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Outsourcing 3.0 coming in 2015

Chris Morris | Sept. 27, 2012
The CIO's role will evolve into a broker of services come 2015, when 'cloud-sourcing' becomes as common as deploying internal IT services across all departments.

IDC's Chris Morris
Photo: Chris Morris is Associate Vice President for Cloud Services and Computing, IDC Asia/Pacific.

Comparison of the cloud services market in 2012 with that of 2011 makes it clear that the last 12 months has seen an important change in the way cloud services are being adopted. A year ago, "The Cloud" was seen as a very useful way to cost-effectively replace aging, or to augment existing, IT infrastructure. But in 2012, "The Cloud", has taken on an additional function as a marketplace for the sourcing of enterprise IT and business services by both information technology (IT) and LOB managers. And as this change occurs, "The Cloud" is no longer seen as a singular entity but as a collection of function-specific mini-clouds which must be holistically managed.

The continuing evolution of both cloud services and the regional CIO's understanding of the benefits and use have pushed cloud computing well into the mainstream. As we move into 2013, IDC expects this evolution to continue as users start to further test the capabilities of the available services. The scenario will evolve further, and by 2015, cloud services will become an everyday sourcing option for the CIO, forcing change from both the vendors and the users of cloud services and technologies.

By then, cloud-based services will be available to meet every business requirement. This is certainly the scenario for small- and medium-sized enterprises (SMEs), whose CIOs will deploy cloud services to maximise business agility. "The Cloud" as a marketing label will cease to exist, as the evolution of cloud services will permeate the sourcing strategies of the CIO and business unit managers alike. The use of externally sourced business and IT services from "The Cloud" will form the basis of the "Outsourcing 3.0" period and will provide an extensive portfolio of services from which innovative solutions can be constructed.

With Outsourcing 3.0, "The Cloud" will morph into a universal service catalogue of individual cloud services that will replace both traditional IT outsourcing (ITO), business process outsourcing (BPO) engagements and on-premises infrastructure.

Table for Outsourcing 3.0
Table: Outsourcing 3.0.

Where on-premises infrastructure must be retained, the underlying cloud technologies such as virtualisation, automation, self-service portals, and granular charge-back mechanisms will become 'business as usual' for any IT infrastructure for on-premises deployment. However, CIOs will also face management challenges associated with a hybrid cloud, such as delivery of a service that spans a number of providers within the entire service delivery chain.

If we consider the public cloud in 2015 as Outsourcing 3.0, it will come with the same sort of advantages and disadvantages that earlier incarnations of the outsourcing model brought. For example, as the cloud market is still new, with many vendors entering and exiting the market, IDC is of the view that about 30 percent of vendors currently in the cloud market will be out of business in 2015. Thus it is imperative for CIOs to be prudent when selecting a cloud service provider; few of our regional cloud end-user survey respondents have indicated that they will use cloud services on only a short-term basis. Examining the full ecosystem supporting the cloud service then becomes part of the users' assessment process: Does the ecosystem have a broad or a narrow industry focus? Can it support my industry, apart from the service I am examining? Are there other alternatives in the ecosystem should my chosen provider fail or get acquired?


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