Revisiting Outsourcing in the Cloud

by Pillsbury Global Sourcing Practice
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[author: Sean Williamson]

In April, we wrote about what we were seeing in the cloud space, including the impact of cloud computing on the CIO agenda. Since then, Savvis published an independent survey of 550 CIOs and Senior IT personnel from large global enterprises concerning their IT outsourcing strategies, including those around cloud computing. We decided to take a look at how some of our personal experiences with cloud computing compared with the survey's results. Spoiler alert: we weren't far off.

We've seen: Some amount of talk, but not a great deal of action.

Savvis Survey Says: The industry generally agrees.

CIOs are testing the water, but they're not quite ready to jump in. Even though 85% of respondents said they were using the cloud in some way within their organization, only 6% of respondents said the majority of their infrastructure is currently outsourced in the cloud.

Although we haven't seen a great deal of action yet, CIOs see opportunity in the longer term. 9% of respondents said the majority of their infrastructure will be outsourced in the cloud in 12 months. That number grows significantly as the timeframe increases to 15% in 2 years, 30% in 5 years, and 40% in 10 years. The survey also predicts that, in order to grow at these rates, outsourcing in the cloud will capture some of the market currently held by traditional outsourcing managed service providers.

We've seen: Some interest in internal cloud deployment, especially for test.

Savvis Survey Says: The industry generally agrees.

IT deployment has been a cloud focal point, as "most enterprises have either already begun moving IT applications and services into the cloud or are planning to do so." Test and development is one of the areas in which private cloud is most popular, particularly in the USA. Globally, test and development is lagging only behind back-up and disaster recovery in partial use adoption. However, organizations have strongly resisted adopting public cloud offerings for test and development.

We've seen: Concern over multi-tenancy security, privacy and compliance.

Savvis Survey Says: The industry generally agrees.

Multi-tenancy concerns still exist. Organizations are much more likely to implement private clouds over public clouds, and respondents identified concerns about security as the main impediments to cloud adoption.

Ok, so we all agree. What does this mean?

Things haven't changed much since our last forecast. The availability of new offerings such as Windows Server 2012, which advertises its cloud capabilities, various open source options, and a marketplace for unused Amazon Web Services Reserved Instances are all indications that the market is maturing, but there is still a general reluctance by CIOs to move large portions of their organization's infrastructure to the cloud.

Private clouds are currently the preferred choice of cloud adopters, but the choice for CIOs doesn't stop at public versus private. The pitfalls and shortcoming of cloud identified in our previous post still exist, and analysts have correctly noted that selecting the right private cloud can be difficult. Furthermore, in addition to finding an offering with the capabilities your organization needs, there are contracting issues that need to be considered. The bottom line is if you're thinking about moving to the cloud, which more people are every day, then you have a lot to think about.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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