September 2009 Archives

We've discussed ITIL and Cloud Computing and the role of trust as a differentiator for service providers. Yes, we see the evidence that IT Hosting companies and managed service providers are closer to their customers and we see that their differentiation is their commitment to serving the customer.

But Amazon, Google, and Microsoft aren't going away. As they pressure customers to make the switch to the cloud, traditional service providers must find new ways to compete. Step one, of course, is providing alternatives - cloud services, like storage for example.  Step two is to highlight their customer commitment - the relationships they already have and defend this "advantage" by becoming even more responsive. 

So how do you build trust? According to Stephen Covey Jr. trust is built through behavior. His work has identified 13 behaviors which build trust:

1. Talk Straight
2. Demonstrate Respect
3. Create Transparency
4. Right Wrongs
5. Show Loyalty
6. Deliver Results
7. Get Better
8. Confront Reality
9. Clarify Expectations
10. Practice Accountability
11. Listen First
12. Keep Commitments
13. Extend Trust

But how do these behaviors translate to a cloud service delivery model? 

To answer this question, I dug up an old model for assessing service quality - SERVQUAL -  which was introduced to the world of service and retail back in 1988 (those were the days before ITIL).  SERVQUAL has its share of detractors, but even recent research reminds us that it is still a useful model.  In particular, I'm interested in how it can be used to help service providers improve and extend their intangible advantages over the more impersonal big shops.

Over the years, the SERVQUAL instrument has been a popular methodology used to measure consumers' perceptions of service quality. Its five generic dimensions or factors are still valid:

(1) Tangibles: physical facilities, equipment and appearance of personnel.
(2) Reliability: the ability to perform the promised service dependably and accurately.
(3) Responsiveness: willingness to help customers and provide prompt service.
(4) Assurance: includes competence, courtesy, credibility and security; the knowledge and courtesy of employees and their ability to inspire trust and confidence.
(5) Empathy: includes access, communication, understanding the customer; caring and
individualized attention that the firm provides to its customers.

None of these dimensions will change in the cloud, with the exception that some of these dimensions are now virtual and must be proven online (customer support, for example) or through superior automation of work processes.

Let's also analyze the SERVQUAL "gap model," as it was called, and see how it applies to service delivery in the cloud:

Let's look at the meaning of each "gap" - the possible breakdown areas in service delivery:

Gap 1: Customers' expectations versus management perceptions: caused by the lack of a marketing research orientation, inadequate upward communication and too many layers of management.

Gap 2: Management perceptions versus service specifications: caused by an inadequate commitment to service quality, a perception of unfeasibility, inadequate task standardization and an absence of goal setting.

Gap 3: Service specifications versus service delivery: caused by role ambiguity and conflict, poor employee-job fit and poor technology-job fit, inappropriate supervisory control systems, lack of perceived control and lack of teamwork.

Gap 4: Service delivery versus external communication: caused by inadequate horizontal communications and propensity to over-promise.

Gap 5: The discrepancy between customer expectations and their perceptions of the service delivered: caused by the influences exerted from the customer side and the shortfalls (gaps) on the part of the service provider. In this case, customer expectations are influenced by the extent of personal needs, word of mouth recommendation and past service experiences.

Gap 6: The discrepancy between customer expectations and employees' perceptions: caused by the differences in the understanding of customer expectations by front-line service providers.

Gap 7: The discrepancy between employee's perceptions and management perceptions: caused by the differences in the understanding of customer expectations between managers and service providers.

Three of these gaps are directly connected external customers: Gap 1, Gap 5 and Gap 6.  Service providers will find their optimal "trust-building" opportunities here.  Apply Covey's 13 behaviors to each one of these gaps to build on your commitment to your customers.

Amazon, Google, and Microsoft aren't building a high-touch responsive model for their cloud services. But you, the service-provider, already have a high-touch relationship. Your cloud-based SLAs must reflect this advantage. The security issue is just a small part of this reality.

Service providers who dedicate themselves to closing the gaps will succeed in this new world.

The quest for quality service didn't start yesterday. I highly recommend that service providers give Delivering quality service: balancing customer perceptions and expectations by Valarie A. Zeithaml, A. Parasuraman, Leonard L. Berry, a second look.

With all due respect to Cory Doctorow, he's wrong.

In his article Not every cloud has a silver lining (Guardian) he states:

There's something you won't see mentioned by too many advocates of cloud computing - the main attraction is making money from you.

And I suppose all the vendors of physical storage, the hard drives, etc., are interested in your spiritual well being!

Here's the heart of Doctorow's beef with cloud computing:

Rather than buying a hard-drive once and paying nothing - apart from the electricity bill - to run it, you can buy cloud storage and pay for those sectors every month. Rather than buying a high-powered CPU and computing on that, you can move your computing needs to the cloud and pay for every cycle you eat.

The point he misses is that cloud computing exists because it answers a real need.

We aren't prohibiting you from buying physical hard drives, I assure you. In fact, we think physical and cloud storage will work together, complementing each other. It's not one or the other.

Our focus is to provide specific services which deliver quantifiable value for both individual consumers and business users. As we mentioned earlier, the basic promise of cloud computing: instant access to your data anytime, anywhere, on any device, is already a reality. It's all about convenience, ease-of-use, cost, and of course, value-delivered. The cloud is a disruptive innovation.

Let's review the benefits of cloud computing:

For Businesses
In addition to cloud storage, the cloud brings game-changing pricing and service capabilities to disaster recovery, fault tolerance, geographic redundancy, and other solutions that have been prohibitively expensive to everyone except for the largest organizations in the world. Here are some specific drivers of business value:

Financial Benefits: The very nature of "pay per use" makes large upfront financial outlays a thing of the past. So your CFO won't bug you about capital expenditures.  You'll simply have to pay a monthly fee for renting the data center and the services you choose. And yes, that's a monthly operational cost.

Better use of Human Resources: Your IT people don't have to spend time doing repetitive tasks like provisioning and  setting passwords.  That will be done in an automated way by your service provider.

Agile Provisioning: "Time to value" is greatly accelerated using the cloud.  Softlayer, for example, allows lets you deploy on-demand computing instances running enterprise-grade and open source operating systems in as few as five minutes. Can your IT department do that today?

Scalability and Flexibility: The cloud provides customers with the capability to start small and grow with demand, in real-time. Cloud "burstability" allows for rapid scaling to meet demand caused by usage spikes.

Leaner and Greener Infrastructure: The cloud allows companies to outsource their IT infrastructure, and maximize utilization of the computing power of their service provider. This makes for a leaner and greener IT infrastructure for all.

Service Oriented Architecture:  Cloud Storage accessed via RESTful Web Services APIs provides new capabilities for developers.  For the first time, an abstracted, services rich storage layer is a true SOA implementation.

For Individuals
I already hear commercials on TV:

"Are you tired of lugging your laptop everywhere? Are you tired of transferring your files every time you switch devices? Are your running out of space for your endless downloads of videos, songs, and movies? Do you want to access your files anytime, anywhere, on any device? Try cloud computing, and your life will never be the same."

The flexibility cloud computing offers individuals is unparalleled. Again, it is the user-experience which will determine cloud use by the consumer.  And as we see more and more personal files (videos, music, photographs) explode, we'll see a bigger and bigger role for cloud computing.

A final statement. We do want to make money. Like everyone else in the market, we're going to have to deliver value to earn your trust and dollars. And if you find that you get more value from buying your own physical storage or owning and operating your own datacenter, go ahead.  We're betting we can show you a better way, a way that complements your local storage.