Technology outsourcers learn to ride the cloud

With cloud, potentially everyone and no one outsources IT.
Written by Joe McKendrick, Contributing Writer
The impact of cloud on the whole IT outsourcing landscape cannot be over-emphasized. The question is: what kind of impact are we talking about?
Photo: Joe McKendrick

On one hand, the wide availability of relatively cheap IT resources available via cloud and open APIs means everyone, to some degree, is now outsourcing some of their IT infrastructure. Even the mom-and-pop store at the corner may now be outsourcing IT. On the other hand, it also means that companies sign multi-million-dollar contracts with outside providers may be finding it easier, cheaper, and more within their control to simply cherry-pick the services they need or want from the cloud.

Forrester's William Martorelli and Wolfgang Benkel recently tackled this changing dynamic in a new outsourcing industry report, which suggests outsourcers are looking to leverage cloud and thus serve as expert go-betweens between enterprises and IT cloud resources, if not offering their own cloud services.

It's worth noting that it still takes a lot of infrastructure expertise -- server provisioning, monitoring, storage management, clustering, high availability, and scaling, just to name a few -- to run instances out in the cloud. Amazon Web Services takes away the hardware, but someone still needs to run it.

Forrester estimates the global infrastructure outsourcing opportunity is $187.5 billion worldwide -- so this is still a gigantic market. "Infrastructure outsourcing services remain critically important as enterprises prepare their infrastructure for the digital age," the report states. IBM scored well among vendors in the report, and is therefore underwriting its release to the public.

Outsourcing providers are beginning to emphasize qualities that include predictability through analytics, self-healing with autonomic computing and automation, and self-service with adaptation to cloud models and use of service "stores.

The report's authors point to growing requirements to integrate on-premises systems (which will be the bulk of enterprise applications for a long time to come) with new cloud resources. "Support for hybrid cloud computing tops the infrastructure outsourcing agenda," say Martorelli and Benkel. "A transition to a cloud-based outsourcing market is also clearly underway, although it's still in its early stages. One manifestation of this shift entails a move from conventional infrastructure delivery to a cloud-based approach."

Thus, IT outsourcers are evolving into IT service "brokers," they state. "Suppliers are moving to encompass both conventional infrastructure delivery and cloud-based delivery from a service management perspective. For example, suppliers are beginning to embrace cloud 'brokering; solutions."

Every major outsourcing provider has a different take on this new dynamic, of course. For example, Martorelli and Benkel state, "suppliers such as Accenture, CGI, Infosys, and T-Systems have all articulated aggressive visions for cloudbrokering, while other participating suppliers have not."

In addition, the report's authors continue, these broker-outsourcers also are beginning to look more alike. "A variety of factors, including the high flexibility and agility of cloud services, are contributing to far more standardization among all infrastructure services," they point out. "For example, Capgemini says that 90% of its infrastructure outsourcing solutions that sold in the past 12 months were based on 'standard' delivery component descriptions."

This is a good thing for IT customers, Martorelli and Benkel state. "Service standardization enables scalability, increases the level of automation, helps centralize service management with standard processes and tools," they observe. At the same time, it's likely a positive for IT outsourcers as well, as it "ultimately protects suppliers' investments in tools and processes and decreases suppliers' service management and delivery costs."

Of course, it's important to remember that IT outsourcers can, and do, avail themselves to back-end cloud services as well to beef up their operations and offerings.

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