Outsourcing: The Fastest-growing Piece in the Cloud

One widespread thought about cloud computing, to use the electricity analogy, is that it is as simple as flipping a switch.

That perspective, unfortunately, ignores the fact that enterprises require more than just raw power. While the cloud is certainly simplifying some aspects of IT, it is also forcing CIOs to manage a more complex, hybrid environment that includes externally provided cloud services along with their own IT services and older legacy applications.

Given the ongoing challenges companies face with cloud services―mainly security, data integrity, system and service interoperability, and service availability issues―the role of the value-added outsource provider, while it may change, is not about to go away any time soon. In fact, the ability to advise companies on the proper design of their business models based on multiple service providers, and to help them harness the potential innovations arising from the interaction of these providers, is likely to usher in a whole new era of outsourcing.

Ramping up the Need

Far from putting outsourcers and integrators out of business, these increased demands are likely to make the services of an integrator even more critical, inevitably creating somewhat of a shakeout within the outsourcing industry. Whereas integration was previously about getting multiple vendors, working across systems and functions to manage basic services in a common and consistent way, this is changing in an environment where companies are sourcing business and IT processes on the cloud.

The challenge is integrating data across multiple services and then understanding the end-to-end business process that is being serviced so that a company can be confident that its employees and customers will be properly served.

This requires specialized skills in service integration, as well as processes and tools that will automate and monitor IT to ensure coordination and oversight between outsourcers and internal IT functions. In short, it means not just integrating cloud services, but all the services IT provides to the business.

As companies increasingly rely on the cloud, the emergence of 3 classes of outsourcing services and providers is envisioned.

Utility Providers

The value proposition for these providers will focus primarily on efficiency and cost. The essential capabilities of a utility cloud service provider will be driven by the needs of a CIO whose overriding concern is having an IT service up and running when required. Downtime, after all, translates into lost productivity, missed sales opportunities, and poor customer service.

Business Function Providers

These are niche providers with deep expertise in a particular function, such as sales, HR or customer support. The value proposition here will be to make sure a company gets a business function that is properly configured to its needs. As a means to this end, the provider will design applications and services, at scale, that are readily and securely configurable to a client's specific environment―needs and business goals.

Orchestrators

These providers will help companies become 'cloud enterprises', or organizations that are more dexterous and agile because they can adapt their business design on the fly. This outsourcer will be more than a pure consultant, but rather a trusted broker with deep operational experience across all major business processes and technology solutions. Aided by the other categories of outsourcers, they will work with clients to harmonize the pieces while taking a holistic view of IT and business services across the enterprise.

While the future of life in the cloud remains unclear, it is indisputable that the rules of the game have and will continue to change-and organizations will live in a hybrid of IT and legacy for the foreseeable future. Companies that intend to be successful in this environment will need to start changing the way they manage their IT and business operations. They will be forced to carefully assess the risks involved with deploying new technologies, and understand at an ever more granular level the capabilities of their outsource providers.

Most importantly, they will need to learn what it means to operate in a multi-sourced environment, one where the integration of the different components promises to take on greater importance than it ever did before.

(The article was first published in DQ)

JACK SEPPLE and

BHASKAR GHOSH

The authors are global cloud computing lead

and global lead of Application outsourcing,

respectively, with Accenture

vadmail@cybermedia.co.in