The Cloud

Do CFOs Need a Service Provider for Service Providers?

It’s easy to sign up for cloud services. Managing and integrating them . . . not so much. Are cloud service brokers the answer?
Rob LivingstoneDecember 11, 2012

Starting your enterprise’s cloud journey is the easy part.  Implementing a stand-alone cloud application is relatively painless, and almost immediately yields significant cost and productivity benefits. 

Given that ease, and those benefits, CFOs may be reluctant to stand in the way of further cloud implementations, especially when they’re being driven by line-of-business executives or, indeed, an enthusiastic chief executive officer. As a consequence, your business may end up with a number of stand-alone cloud systems. And when the time comes to integrate those systems in order to streamline business processes, eliminate waste, or address data integrity and duplication, the easy part is over.  

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Then it’s time to say hello again to the pain of IT complexity.

The Pain of Complexity
Once systems demand to be integrated, the business can find itself having to manage an increasingly complex menagerie of technologies, applications, and processes over which it has varying degrees of visibility and control. This is even more apparent if the various parts of your business already have implemented their own cloud systems to meet their local needs. (Some call this the democratization of IT, and see it as an inarguable good. Others, going back to the Greek origin of the term, view it as the simple empowerment of citizens, as opposed to kings, and therefore value-neutral. In other words, it’s only good if it produces something good.)

As CFO, you don’t want to be caught between a rock (business leaders demanding productivity improvements) and a hard place (rising IT costs). When that happens, the promise of the cloud delivering IT simplicity with lower costs can disappear as quickly as the morning dew.

Once you’re wandering in the valley of IT complexity, you may meet a tall, dark stranger: the cloud services broker (CSB). For a nominal fee, the broker will manage your cloud ecosystem, essentially acting as an intermediary between your business and your cloud providers. Now that may sound good, but this arrangement results in yet another layer of abstraction, demanding another layer of provider due diligence. In essence, you’ve outsourced your cloud, which is already an outsourced utility.

What Is a CSB?
The U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) define a CSB as “[a]n entity that manages the use, performance, and delivery of cloud services, and negotiates relationships between Cloud Providers and Cloud Consumers.”  

The NIST breaks the service into three broad categories:

  • Service Intermediation, in which the broker provides some sort of value-added services to the cloud consumer.
  • Service Aggregation, where multiple cloud services are combined and integrated in a seamless manner from the perspective of the consumer.
  • Service Arbitrage, which leaves the broker free to select services from multiple agencies as it sees fit.

Remember when “disintermediation” was on every lip at the peak of the e-commerce hype cycle? For good or ill, common wisdom had it that the middleman would be removed from all transactions. The opposite occurs when you engage a CSB. Call it reintermediation. The CSB is the new middleman.

The Good, the Bad, the Ugly
CSB services can be of value if they function as part of a deliberate business strategy, and fit into a technically and commercially sensible cloud road map.  But CFOs can’t afford to find themselves backed into a blind alley of IT complexity, risk, and cost where the only solution is to hand their problem over to a CSB.  Decisions made under duress, especially when they relate to highly complex systems, add risk and make governance increasingly burdensome.

The time to explore the CSB relationship is before the clouds turn dark and things get ugly.

Rob Livingstone, a former CIO, is the author of Navigating Through the Cloud. He runs an IT advisory practice and is also a Fellow at the University of Technology Sydney (UTS), Australia, where he teaches strategy and innovation in UTS’s flagship MBITM program. Visit Rob at or e-mail him at [email protected].