Why is IT Service Management Important to Cloud Providers?

Blog Post • Best Practice Insights • [read_meter]

Cloud service providers are no different from traditional IT service providers in relation to their need to provide quality, cost-effective, secure and available IT services. A key value proposition of cloud-based service providers is the provision of IT infrastructure and services under a utility or pay-per-use model. Cloud service providers should be focused on designing quality services customers and consumers require while solving problems. Cloud service providers aim to provide value to customers by facilitating outcomes customers want to achieve, without the ownership of specific costs and risks.

What Challenges and Opportunities Does Cloud Computing Present for IT Service Management?

Cloud computing presents both challenges and opportunities to IT organizations, businesses, customers and consumers. A current shortfall in best practice for the design, development, operation, management and improvement of cloud-based services may be seen as a challenge for some within the industry. This is especially true for hybrid IT environments. However, previous investments in IT management structures and best practices such as ITIL® can be capitalized on and provide a solid foundation for managing cloud-based services and hybrid IT environments. (Here’s a blog post on how to adapt ITIL for Cloud Computing.)

Opportunities include a new way of providing IT and business services without the ownership and cost of setting up, managing and maintaining backend infrastructure and underlying technologies. In effect, cloud computing allows an IT organization to effectively outsource some or all of its IT ‘factory-floor’. This requires the IT organization to be less focused on lower-level IT activities and more focused on designing, delivering and managing quality services that utilize cloud computing and deliver benefits to their customers and consumers.

The Additional Benefits and Challenges Presented by Cloud Computing

Area Benefit Challenge
Procurement and finance Cloud computing lowers the need for upfront CAPEX requirements, instead, costs are paid for on a utility basis, i.e. pay-per-use model. Are the organization’s current procurement rules and culture set-up to approve and finance fluctuating costs, i.e. pay-per-use over fixed price services?
Ability to scale quickly and reduce IT overcapacity Cloud computing can be enabled to scale on-demand, or extremely quickly to meet sudden changes in demand for IT computing services. Demand for IT services can be matched exactly to the required capacity. This reduces the cost of scaling IT to meet only occasional spikes in demand. Traditional change management approval times can eliminate the ability of IT to scale cloud services quickly and when needed. However, scaling quickly can incur additional and unexpected costs. Identifying the right balance of pre-approving cloud-based change is required against the cost associated with those changes. Adopting ITIL based standard change models for scaling cloud computing scenarios is a recommended approach, which can help restore the flexibility of the change process.
Leverages new technologies Cloud computing service providers are leveraging the latest in technology and IT platforms. By using cloud computing services the IT organization will have access to the latest in IT technology, without the associated costs of ownership, maintenance and upgrading. Although the low-level management activities associated with supporting the IT infrastructure will remain with the cloud service providers, the IT organization will need to understand and work with the latest technologies for service design and integration. Legacy IT systems and mainframes may not be as easy to interface into a cloud computing environment.
Reduces IT ownership Cloud computing reduces the need to own certain elements of IT including hardware, infrastructure and IT backend systems. These are more commonly provided by Infrastructure as a Service (IaaS) and PaaS cloud service providers. In moving to cloud computing under an OPEX model IT assets are no longer purchased by the organization. This means that IT investment costs can no longer be depreciated in the balance sheet. This is likely to cause some financial officers concerns.


To better understand how to adapt ITIL for cloud computing, read this white paper “IT Service Management and Cloud Computing”. This paper sets out to describe at a high level what cloud computing is, how cloud computing is a disruptive innovation and what this means to IT organizations across the globe. Under examination will be the effect of cloud computing on existing IT management practices, including IT service management (ITSM) and ITIL best practices.

The Professional Cloud Service Manager course, accredited by the Cloud Credential Council, is available at ITpreneurs. View the full portfolio of Professional Cloud certification trainings.

Need more information? Please contact ITpreneurs.

About the author

Mark O’Loughlin
CEO and Founder of Red Circle Strategies, Managing Director CCC, Author, Keynote, Digital Strategist & Transformer

Mark O’Loughlin is a business owner, senior executive, Director, consultant and strategist helping organizations to improve their business development, sales, marketing, service delivery, and customer services.

Mark is recognized as a global thought leader in digital IT, cloud computing, DevOps, cloud service management and IT Service Management, providing consulting services to global clients.

Mark is the author of two books, is published in four languages and is a keynote speaker and educator. Has extensive experience in outsourcing, business transformation, driving business change, IP development and digital enablement. Mark is one of only eighty-five ITIL Masters globally.

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