Cloud: Competitor or opportunity for the outsourcing business? (Part 2)

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Click here to read Part One of this series. 

What do you tell customers who want the benefits of a cloud environment as well as the operations, management and governance that traditional outsourcing offers? In part 1 of this two-part blog post, we talked about the outsourcing of IT and how cloud is a recent game-changer in this realm. Here we’ll look at the choice between outsourcing IT or using a cloud service provider and consider how these approaches may be combined.

How does this all fit together?

If your option is to either consume IT services from an outsourcer or from a cloud provider, does it really matter to you how the solution is managed or what the technology behind it is, as long as you get the services you have signed up for?

  • Are you looking for simply a pay-as-you-go consumption model where you are charged for the IT resources you consume? Are you looking for a flexible consumption model where you are not tied in on a long-term contract? In that case, the cloud might be what you are looking for. Popular cloud providers today are providing a public cloud service where you pay for a nonmanaged solution above the hypervisor. That leaves you with the challenge of managing the solution with your current IT staff. This is particularly true in the infrastructure as a service (IaaS) and platform as a service (PaaS) spaces but also to a certain extent in the software as a service (SaaS) space where you are getting a standardized service that you need to integrate with the rest of your IT.
  • Are you looking for a fully managed IT infrastructure with a predictable cost, where someone else does all the management for you? This is the case where traditional outsourcing excels. However, this comes with a drawback: you often have to commit to a long-term contract, and the prices are not very flexible if your consumption of IT changes. Sure, an increase in consumption is easily handled, but a reduction in consumption—not so much. This is where the cloud might come in as a possible solution.

Incidentally, I was told by a customer one time, “We do not care where you operate our solutions, as long as it is cheaper and has the same service level agreements (SLAs) as today.” This customer has understood the possibilities of the cloud in looking at it as a service and not as a set of servers or applications that are located in a given location.

Cloud as an element in outsourcing

What if you could get the best of both worlds?

  • A flexible pricing model that can flex both up and down
  • Effective and solid governance and managed security

In a cloud scenario, what you can obtain from a services perspective is, in most cases, IaaS, PaaS, SaaS or derivatives thereof. Some providers also provide managed services such as a managed IaaS or PaaS service. This is not necessarily the same as an outsourced IT model, however, and there are certainly gaps that need to be filled. This is where I think traditional outsourcers have a very important role to play in the larger picture, providing over-the-top services to the enterprise cloud consumers.

If an outsourcing organization would provide the solution from a cloud infrastructure, the customers could reap the benefits of the cloud such as the elasticity and pricing models while at the same time achieving the goal of having solid governance, architecture and processes. Ultimately, the client of such an organization could conceivably buy all their IT needs as managed cloud services from the outsourcer. This would give them the best of both worlds.

Does such a service exist, or is it currently a utopia?

Yes, such services exist in the market today, and a lot of companies provide them. Both traditional outsourcers and new companies provide the over-the-top services. IBM is one of the companies that is in this marketplace with a comprehensive set of offerings. Some examples of these offerings are:

  • IBM SmartCloud Enterprise+: A fully managed IaaS and PaaS with flexibility relating to both the sizing and the SLAs provided.
  • IBM SmartCloud for SAP: A fully managed SAP environment that is hosted on the IBM SmartCloud Enterprise+ environment.
  • IBM SmartCloud Managed Backup: A managed backup solution that provides a flexible price structure while delivering on a set of SLAs.
  • IBM SmartCloud for Social Business: The IBM social collaboration suite is available as a SaaS offering. It covers elements like email, virtual meeting rooms and a social platform for the enterprise and other capabilities.

All of these can and should be used as elements in an outsourcing play, and they can help the customer reap the benefits of both worlds—the capabilities of the cloud paired with IBM’s unparalleled experience in managing operations in complex enterprise environments.

What do you think about how cloud relates to the outsourcing business? Share your thoughts below.

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