem that makes sense for you, and you can determine how much of everything is truly everything.”

It’s also a good idea to figure out if services can be ported. “If a new form factor comes out like this mirror, or eventually, smart glasses, can you put everything into that? If you can’t you have to figure out what pieces are critical” to your users, Mathews says.

At this stage, observers say, just about all companies are doing something with as-a-service and will eventually move to XaaS. “It’s just not that scary a thing,’’ says Westerman. “The question you should be asking is, If you’re not doing it, why?”

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