In most cases, leveraging cloud delivery models, be it in application, infrastructure, or platforms, implies being served end-to-end by an external vendor unlike the typical “do-it-yourself” products. Therefore, in a way, the cloud is driving the IT consumption towards an “external vendor” model, which is also a type of outsourcing.
Most of the discussions around cloud’s impact on outsourcing services take a monolithic view of the industry. The focus is to take an extreme position, such as “outsourcing is dead”, or perform a very broad analysis based on the evolving role of CIOs, changing demand in enterprise IT, cloud eating into traditional sourcing, etc. This makes for good reading but is not necessarily a thoughtful analysis of the real impact. The need of the hour is to drill down into each type of global sourcing service and analyze the impact of cloud delivery models.
To analyze the impact of cloud delivery models on globally-sourced services, one needs to understand both of these in the right context. For IT outsourcing and the impact of cloud, there is a need to differentiate between the type of services delivered such as application development, application implementation, application maintenance, “keep the lights on” infrastructure services, service-level driven managed services, and transformational services. Cloud delivery models will have a spectrum and not a binary impact on this market. Different services, providers, business models, and investments will see different opportunities and challenges.
One major “non-technology” challenge from cloud models is the shifting of budgets from a typical IT department to businesses. Everest Group and Cloud Connect Enterprise Cloud Adoption Survey indicate an increasing role for business users in deciding IT spending. As outsourcing providers have access generally to IT and procurement departments, they will witness significant challenges to penetrate the business side of a buyer in accessing “business IT” budget. Moreover, enterprise IT shops that have so far not outsourced, may directly leverage a cloud service, reducing the potential role of an outsourcing provider. To pre-empt this, the provider may need to offer integrated cloud and outsourcing services.
The relevance of cloud models should also be seen from newer or existing investments the buyers make in enterprise IT. For transforming the existing investments (e.g., ERP, CRM, other business applications, and infrastructure) to the cloud, it is difficult to believe that typical global sourcing buyers will prefer any other vendor over the enterprise-class providers. For example, if they have to transform ERP platforms to a cloud infrastructure, they would generally prefer a renowned enterprise class ERP and cloud service provider over a pure-play cloud hosting provider.
Even though email, smart phones and iPads are great virtual communications devices, nothing beats the value you can gain from face-to-face time with your peers and other industry thought leaders. If you weren’t fortunate enough to attend the Cloud Connect conference in Chicago earlier this month, we’ve captured some of the highlights of and insights from the discussions during the Organizational Readiness track (which we were privileged to lead) for you:
Change management comes to the fore – executive sponsorship and early successes are keys success factors for driving cloud-enabled transformation. While “top-down” CIO-driven programs are helpful in shifting culture and mindset, “bottom-up” adoption and innovation is also required to demonstrate the value of cloud models to skeptics. In many cases, new cloud initiatives need to be incubated and protected from the enterprise to provide freedom for experimentation. This kernel of wisdom was a result of our very interactive session with Matt O’Keefe (Morningstar), Keith Shinn (Fidelity) and Dave Roberts (ServiceMesh) about the hard choices in enterprise cloud adoption. Watch Dave in this video for tips on ensuring a successful cloud deployment in.
“Shadow IT” isn’t a dirty phrase – corporate IT needs to focus its limited resources and time on the objectives and initiatives that are deemed to be highest priority. In many organizations this means focusing only on applications and infrastructure considered to be “mission-critical.” As an unfortunate result, many projects requested by the business fail to make the cut. Thus, it’s understandable if the business decides to “end-run” IT and go to the cloud. The cloud can give enterprises additional scale with limited IT budget and go deeper in the project stack. In fact, in many cases CIOs actually encourage their business counterparts to go to external cloud service providers. The key to success, however, according to Bates Turpen (formerly InterContinental Hotels Group) and David Falck (salesforce.com), is that IT leaders , help internal customers self-provision without losing control and help business users ask the “right” questions of potential cloud vendors.
Culture changes within IT – not only is cloud reshaping the relationship between business and IT, it’s also starting to restructure the IT organization itself. The dev ops revolution is shifting IT from a CIO-driven model to a developer-driven decision-making model around infrastructure. Developers are making their own frontline choices around platforms and service providers that are then being aggregated up by managers, a distinct break from legacy models where platforms and infrastructure are mandated by the CIO. Also, as user experience becomes an integral part of a product, CIOs need to encourage their developers to think like a user and empower them to build a product from beginning to end. Watch Lauren Cooney (Cisco) talk more about the dev ops movement.
Different clouds for different folks – common enterprise concerns around cloud continue to center around security, compliance, performance and vendor lock-in. We asked the experts on our “Current Thinking in Addressing Persistent Cloud Challenges” panel, Paul Burns (Neovise) and Troy Angrignon (Cloudscaling), how to best address these questions. Their answer was : “It depends” (which is a much better answer than the vendor community could deliver just a few years ago). Options across public and private, and enterprise virtualization and elastic infrastructure clouds, provide new answers to these issues for both legacy and new applications, but also must be carefully evaluated.
Adoption is about innovation – in conjunction with the Chicago conference, we conducted a joint survey with Cloud Connect on enterprise cloud adoption patterns. While most service providers think enterprises are migrating to the cloud for total cost of ownership (TCO) reasons, agility, innovation and flexibility are actually the drivers. Thus, there’s a glaringly apparent disconnect between vendors that are focused on selling next generation infrastructure to IT, and businesses that want cloud platforms to drive top line revenue. Download the complimentary survey results.
If you attended Cloud Connect, our readers would enjoy hearing what you took away from the conference sessions, as well as your concerns, issues and successes on cloud adoption within your enterprise, so feel free to share away!
Lauren Cooney, Senior Director, Software Market & Developer Strategy at Cisco, explains the new cloud computing world order. The consumerization of IT is changing the CIO’s perspectives, and user experience is ascending as a top priority. Lauren talks about empowering the developers and create a better product and better user experience.
Follow Lauren on Twitter @lcooney.
Lauren was a speaker in the New World Order: Your Dev Team Just Became the CIO session — part of the Organizational Readiness track at Cloud Connect Chicago, which Everest Group’s Scott Bils chaired. For more Organizational Readiness resources, visit www.everestgrp.com/ccevent.
Dave Roberts, SVP of Strategy and Evangelism at Service Mesh, talks about balancing an open and closed cloud infrastructure and provides tips on ensuring your cloud project succeed.
Follow Dave on Twitter @sandhillstrat.
Dave was a speaker in the Hard Choices in Enterprise Cloud Adoption session – part of the Organizational Readiness track at Cloud Connect Chicago, which Everest Group’s Scott Bils chaired. For more Organizational Readiness resources, visit www.everestgrp.com/ccevent.
We wrote in a blog last week about the top messages that emerged from the extensive enterprise cloud adoption survey we conducted earlier this year in partnership with Cloud Connect. To ensure we’ve “got the backs” of our readers who tend to be right-brained and thus more attuned to images and visual thinking, the following shows the key findings we reaped from the responses of the 346 buyers, providers and advisors who participated in the survey.
As you see:
- Cloud adoption is expanding beyond “low hanging fruit” like email and custom applications to include disaster recovery, storage and archiving, and business intelligence and analytics to support Big Data initiatives
- Buyers’ opinion of the Cloud is extremely positive, with highest satisfaction in ability to create flexible infrastructure, and they have exceptionally high expectations of future benefits
- Enterprises are increasingly viewing Cloud as an enabler of top line growth, i.e., to reduce time to market for applications, solutions and products, yet providers continue to sell with a cost reduction value proposition
To gain more insights on these and other key findings, you can download the survey summary report, and/or join me at the Cloud Connect Chicago conference on September 12, when I’ll be discussing the survey results in detail. Use code EVERESTGRP to receive 25% off conference passes or claim a free expo pass. For now, up and away on the Cloud!