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Consumerisation, service and green issues will dominate outsourcing

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An increasingly mobile workforce, new requirements for access to services and environmental concerns will be among the key factors impacting enterprise outsourcing decisions in 2008. 

This is according to Joe Hogan, vice-president: Strategic Outsourcing Programs at Unisys, who predicts the following key developments for the coming year:
* Consumerisation of information technology will continue to have profound implications for enterprises’ IT services strategies;
* The outsourced utility model of IT infrastructure management will become more of a necessity;
* Environmentally conscious data centers based on “green” technology will proliferate across all industries;
* Access to intellectual capital and services expertise will intensify as an outsourcing requirement; and
* Modernisation of legacy applications will accelerate as pressures for both flexibility and cost containment increase.
“Cost savings, formerly the key factor in outsourcing decisions, will now be a given and not the sole driver, or in many cases even a primary one,” Hogan says.
"A profound transformation in how people work and do business is driving a new set of service requirements and imperatives. Accommodating these new user demands will be the main challenge for outsourcing providers in the coming year and beyond.”
In terms of consumerisation, new consumer technologies like the Apple iPhone continue coming on to the market at a rapid pace, and employees increasingly want to use them for business – especially in sales, customer service and other revenue-generating functions.
To meet this increasing demand and capitalize on business opportunities in 2008, Hogan says, companies will increasingly add support for consumer technologies into their IT outsourcing agreements. Many will even provide the devices or subsidize employee purchases. Hogan asserts that, in any case, they need to focus their technology support on revenue-touching employees, rather than those in the executive suite who have traditionally received priority support.
“Providing support for consumer technologies is an economic necessity for enterprises today,” he says.
A Unisys research study published in 2007 showed that the leaders in best practices for end-user IT support consistently focused on supporting employees in positions that affect revenue.
“Next-generation devices, which have a tremendous capacity to revolutionize productivity, should first go to employees whose jobs touch customers every day, and who require real-time information to capture those customers and keep them happy."
The utility model means that companies which previously hosted their own data centers – with management of those facilities provided by their outsourcing provider’s personnel – will come to rely more and more on off-site data centers owned and operated by their services provider.
 “It makes economic sense for enterprises to take advantage of their outsourcing partners’ increasing investments in lower cost service delivery, standardized systems serving multiple customers, and ‘green’ IT,” says Hogan. “This new paradigm can help forward-looking enterprises decrease their capital expenditures and reinvest the difference to drive innovation in their business.”
The move to green technology was kicked off earlier this year, when a report to Congress from the US Environmental Protection Agency stated that power consumption in U.S. data centers doubled between 2000 and 2006 – accounting for as much as 1,5% of total US electricity consumption – and could double again by 2011. If unchecked, this trend could lead to increased operational costs and even energy shortages.
To avoid the adverse impact of unchecked data center power usage, Hogan says, companies will push substantial investments in “green” IT in 2008. They will also demand that their outsourcing providers do the same – not only to conserve energy, but also to appease increasingly concerned shareholders and dramatically impact their bottom line.
According to Hogan, outsourced data centers will increasingly feature more efficient storage and better power facilities, servers using multi-core processors and use of virtualisation. The last two steps can reduce the number of systems requiring separate power supplies while making operations more efficient by dividing tasks among and within multiple processors in each server computer.
Meanwhile, technology consumerisation and modernisation are driving the need for a broad range of innovative services for end-user support and application renovation. Enterprise IT organizations often don’t have the internal resources to deliver those services efficiently. Yet clearly they’re seeking help. In a 2007 Unisys survey of IT decision makers worldwide, 20% of respondents said they plan to increase use of outsourcing over the next two years.
“IT organisations will be increasingly hard-pressed to follow and address the dramatic change in work styles and the continuing waves of emerging technology we’ll continue to see in 2008 and beyond,” Hogan says. “They will need to leverage the intellectual capital provided by sourcing partners who have developed innovative global best practices for addressing evolving services challenges.”
Application modernisation will happen as companies transition their data centers from in-house facilities to those owned and managed by external providers, it will make sense for them also to take advantage of the providers’ skilled personnel. A key skill is the capability to transform existing application environments through implementation of service oriented architecture (SOA).
Strategic legacy applications often represent a multimillion-dollar investment for the enterprise, so modernization must be handled carefully to preserve continuity while outfitting the applications for continued long-term use.
"SOA offers a way to modernize applications more effectively, while making an organization more flexible and responsive,” Hogan says. “Given the potential benefits, we believe more organizations will choose outsourcing providers who can offer this kind of modernization capability along with infrastructure management and data center services.”
Hogan notes that the Unisys 3D Blueprinting methodology provides a roadmap for application modernization in an outsourced environment. The 3D Blueprinting methodology makes visible the relationships between the business and the technology that supports it, revealing the connections among business strategy, business processes, applications and IT infrastructure. The Unisys approach helps clients see ahead of decision points, understand cause and effect and minimise risk.