Cloud Vs. On-Premise ITSM: Is there a Clear-Cut Winner?
June 24, 2015
Industry trends strongly suggest that hybrid ITSM solutions are the wave of the future in ITSM. So why have analysts at Gartner predicted that 30 percent of the companies that are currently using cloud-based ITSM tools will go back to premises-based solutions by 2014? When it comes to choosing an ITSM solution, is a cloud-based model inherently superior? Watch this webcast to find out!
Robin: Hi everyone, thanks for joining our webcast today my name is Robin Simpson and I'll be your moderator for today's live webcast in which we'll discuss hosted and on-premise deployment models for IT service management. Before we get started, I'd like to cover a couple of housekeeping items. This webcast is being recorded so your telephones are in listen-only mode. We encourage you to submit your questions at any time through the BrightTALK platform. After we hear from our speakers, we'll take as many questions as time allows. If you would like additional materials relating to this webcast please click on the attachments button at the top of your screen. There you'll find an analyst white paper as well as a case study and infographics for Total Wine & More.
Today's webcast features two speakers. First, you'll hear from Kevin Smith. Kevin is currently the general manager for the FrontRange Cloud Business Unit. In this role, Kevin has responsibilities for business oversight, TNL, product strategy and the full life cycle of customer success for the growing global Cloud business. Prior to this role, Kevin was VP of Products, overseeing product strategy, product and technology acquisitions, and product portfolio. Before FrontRange, Kevin spent 10 years with NASA at the Johnson Space Center and 10 years with Managistics as Director of Product Marketing and VP of Solutions Management.
Joining us today is Candice Peacock. Candice has 15 years of help desk experience and has worked for the last three years at Total Wine & More. There she is the IT Service Desk Manager. Candice has experience in managing customer service groups across the country and has streamlined her help desk processes a company such as NIH and the FDIC. During her time at Total Wine & More, Candice has been instrumental in developing the partnerships with IT and the rest of the business that have resulted in better communication and increased customer satisfaction. Thank you both for joining us today. Kevin, over to you.
Kevin: Thank you, Robin, and thanks to our listeners for joining us today. We have what we think is a fun topic and a topic that has had a lot of attention and discussion and that's regarding cloud and premise applications and what might be right for you. So, we're gonna take a little bit of a closer look at that and I would frame that as what is, I think, in fairness a great debate where clearly Cloud applications have had a big impact on our market over the last five or six years. We didn't even talk about Cloud in the context of IT and IT service management just a few years ago. But as always, new technologies and new models coming into our market is a good thing because it gives you choices. It gives you more flexibility and clearly, Cloud has delivered some exciting upside and a new model. A very new model from what we've been working with. If I characterize the history of help desk and service desk and service management having a lifetime of about 25 years, it's one of the biggest changes we've seen in the market during that quarter of a century.
Now, because this is a multi-faceted issue we're gonna peel it back a bit and explore a number of different considerations. But I can tell you right up front that no one model is right for everybody. And clearly, we've learned that over the last five or six years as we've gained more and more experience and delivering Cloud applications and on-premise applications to different types of organizations. The key is really and what we're gonna help you with today is understanding what's best for you. All companies are different. Although many companies in similar markets for example, in retail or Healthcare or government or education or manufacturing, have many common characteristics but we also understand that there are a few unique considerations for every company.
And so, what we've done to help you self-educate and what we've done to explore this topic a little more deeply is to create a quiz that we will go through together and of course in the interests of time we're gonna keep this fairly high level. But we have a quiz we're gonna take you through in just a few minutes and we think you'll find it insightful and we think you'll find it healthy and doing some introspection and taking a look at your business.
But before we do that, I wanted to mention some of the things that have driven the growth of the cloud. One of the cool things about cloud is that it's brought a consumer-like interface to the business...to a business application because the genesis of the cloud was in applications like Yahoo and Google and Amazon and much much more and really shaped how we as individuals get information and learn and shop. We now get the benefit of that modern interface in business applications.
Another great thing about cloud is that the solution provider manages the application and the data for you. We deliver a data center. A data center is managed on the customer's behalf and so the responsibility for that application and for the data is taken on by the vendor. And that is something that for many organizations in itself represents a lot of value. It also makes it easier to get to these applications. Really all you need is you can, from a smartphone or from a tablet or from an iPad or any device, you just need a browser. You can log into your application and you're good to go. That is a simpler, faster, lighter weight model than what we've been accustomed to in IT and managing many, for example, heavier complex applications. This is a very different model. It is easy to deploy. It's one of the great things about cloud is because the data and application are managed by the vendor, it allows the customer, it allows you, it allows the business to focus on the business itself and deployment can often be accelerated in the early phases of the project. And what we've seen is we can bring that application to the business more quickly than we have been able to in a traditional model.
And yet another cool thing about cloud, and I did limit it to just five things here because we're gonna explore cloud in more detail in just a minute, is it does reduce your early year cost and clearly in year one, you're gonna save some money. You're gonna save some money because the subscription cost of cloud is gonna be lower than the cost of a perpetual license. It is likely you're gonna be able to save some money on infrastructure. It is likely that your phase one deployment can go a little more quickly. Although, I would say our experience has shown us in working with many many clients that overall the services investment between cloud and premise are gonna be about the same. Phase One for cloud can often go a little more quickly because we are not as concerned with database configuration or application configuration or infrastructure configuration. That is offloaded from the business as a natural benefit of the cloud model. So, yeah, you're gonna save money in year one. I think it's fair to say.
So, now let's...without further delay, let's go right into the quiz. And again, we tried to structure this in such a way that you can self-diagnose your business, some key characteristics of your business. And it will help you determine that in your case would you be a better fit likely for cloud or for on-premise? Again, because some of you might discover that, in fact, "Hey for me, on-premise may make more sense." But because we didn't want to wave our hands and treat that at a high anecdotal level we're gonna give you a little bit of detail in how to explore that further. So, I'm gonna frame some questions and we're gonna talk about the elements of these questions from the perspective of which considerations would likely indicate that you're a better fit for cloud or would likely indicate that you're a better fit for on-premise. Now, because this is a high-level discussion and we're working within the limits of today's time that we scheduled with you, we're gonna keep this at a medium level of detail. But what I think you'll find is as we go through to these questions it's likely again it may not work out quite this way for you, but it's likely that the majority of these questions would indicate that your business is a better candidate for cloud or a better candidate for on-premise.
So, with that let's get started. Question number one. Do you tend to focus as an organization do you tend to focus on year one cost when you make a decision about deploying an application? Or do you focus on a long term TCO?
Now, some of you may be thinking, "Well, actually we like to think about both." Well, that's great and that's natural. But in the end, when you're gonna make a decision which one of these is gonna carry more weight. Because the simple fact is, let's look at cloud for a minute, year one costs are gonna be lower. Generally, for year one, those costs are gonna be 50% to 75% lower than they would be in deploying an on-premise application. And we won't go into all the reasons why but I can assure you this is a reasonable estimate based on many many projects that we've run and the feedback we've gotten from the market. You're gonna pay for an annual subscription cost. You're gonna pay some initial implementation costs. You're likely to have some savings on your infrastructure side and the net result is gonna be you're gonna save money in year one. And for many companies, that's enough to go with cloud.
On the other hand, if you really are focused on a longer-term TCO. Once you get to a total cost of ownership point of about three years could be three years, could be four years but longer-term the total cost of ownership is gonna begin to favor on-premise. Now I mentioned before that there can be some money saved on the infrastructure. You can divest the servers in many cases. You may have resources that you can focus on other activities. Over time, however, the consulting costs are gonna be similar. I mentioned that earlier in the call.
And realize that these are two fundamentally different models. With a cloud application, you're gonna pay an annual subscription cost. And with a on-premise application, you will purchase a perpetual license. The fundamental nature of those two investments is such that the annual subscription cost is gonna be less than what the purchase of that perpetual license is. You're also gonna be leveraging OPEX versus CAPEX, which is another consideration that can be factored into the decision. So, that's question number one. How do you really drive the decision from a financial perspective? Is it focused on year one cost and you really want to save money there? Are you really focused on that three, four, five-year total cost of ownership?
Let's go to question number two. Question number two is what is the state of your IT resources? In many cases, IT is undergoing change and the health of your IT resources is going through an evolution. So, I'll look at premise first this time. So, with an on-premise application, you will require some IT support. The data and application are going to be local. That's a fundamental characteristic of on-premise. So, you're gonna manage your database locally. Your application is gonna be behind the firewall on your local infrastructure typically running on servers that support some number of users. You will need to plan for some local system administration support because you are managing the data and the application locally and because you'll be onboarding users and providing local expertise on the application. You'll need to plan for a local sysadmin. It could be a part of one person's time. It could be more than one person's time really depends on your business the complexity of your business and the number of users you have on the application.
You will also need to manage your upgrades and for many companies, they have a very good proven successful upgrade model but the upgrades are the responsibility of the business if you're running an on-premise model. On the cloud side, it will lower your requirements for IT services. Clearly, this is one of the original drivers of the cloud model is that the cloud could be brought into the business with significantly reduced dependency on IT support. IT is still gonna play a role, an important role in this process but that dependency is gonna be reduced.
The data and application are moved off site. The data and application will be available in the vendor's data center. These do tend to be very highly secure highly performing data centers well-proven data centers. We have a lot of experience running cloud data centers that has been developed over the last five, six, seven years. And generally, those data centers have been very, very effective. System admin needs are reduced. And so, if IT is being if the availability of it resources has been reduced, if IT support has been outsourced, if there are other considerations which would create a benefit to reducing the dependency on IT, that certainly can be provided through the cloud model.
Another benefit of cloud is that upgrades are managed by the vendor. Most cloud vendors will do upgrades two or three times a year, major upgrades two or three times a year, scheduled maintenance on a more regular basis. But generally, users would move then to the new version on a more frequent and regular basis because the upgrades...most of the heavy lifting around the upgrade process is being managed by the vendor. And when done correctly that does allow an organization to stay more current and utilize a more incremental model in moving forward through the upgrade schedule.
Again, your needs are different. Many of you will recognize that your business has unique considerations. But I will tell you that in the scheme of us looking at these considerations across this number of these six questions we're looking at today, upgrades is one thing that I would point to as an important consideration. And I would say be honest with yourselves about how well your organization does upgrades and what history you have with that. In some cases, you may do upgrades very, very effectively. You may have a very good history with upgrades and being successful. On the other hand, if upgrades have been problematic for you and it could be a benefit to offload that to the vendor in a cloud model, that is a consideration that you need to pay attention to.
Next question. Question number three. What is the nature of your system integrations? This is a point that is often overlooked but it is a key consideration because it represents significant risk and ensuring that you can be successful in deploying these applications into your business. Sometimes this is not thought about early but it will always come up and the sooner you address it the better you'll be in creating a good strong project plan.
So, in the case of cloud, cloud is at its best when there is a more limited number of integrations and we would typically see those integrations to be well defined, well understood and typically not changing at a high rate and in many cases a one-way push of data. Cloud will be at its best in this model. It does not mean this is an absolute and none of these questions are absolutes. They simply let us explore each of these considerations in a little more detail and start to reveal to you what might be the best fit for your business.
Now, on the on-premise side, we typically see companies that are successful with on-premise they have a larger number of integrations. These integrations tend to be changing. They tend to be more complex. They tend to be adding significant integrations that are planned on the business roadmap in the future. And in some cases, they are very dynamic. They may fire many times a day. They may be real time and they can be bi-directional, meaning that information is pushed into the application and information is pushed out of the application.
In this profile, larger number of integrations, highly dynamic bi-directional, highly complex that is gonna be a natural fit for on-premise. And again, in terms of cloud, if they are well understood and there are a fewer number and I would characterize it as a few integrations. Virtually every application and IT service management is going to have some number of integrations. It is one consideration and in looking at this I would suspect that you can identify which is a better description of how your business is going to operate. And again, just one more consideration. So, if you're keeping score we've now been through three questions and we'll continue to go on and look at a few more, but you might be starting to see a pattern develop here.
Question number four. Does your organization have any experience with cloud? Wow, you know everybody is in a different place. And in some cases, organizations do have other cloud applications in place and now I'm gonna start on the cloud side here. You have other cloud applications in place. The cloud model is very well understood and it's accepted. There's well-established management and executive support for cloud and you will not be educating your organization. I would say that in most cases, IT service management would not be the ideal first application, cloud application, or SAAS application to put into the business. And I'm gonna use those terms for the purposes of this call I'll use SAAS and cloud interchangeably. We know, of course, they're not exactly the same thing but for the purposes of this discussion, we'll use the two terms. That there is executive support for SAAS. Then that makes you a more likely candidate for bringing a SAAS application in for IT service management or for service desk.
Now on the other hand, in looking at the on-premise profile is if you have no cloud applications in place. If, for example, two common applications in the business that virtually every organization will have is CRM and ERP. If both of those applications are on-premise then cloud might be seen as new, it might be seen as a risk. There might be a great deal of education that's required and acceptance that's required and organizational alignment that is required. And honestly, cloud does create a cultural shift and that takes some time.
So, this is one element and what we've posed here with question number four that we encourage you to take a look at and it's basically around your cloud aptitude and your level of cloud acceptance. If it's high well, that will provide support for bringing cloud in for IT service management. If it's still relatively new, it may make more sense to deploy IT service management as an on-premise application. So, I hope that makes sense and I hope that helps further building out your profile.
Let's go to question number five. What is your history as an organization with application upgrades? And man, we get a lot of spirited discussion around this point when we're talking to clients. And that is normally there are very strong feelings around this, and normally people are highly polarized. In the case of on-premise, you would have a good history with upgrades. You'd have an established upgrade process that has been successful for you, that has worked for you in the past and you have done a number of upgrades in past years that were successful. You know how often you do them, you know how you do them and you know how you do training. And you have the right skills. One thing that drives that process is having the right skills in your organization available to drive that upgrade process.
On the other hand, now, let's look at cloud for a minute. In many cases organizations that go with cloud, one reason they're doing it is because they've had a really rough history with upgrades. They have not done them well. They have been burned by vendors. They really don't have an established upgrade process. They may not have those skills or those skills have departed the business and they're looking now for the vendor to manage those upgrades. And that's one thing that cloud brings to the table is the solution provider is going to manage those upgrades for you. They will again, do them two or three times a year. We do it three times a year. -bility of those upgrades coming. You know what's in the upgrade. You typically have early access to the upgrade through something like a staging environment.
So, again, we put it in the profile of questions today because it's an important consideration. It is going to come up at some time. So, best to just get ahead of that point and be ready for that discussion. And again, it's important that you're honest. You have organizational honesty, I would call it in looking hard at the truth of what your organization has done in the past and how your organization has performed.
All right. Question number six. I hope you're having fun in going through these. Question number six and again we could have 20 questions and in a more detailed discussion we would dig deeper but we picked these to get your wheels turning and your thoughts started. Rate your readiness and this is another very important one. Rate your readiness for out of the box. This is another point that creates lots of passionate discussion is, where are you in the evolution of your business and in your history with applications and being ready to accept out of the box?
And on the cloud side, and you potentially being a good fit for cloud. If your organization is ready to embrace standard applications and out-of-the-box processes. If your business is more standardized and you've developed a pretty good understanding of your business processes and you are confident in being able to describe that and configure the application to support it. Maybe you had a bad experience or more than one bad experience with custom applications.
I was with a large organization earlier this week and they were talking about how they currently have an application that they have highly customized over the last four or five years and it started to cause them a lot of pain. And now they're looking to cleanse themselves, cleanse the organization and go with more out-of-the-box because they've learned that that reduces their risk for upgrading in the future and it allows them to work more consistently across the organization. Now in consideration of premise, on-premise, it may be a very unique business model. Your organization may know that there are some very unique considerations and you may have been successful in having one more customized application. An application that needs to be more highly configured. You may have a business that is truly unique and you understand that uniqueness and you understand from the front line all the way to executive management that that uniqueness is a key to your success and there are some organizations like that. You just have to understand if you're one of 'em. And you do have an aptitude for sustaining customizations or sustaining a highly configured application. That's okay as long as you understand it, it's critical to your business and you have the skills and the commitment and the fortitude to sustain that.
So, those are our six questions. First six questions and let me explore a couple more to round out the profile. How are your users distributed? And I'm gonna to describe this as, in the cloud case, you may have users that are highly distributed, which creates a more complex upgrade process and you do have more reliable and high-speed web access. That goes along with a cloud model. Many companies have established this high-speed web access for other reasons but it is necessary because that's how you get to the cloud. That's how you get connected to the cloud and get access to your application.
In the case of on-premise, we do see more centralized user distribution and fewer locations. Upgrades are more localized which makes upgrades a little easier to execute. And you typically have high-quality infrastructure. High-quality servers that will accommodate the application. That is readily available. So, again I will repeat my public service announcement that these questions are not absolute but they will give you an indication of the profile for your business and for this one, highly distributed users is a natural fit for cloud. More centralized user communities is a natural fit for on-premise but is supported by high-quality infrastructure that's readily available.
And then question number eight. And I mentioned this at the beginning of the profile but CAPEX or OPEX, what's more, favorable in your business? And it may not be something that you're not thinking about naturally but I can assure you there are individuals in your organization, could be your CFO, could be your COO, could be the CIO. CAPEX and OPEX is an important consideration. So, what do you have more readily available access to? What is more favorable in your budget because the fact is cloud is gonna utilize OPEX. On-premise is gonna utilize CAPEX. And that in itself in some cases this can be one of the top factors in your decision.
It is a smaller impact to the budget in year one on the cloud side. Is a bigger investment on the on-premise side but you are purchasing a perpetual license and then you're gonna have the right to use with that license perpetually and you have a smaller recurring cost for example, for annual maintenance. And it is fundamentally a subscription model for cloud versus the purchase of a license on the other on-premise side.
So, to further extend that profile we really felt like those eight questions would give you a great indication. And what we see and having been through this with a number of customers is there is, of course, an expanded set of questions out there but in this case for the purposes of today's call to give you kind of a fast track to insight. What is likely is five or six or seven of those for you are gonna fall on the side of cloud or premise. And does that mean that you know the final answer, you know the right answer? Not necessarily but it would give you early indication, a directional indication of whether you are a better candidate for cloud, your organization's a better candidate for cloud, for IT service management or whether you are a better candidate for on-premise.
Now, of course, as you would go through next steps you'd have to dig a little more deeply, which would validate what you had a sense for as a directional fit today. So, I hope that helps. You can keep score at home or in your office and at least get you thinking about how you might approach this choice in a more systematic analytical way. So, now what I wanna do is I wanna turn it over to Candice Peacock with Total Wine & More, who's gonna tell you a very interesting story about a very interesting business. Candice?
Candice: Thanks, Kevin. Thanks for introducing me. Great presentation so far. So, welcome everybody. My name is Candice Peacock. Like they said earlier I do work for Total Wine & More as our IT service desk manager for the last three years. It's definitely been interesting. At first, I really didn't think a retail company that sold beer wine and spirits really needed a IT department but I was very wrong. Basically, a little bit about our company. So, when I started we were at roughly 80 stores. Now as of today, we're at 105. So, we've opened three more since I've actually finished this presentation. And by the end of the year, we'll be closer to 110 stores across the country. On average, we open 12 stores a year. Each store, of course, has multiple desktops located. They have their own server racks and all that kind of stuff. So, of course, they need a whole service desk. You know, our service desk is 10 people. We have a total of 25 now in our IT department but we grow very slowly. So, some of you support retail locations you probably understand what I mean. A lot of money goes into store growth and the customer care center and all the bells and whistles that go in the store and IT is usually a little bit less on the list to kind of upgrade the things that they have.
We're in Maryland, of course, all of our stores, we have stores all the way down the East Coast. We have stores in Washington State, in California and when we started here we had a very very old version of an on-prem solution and it was not scalable. It was very very basic. It had not even been upgraded for the last three years before I even got here.
So, needless to say, we were definitely looking for something new. Growing the way we've had and trying to get things together it was a big challenge for me and my team to be able to track trends and figure out what's happening and our infrastructure team had to do everything. Their project managers, their architects, their system admins. They're wearing like five hats, which is why our ticketing system had not been upgraded. So, some of our biggest business issues was that our solution was end of life. When it was time to actually upgrade and they said, "Okay, Candice you can have some money." It had been bought twice already and we'd have to start all the way from scratch. We didn't have any useful metrics. It was not integrated with any other actual piece of software or hardware that we had. So, everything was manual. Everything was difficult. Tickets could take over a week to actually get done and there was really no way for me to see was something still sitting there for a while? What's happening? Our stores had no insight into what was actually going on with their issues.
So, we actually asked ourselves all those questions that Kevin just asked you. We did that and more. We vetted, we figured out what we needed, what we wanted, what were some of the bells and whistles that were on our biggest wish list. And, you know, some of the main ones...our top three questions was number two, what's the state of our IT resources? You know, at the time we had maybe 15 people at our IT Department and we had one person, one guy out of everybody, who was actually in charge of our ticketing system. And he was the best there was on the team so then he got all the new projects. So, anytime we needed something done I had to wait and wait and I literally just gave myself rights so to try to figure out how to do what needed to be done and that didn't really help.
And number five was the history of our upgrades. One, we didn't have any for our ticketing system but we also have quite a few custom applications that we've built in-house as well as COPS products. And whenever it was anything time to be upgraded it was always a big mess. So, we didn't really have a really good set process procedures to upgrade the applications that we already had. So, going in and thinking of you can get a new application. Every upgrade took like three instances of hot fixes to actually be the way it needed to be.
And then number six was our out-of-the-box readiness. So, our solution is end of life. It doesn't really do what we need it to do. If it breaks we lose everything and there's nobody that supports it. So, we needed to get something right now which means I didn't really...I really couldn't wait for our infrastructure guy to be available to do things for us.
And when we actually started looking at applications and we didn't even think on cloud at first. We didn't even think about it. We didn't even entertain it until someone actually said, "You know what about cloud versions?" And our infrastructure team started jumping for joy. They were like, "You mean I don't have to do upgrades? You mean you'll do it for me? All we have to do is tell you what we need and then we can do it?" It definitely made sense for us. So, of course, we picked cloud and now we were able to...we all took, I took courses. We took Microsoft Framework courses. We actually were able to use that to partner with some of our other groups that we had never partnered with before on what we could actually utilize a cloud version of a ticketing system for. And not just for break fixes but we could put changes in here. We could actually put some metrics out, some charts. And we could really build our business IT side and not just store side.
So, of course, after implementing here are all the really great things we were able to do. You know I am not an infrastructure person. I manage the service desk. I like to call myself the pretty face on the box but I was able to actually pull this out in 30 days because it was cloud. And we didn't have to find the server, we didn't have to find the room, we didn't have to transfer anything over, we literally open the box and got to moving.
It had automatic workflows. We actually eliminated 500 of our backlog tickets day one. Actually throwing things in the system. And our old system actually misrouted tickets all the time, it was very manual. This cut it out 90%. We hardly ever have any misassigned tickets anymore and we were actually able to field 300 fewer calls the first quarter we threw it out there because our stores now had insight to what was happening. You know, every update we put there they were able to see.
And the most important thing was the reporting, you know, we were now able to show this is how many tickets we got, this is how much this store needs, this is why we need to upgrade. Because of this, I actually didn't put this on the slide but we were able to show how much we pay and how many tickets we get for printing issues. And we ended up changing all of the printers in the store to multi-function printers between printers and faxes. But we would have never been able to do that if we weren't able to get these things right now, out of the box, ready to go.
And it has opened the door for us to continue our partnership with our other groups where IT is sometimes disjointed with some of the other departments because they just throw things at you and we fix things and we just throw 'em right back. But now they see our system they see how much are stores love this system and we don't have to worry about upgrading. We've actually been upgraded like 3 times with no downtime for anyone. We don't even know it's happening if the system didn't tell us, "Oh, we're upgrading tonight." It is so wonderful to be able to come in and know, "Oh, we're getting ready to have the latest and greatest." It doesn't really matter. I don't have to wait for my team and when we have a issue we're able to call and say, "Hey, I'm having this issue. I need your help." "You've got it. I got it. I'll fix it for you." So, it's definitely saved us time and money at the IT department where now we're able to focus on all the other upgrades that we have had to put on the back burner because we had no way of doing that and this at the same time.
So, you know, for us it has been fantastic being able to pick the cloud version and we've actually had other talks with other groups who are looking at applications and they're all now because we have been able to successfully put this in minimal downtime and very quickly, they're now looking at cloud versions of other programs. So, it's definitely starting to change our business and how fast we can get things done and how more efficient we are. So, you know, we went through that same eight questions and even more, of course, as Kevin said you'll have a lot more and really think about the benefits and the pros and cons and money-wise and staffing and just the peace of mind to know that your system will work when you walk in. You're not gonna have to wake up at two in the morning when the alarms buzz. They're not gonna buzz for you. You're gonna wake up and it's gonna work. So, that's a little bit about our story. I can go in-depth for anyone if you want to contact me that's great but so far so good. So, back to you Kevin.
Kevin: Thank you, Candice. Yeah, I like that, "the pretty face on the box," is that what you said?
Candice: That is exactly what I am on the Wheaties box.
Kevin: Okay. So, yeah, thank you for that. It's just a...it's a great story. For you listeners, you probably find some of that in what's going on in your business and the great thing about what Candice shared is it's very real. They've been through this journey over the last year and hopefully, that will help you again better evaluate how you move forward and make good choices based on the experience of others.
So, just some comments on moving forward. What I wanted to share, I could also call this "Lessons Learned" and having worked with hundreds of customers and making this decision and undertaking this journey and seeing projects be successful and also honestly seeing a few projects struggle. One thing we've seen is what I would call five elements for your further consideration. Five recommendations.
One is the incremental approach is best. When you try to take this big bang approach it just creates a lot of risk. It puts a greater burden on the organization. It puts a greater burden on your team. And so what we've seen is small steps get some early successes, take a multi-phase approach. Define some objectives in your early phases that will allow you to be successful and then build on that success. Because the fact is and I don't wanna make it too technical but even if you choose a simple process like incident management. You're gonna learn a lot in just doing that. You may think you know everything about incident management but as we develop more best practices, as we all get more experience about how to manage incidents within IT service management you're going to take a slightly different view of how you do incident management or self-service.
Those are common processes that are a good place to start but again, I can't emphasize this enough is define a phase one that is achievable, that will let you build credibility and build support across your organization and don't take on too much in phase one. Multi-phase projects are good and it allows your organization to digest the project and it allows you to create the cultural alignment that you need.
I've already talked to the second thing, which is deliver early success. Early success can have a miraculous effect on the organization. And the fact is, that if you have an early failure even if it's with a limited scope, things are gonna change. You may not have a chance to implement the second phase. So, get that early success and then that will earn you the right to take the project forward. And what we've seen is the good news is, is that with some thoughtful planning you can define a phase one or a first step that puts you in a position to be very successful and to build some momentum.
And one of the elements we've seen in making that possible is invest in training. Don't wait until you're feeling pain and then wait until later to come back and try to invest in training is invest in training up front and it doesn't have to be a huge investment. This might be the smallest component of all the costs that you're looking at and implementing this solution for IT service management.
But early training with a few key people is really critical because it provides those people with additional understanding and additional skills and it is also great in that it catalyzes, it's a catalyst for that organizational alignment and that cultural change. So, training has many many many benefits and it's both training in the application. We're talking about IT service management. It's training in the application. It's also training in best practices. Whether that's Eiffel or Iso, or COBIT, or Sarbanes-Oxley, or whatever it may be, understanding the best practices can allow you to leverage out of the box. It can give you a good understanding of the business processes you'll be implementing.
Some of you may implement within IT service management. Your goal may be to just implement two or three processes. It could be incident management, problem management, and self-service. You may have a more ambitious goal to get to level two or level three which could include change management or release management. Or you may be looking to go to the highest level in the maturity model at level five, where you're implementing 10 processes for service management. Whatever the case may be, get a foundation of training.
I make the comment here that speed is not your friend. Speed is fun. Speed is thrilling. But this is not the time or place for speed. You do want to...I'm not saying go slow. I am saying be methodical and be thoughtful and go at a pace that your organization can accept and will allow you to achieve the success that we've talked about so much. So, said another way, do not set overly aggressive project milestones. Set achievable. You can't set overly conservative milestones either because none of us have that luxury. Wouldn't that be great? It's just not how...it's not how we live. But set achievable milestones that will then tie back to the incremental approach and delivering early success.
And then again to the greatest extent possible leverage out-of-the-box processes. Leverage the best practices because we have learned so much in the last five years about IT service management and we've come so far in the practice of it over the past 10 years which really gives us the benefit of the last 30 years of learning. Take advantage of that. Leverage out of the box because it will let you go faster it will increase your chance of success. The applications in the market today are much better than they were five, six, seven years ago. Take advantage of that. Many of you have been now, this'll be your second or third or fourth service management project or service management application. Take advantage of those learnings and just realize that the upgrade goes better, you move faster, training is more successful when you leverage established processes and established knowledge. So, I hope that helps and again gives you a bit of a cheat sheet for how you go forward.
And then my final thing is just around outlook, you know, cloud adoption... cloud is here to stay and cloud adoption is going to continue to grow. In the IT service management market today, we're probably running at about 15% maybe 20% adoption. We could argue those numbers but that's pretty close. It's gonna to continue to grow because of the benefits we talked about earlier. But make no mistake is on-premise is also here to stay. On-premise will continue to make sense for some companies. No one model is right for everybody and the key is in a systematic thoughtful analytical way determining for your organization, how it is going to be best to deploy an IT service management solution.
And what I think you'll see is cloud has been cool, cloud is exciting, cloud has dominated our conversation and our thinking, but I think you'll see on-premise experience a rebirth because it is again the best model for some companies. Organizations are more educated. We see that every day. Customers are smart. Customers are paying attention. Companies are adapting and organizations are more educated and are making better choices. And I think you know, the excitement and the fashion of new technology, hey, as IT organizations and as application teams we love to talk about technology. It's a lot of fun. We really enjoy talking about the new technology and cloud has been that for us over the last five years.
Common sense is gonna prevail and in the end, we really believe the market will find a balance. You could argue what that balance is but suffice to say that they'll be a balance between on-premise and cloud. Both models are here to stay. Both models are gonna be available to us 5 years, 10 years, 20 years from now. They'll both continue to get better. I think on-premise, in fact, will benefit from the cloud, for example, you know, web access is getting better mobile device access is getting better and I think frankly cloud is gonna benefit from on-premise. Those two models are gonna make each other better and what it does is it creates a brighter future for all organizations that need to bring to the people a great IT service management solution.
So, with that, we will open it up for questions. If any of you have questions we'd like to take those now. Robin, I don't know if we need to provide any guidance on how we do that for the listeners but we'd be happy to answer your questions now.
Robin: Yes, excuse me sorry about that. Yes, I did display a message. If you have questions for Kevin or Candice please submit them through the questions panel. We have a couple that have come in. So, Kevin here's one for you. So, how do implementation times compare for cloud versus on-premise applications? Is one faster and why?
Kevin: Yeah, that's a great question because implementation in consulting services is always going to be part of the project and I think what we've seen is I'll comment on this from two perspectives. One is overall they are similar and what I mean is overall over the course of let's say the first one to two years in what is likely to be a phase one and then some follow-up engagements, they're going to be very similar. Because ultimately what consulting and implementation's gonna be addressing is getting the application adapted to provide the right fit for your business and for your business processes. And expect that to be about the same.
Now having said that, we have seen that cloud can accelerate the first phases of deployment. Because what it does do is it allows the business to focus a little less on servers and databases and infrastructure because that's gonna be managed by the vendor and focus a little more on the business side and on configuring the application for business processes. So, that could potentially save you money in the first six months for example, on consulting and implementation. But it would not be fair to say that cloud is a silver bullet or is a magic tonic for implementation overall because in the first one to two years those costs are probably going to end up being very very similar. So, I hope that helps and I hope that answers the question.
Robin: Excellent. Another question came in and this one is for Candice. So, Candice, how do you use service management for other departments such as HR or finance for example?
Candice: Great question. We do use it for our finance department as well as our loss prevention department. So, basically, we have set up certain templates for them and workflows where if a store has an issue with a customer, gift card, or something wrong with their till they can actually use our system and it'll go straight to our accounting department to fix. And for loss prevention, we actually put in any slips and falls with customers. With all those, they use our system as well. We are actually working with HR now. HR's looking for their own HRIS system and we are integrating the two so that when new hires come on, you know, they can start the process and go straight through our system. So far it looks good. Right now, they just go straight through our system. With new hires, separations, accesses, things of that nature So, that's a few examples.
Kevin: Yeah, just a quick comment Robin and Candice is one thing that is interesting and I had this conversation with an organization this week on Tuesday is service management. IT service management has developed a lot of really really good processes for service delivery and that is starting to benefit other parts of the business. So, for example, HR offers services to the business and IT and IT service management can now help with that because we are in many cases leveraging the best practices and standards of the last few years. We can help HR. We can help facilities. We can help other parts of the business do a better job of delivering their service to the organization. So, great to see the IT team leading the charge in many cases for how we improve the quality of service.
Robin: Excellent. Thank you. So, I think we have time for one last question. And so, I believe this one's for you, Kevin. So, it says for upgrades, who normally conducts the user training and communications in a cloud solution? And where is the cost absorbed?
Kevin: So, yeah, for upgrades I think what can happen and Robin that was for cloud, correct? In the case of cloud?
Kevin: Yeah, so, what normally happens is is that normally in the upgrade process in a cloud model you'll have an additional environment outside your production environment outside your production tenet and the upgrade will be available early. So, if the production upgrade is occurring on a given date, normally the production upgrade or the upgrade itself will be available in a staging environment two to three weeks ahead of the production upgrade. Meaning that you'll have two or three weeks to do training and to make sure you understand what's coming in the upgrade. So, when the production version the production tenet gets uplifted you've already been working with the upgrade for a few weeks. We found that to be a very successful model and what that means is, is that a lot of the training can be done by your organization.
So, you are able to whether you have a couple super users or team leaders, they can work with the vendor to understand. There may be a readme file or an overview of the upgrade. You can go through that and then you can get into the staging environment for example or your training environment and do some testing and some evaluating of exactly what's gonna happen when the production upgrade goes live. That way you're prepared. You are in a position to help lead your organization forward to be ready for the upgrade and then when the production upgrade happens and these often happen on a Friday night or a Saturday, that when that happens that when your users come back to work or come back into the system on Monday, for example, you're ready for it. And you know exactly what has changed in the system and there is a very very minimal disruption and your team is able to work going forward and take full advantage of that upgrade. So, it is a little bit of a different model and it does happen more frequently. I mentioned earlier probably two to three times per year, you'll get these major production upgrades but you will be prepared because again you won't be surprised by the upgrade. You will have been working with it for a few weeks before the upgrade is delivered to your users.
Robin: Excellent. Thank you, Kevin. So, we're right at the top of the hour so, we're going to have to end. But I wanted to thank everyone for their time today and we encourage you to continue exploring whether cloud or on-premise ITS is right for you. So, you can do this by visiting frontrange.com and visiting our resources page, where you will find papers, demos, and videos on both. So, thank you, Kevin. Thank you, Candice, very much for your time. Thank you, everyone, for joining us today and enjoy the rest of your day.