Partying with the Cloud

As the hype and confusion over co-mingled public and private cloud starts to dissipate, more CIOs are joining the cloud computing party.

 

This will have an impact on the IT outsourcing service providers, who will see their business models and customer value propositions disrupted. Service providers in the IT outsourcing space have, after all, profited significantly by taking on their customers' highly complex, one-off collections of IT assets and finding ways to manage them more efficiently than their customers can. But the essence of cloud computing is a move towards highly standardized racks of commodity servers and a software environment that together make for a highly efficient use of resources. Cloud computing, when done right, has the potential to actually replace, and not just augment, legacy environments while adding value by reducing costs and increasing agility.

State of Data Center Management

PwC surveyed 489 business executives to understand the real state of data center management today, how fast business executives expect to move to cloud infrastructures in the future and who they will turn to-traditional IT outsourcing providers, new cloud-oriented providers, or internal staff-to make the shift. Individual interviews with vendors offering traditional IT outsourcing and new cloud based offerings, including infrastructure-as-a-service (IaaS), complemented the survey.

The PwC IT outsourcing and cloud computing survey suggested that many, if not most, functions of the traditional data center-internal or outsourced-will gradually migrate to the cloud. The survey revealed a growing interest among IT outsourcing customers and non-customers for infrastructure in the cloud, especially private cloud; and a slight preference for new cloud-focused service providers over traditional IT outsourcing vendors to manage the private clouds. As a result for the next several years, IT outsourcing providers will face the dual challenge of delivering traditional IT infrastructure services while trying to meet the growing demand from their own customers to migrate to cloud computing, including IaaS. IT outsourcing providers not ready or able to move with their customers could put the entire relationship at risk. This provides an opportunity for younger cloud based IT infrastructure providers to aim at the enterprise market for IaaS.

IaaS is indeed a boon for IT outsourcing customers who are thinking of moving workloads to the cloud because it gives them many of the same characteristics of IT outsourcing at a lower price and with greater flexibility. But the big question for IaaS providers is: Over the long haul, can they match the spending, innovation, and marketing one can expect from IT outsourcing providers, many of whom are already offering cloud services?

Migration to Cloud

The survey indicated that the migration to cloud will be gradual and the cloud will coexist with traditional infrastructure for a long time. In the near future, there is likely to be enough demand for both traditional IT outsourcing and cloud services to keep everyone busy.

 

Many IT outsourcing vendors are realizing this trend, and are also gearing up to play that role, specifically aiming to provide 3 vital cloud services-planning and workload assessment, migrating workloads to the cloud, and managing all the moving pieces.

Despite such efforts, the PwC survey suggested that in some cases IT outsourcing vendors may lack credibility as cloud experts. IT outsourcing executives recognize the problem, and are working to increase awareness of their cloud capabilities and are undertaking marketing efforts to re-brand themselves as both IT outsourcing and cloud providers. However, if IT outsourcing vendors over-emphasize the cloud they risk alienating existing customers who prefer traditional infrastructure. The challenge will be to maintain the right kind of balance between traditional IT outsourcing services and cloud services.

The Future

The overall picture that emerges is that the future holds tremendous opportunities and enormous challenges for the IT outsourcing vendors.

Established IT outsourcing vendors clearly have a role to play as enterprises move to the cloud. Evidently, there appears to be a new, cloud related business available to IT outsourcing providers if they can offer the right menu of services to customers who have previously shied away from them. Their ability to seize the opportunity and to offer credible private cloud services could, in fact, determine their ability to prosper in the future.

The results of the survey did not suggest a clear cut answer to the future of IT outsourcing in the cloud era. Though there is hardly a tsunami on the horizon that threatens the traditional data center, whether managed internally or by IT outsourcing vendors, indications are clear that the business executives know that cloud computing will soon be the single best approach. However the migration to the cloud would take some time. On the surface this may appear to be good news for IT outsourcing vendors, but only if those vendors are perceived as helping customers to reach the cloud.

(Article was first published in Globalservicesmedia.com)