IT Service Management Forecast for 2013: Hybrid Conditions Will Prevail - Executive Viewpoint 2013 Prediction: FrontRange

Kevin J. Smith (Profile)
Monday, January 21st 2013

The notion that IT Service Management solutions will migrate exclusively to the cloud in 2013 is a fantasy. In point of fact, “cloud-based” might be the most abused marketing concept of the past three years.

The mindset behind this thinking is that enterprises are universally aligned in their belief that IT services should and must be moved wholesale to the cloud. The rationale is that capital expenditures will be slashed, operating overhead will be trimmed and new levels of efficiency will be realized. Unfortunately, we don’t live in a world of absolutes. While cloud computing is without a doubt a significant and strategic element of the IT puzzle, it will hardly displace on-premise IT services. This is especially true when it comes to IT Service Management (ITSM).

So when it comes to my forecast for 2013 and beyond, I am predicting we are entering the ‘Era of Hybrid ITSM’.

And here’s why and it’s very simple. Customers want choices. And, who really knows what the future holds? So, let’s look a little closer and for further consideration is some good third-party market research that supports this concept. Analysts at Gartner predict that 30% of companies that are now using cloud-based ITSM tools will revert back to a premise-based solution by 2014 [How to Decide Whether SaaS ITSM Tools Make Sense for Your Organization]. This begs the question, “Why?”

There are a host of reasons why cloud-based implementations make sense for many enterprises. For organizations supporting remote/branch offices with limited IT resources, cloud-based ITSM makes a great deal of sense. The “care and feeding” provided by cloud implementations can overcome the lack of technical support in remote locations. Conversely, for enterprises with deep technical skills and resources, running strategic applications like ITSM on-premise is highly advantageous, especially for those organizations with significant and ongoing customization requirements and dynamic integrations. Given the fact most enterprises sit somewhere in the middle, a hybrid ITSM strategy – combining cloud and on-premise offerings – is a decided advantage.

Lost in the noise of the “cloud-based” hype is the long-term expense of cloud solutions. While promises of reduced upfront capital costs are a seductive sales proposition, disciplined CFOs and COOs that are adept at TCO analysis can quickly spot a “too good to be true” offer. The upfront benefits of cloud solutions are short-lived. While many cloud solutions carry lower cost licenses than on-premise offerings at the outset, the “gotcha” occurs at or around the 30-month mark when the annual licensing costs surpass the fixed cost of an on-premise solution. The easiest analogy is leasing vs. buying. At year 3 – 4 of a lease, the cost exceeds an initial purchase price.

Price is not the only fly in the cloud ointment. Customization in the cloud is another major issue to consider when deploying ITSM solutions. Each organization is unique in how it handles incidents, configuration management, change management and release management. Not to mention problem management and the business rules that drive the performance of their service desks. Shared applications in the cloud that are largely standardized make configuration changes more complex. And this introduces an element of risk since, to cite the cliché, change is the only constant.

This is why hybrid ITSM will emerge as the dominant model in 2013 and beyond. Customers don’t want – nor must they – be forced into an either/or model. They want the flexibility to deploy ITSM solutions via cloud or on-premise as needs dictate and when and where it makes the most sense for the ever changing organization.