The advent of cloud computing has led to a number of new, innovative business models being introduced to the B2B integration sector. In earlier posts, I described the concept of Integration Platform as a Service or iPaaS. In this post, I will discuss the concept of a Cloud Service Brokerage. The term is widely misunderstood, but the concept is actually quite simple. I have found the best way to understand the value of a Cloud Service Brokerage is to discuss what life would be like without one.
Let’s suppose that you wanted to eliminate your behind the firewall applications and go all SaaS. Which applications might you choose? For Human Resources you might select Workday. For Finance and Accounting you might choose NetSuite complemented by specialized applications such as Concur for expense reporting. For Sales and Marketing you might choose Salesforce.com along with Hubspot. And for the Supply Chain you might choose Ariba.
While there may be a number of economic benefits to such an approach there would be a number of challenges as well. For example, each different cloud provider will provide separate bills, which will need to be audited and paid. While receiving multiple bills would undoubtedly be a nuisance it would not have much impact on the end users. But there are a number of challenges that would impact the customer experience. Most of these challenges arise from the fact that these various best-of-breed cloud applications do not talk to one another. Or, in other words, they are not integrated.
For example, each user that wanted to have access these cloud services would need to be provisioned separately on each application. Your IT organization, or more likely the end-user themselves, would need to establish an account within Salesforce.com, Hubspot, Netsuite, Concur, Ariba and Workday. Perhaps even more troublesome is that each user will need to remember passwords for each separate application. And when an employee left the company the IT group would need to deactivate the user’s account on each different application – both for security and billing reasons.
Another set of challenges relate to service level management. Each different cloud provider will offer different service levels for availability, performance and problem resolution. Furthermore, end-users will have to contact separate help desks for technical support.
Another challenge, which is arguably the most problematic, would be the lack of integration between the different applications. The various SaaS applications would not be able to share information with one another. This would create challenges with financial data, for example. Travel expenses reported in Concur would not be propagated to the general ledger within Netsuite. Payroll, benefits and other compensation information held in Workday would not be visible in NetSuite either. And purchases of indirect materials made from within Ariba would not be automatically transferred into NetSuite.
A Cloud Service Brokerage (CSB) would provide an elegant solution to all four problems outlined above. First, the CSB would offer centralized provisioning and a single-sign on mechanism for users. Centralized security and user management would eliminate the fragmented customer experience described above. Second, the CSB would offer consolidated billing on a monthly basis for the various SaaS subscriptions. Third, the CSB would offer a single point of contact for all technical support issues as well as a consistent SLA across the various applications. Finally, the CSB would provide integration between the different SaaS applications enabling sharing of transactional or master data.
The example above is a fictitious one. However, it does illustrate some of the challenges emerging from the broader adoption of SaaS and cloud technologies. And it highlights the value that a broker can play intermediating transactions between different cloud platforms.