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As part of IT outsourcing’s continuing metamorphosis, the number and range of specialist service providers to whom components of an organisation’s technology could be outsourced continues to grow, as are the delivery models through which they are being consumed.
Since it first came into the spotlight in the early 1990s, IT outsourcing has shape-shifted through the industrialisation of IT services, multisourcing and now cloud computing.
Peter Dixon, Dimension Data’s GM for Services Innovation, believes that cloud’s journey into the mainstream has been hastened by circumstance.
“The pace of cloud adoption is being fuelled in no small part by the lingering effects of the economic slump. With capex investments few and far between, utility computing and consumption-based models are words on everyone’s lips.
“Not only does cloud computing eliminate the need for CIOs to justify capital expenditure; it also eases the management burden associated with operating your own assets. This means that the efforts of scarce and expensive IT resources can be channelled into business-critical activities.”
That’s not to say that the focus on IT outsourcing and managed services is waning. Longer-term, asset-heavy IT outsourcing deals won’t disappear overnight. But the clock is ticking. Cloud computing maps almost perfectly to the challenges with which the majority of businesses are currently wrestling. As a result, its progress up the adoption curve has been far more rapid than is typically expected of new technologies.
Moving parts
While the advantages of cloud are well accepted, it’s not without its potential pitfalls. The prospect of paying only for the services users use, dialling consumption up and down as business needs dictate, and avoiding being locked into long term contracts may be appealing, but there are further considerations to bear in mind: governance, billing and chargeback, and the need to co-ordinate the activities and performance of multiple cloud providers.
No single cloud provider can deliver all the cloud services that a business may wish to procure; yet, the greater the number of cloud providers users deal with, the greater the potential risk and management burden.
“If you are buying cloud services from multiple cloud providers, who’s going to oversee all the moving parts? Each cloud vendor will have its own reporting and billing mechanisms, which will make obtaining an end-to-end view of service levels difficult and time-consuming,” says Dixon.
“Not only do you need to manage your new suite of cloud vendors, there’s also your existing, traditional IT outsourcing contracts and vendors to consider. Ensuring co-ordination and retaining control of this new ecosystem of sourcing models, technologies and providers is critical.
“Whatever combination of insourcing, outsourcing and cloud-based services an organisation opts for, someone has to ensure that the pieces are working together effectively to ensure business service levels are maintained.”
Help at hand
As part of their efforts to tap into the many benefits of cloud computing, organisations are giving thought to the value that their IT outsourcing partners can – or should – bring to bear. Dixon believes that organisations with established and mature IT outsourcing functions will make the change more swiftly.
“These businesses are comfortable and conversant with the concept of relinquishing a certain degree of control over their operations and assets and therefore may be quicker to adopt cloud services than those relatively new to outsourcing.
“They’ll also be more likely to have a long-term partnership in place with a provider with whom they can chart an actionable roadmap forward, especially if the provider itself has expertise in cloud services. Such a partner will already know the client’s technology environment intimately and understand its risks.
“As such, it can assess the organisation’s cloud readiness, plug any gaps and help make informed decisions regarding private versus public clouds. This takes away a significant burden on the internal IT team.”
Dixon explains that often Dimension Data’ advice to clients contemplating the right path to the cloud is to begin conservatively.
“There are a number of mature, very reliable public cloud services available: these can help you form the foundation for allowing your internal operating model to evolve to working with a third party. With this approach, it will be easier to transition more mission-critical applications out of a private cloud into the public cloud, without concerns that you are putting the business at risk.”
As they step ahead on their cloud journeys and gain in  confidence, businesses are looking for IT outsourcing partners that can themselves provide cloud services and / or have close partnerships with cloud vendors.
They’re also looking at IT outsourcing providers to extend their delivery models to include cloud services. Ultimately, businesses are looking to retain the traditional benefits associated with IT outsourcing (service level agreements, service management) while building in the flexibility and cost benefits associated with the cloud.
One approach is to assign a single provider as “cloud aggregator” – overseeing and co-ordinating the activities of various cloud providers as well as ensuring integration of cloud services providers into the existing outsourcing ecosystem within the organisation.
Increasingly, this function is being extended to that of “cloud broker” in which the provider takes responsibility for sourcing and managing the delivery of business applications and assumes responsibility for negotiating contracts with cloud providers on its client’s behalf.
Contract management is often a stumbling block for businesses testing the cloud computing waters. Here, a seasoned IT outsourcing partner can deliver value by negotiating and setting up contracts and ensuring that they align to the larger business requirements.
Cloud computing puts the focus on due diligence regarding the provider’s solution rather than the development of detailed contractual language. Undertaking these tasks in-house is time consuming and an experienced cloud broker will be better able to ensure the contract delivers maximum value for money, given their experience in contract negotiation.
IT outsourcing partners can also assist in-house IT teams to contain the risks associated with business units bypassing IT and independently procuring public cloud services.
Here, the role of the IT outsourcing provider is to put in place processes to monitor and manage the procurement of public cloud services while at the same time ensuring that business units have the tools and flexibility they need to take advantage of self-service models.
Cloud computing continues to gain momentum and its influence on outsourcing becomes ever-more material. Providers and buyers of outsourced services must continue to analyse the implications of cloud computing and the actions they need to take in a world in which cloud models and providers increasingly permeate all aspects of IT services development, delivery and management.
Dixon believes that in spite of the prevailing hype around cloud computing, it is in fact a step in the natural, ongoing evolution of the IT outsourcing discipline.
“Ultimately, cloud services will become commoditised to the extent that they’ll be just another part of the technology outsourcing ecosystem that must be deployed, supported and managed, albeit under alternative contractual and consumption constructs,” he says.
“Nevertheless, putting in place an actionable cloud roadmap and a having competent partner at your side will go a long way to putting your cloud journey on the fast track to success.”