Is the journey to the Cloud really just another way to outsource?
I keep hearing people say that the cloud is just another road to outsourcing IT. Is it really? Whenever an executive wants to outsource IT, I immediately have to wonder what they are trying to achieve and then analyze if outsourcing will fix their problem.
I find that the following are all legitimate reasons to outsource IT:
- Cost Reduction
- Service Improvement
- Focus on Core Business
- Rapid access to cutting edge technologies and expertise
While many CIOs focus on cutting costs, I don’t think there are many IT shops left who are bloated enough to actually realize a cost reduction. It may look good enough up front to make the IT leader a star in the eyes of other executives, but the actual ROI probably looks much different as the organization pays for every drink they take off the IT outsourcing Kool-Aid cart.
What outsourcing will do is allow a professional services organization, whose core business is IT, to provide professionally managed services to your company. They will also be able to provide that level of service at a cheaper cost than your IT department can since they can leverage the investment in skills and tools across multiple customers – it is simply a factor of scale. The key is to realize that you may pay more, but you will receive a higher level of consistent service. Of course this will depend on the process maturity level of your IT organization.
What happens in many cases is that the business continues to cut investments in infrastructure and makes it all but impossible to achieve consistent levels of service. Many times IT funding is moved from infrastructure to fund development projects since the crumbling infrastructure is hidden until it all but implodes. The only way out of this cycle is strong IT leadership at the top, or outsourcing. Outsourcing is the easy way out and a good choice if it achieves the objective.
So how does cloud measure up to this?
Here are some legitimate reasons to move to the cloud:
- Cost reduction
- Service improvement
- Focus on core business
- Easy access from anywhere
- Rapid access to cutting edge technologies – especially affordable for SMB business sectors
- Pay by the drink – easy upscale and downscale of services (Flexibility)
As you can see, the two service models look very similar to each other and achieve many of the same objectives.
But my argument is NOT that the cloud is another way to outsource, but that cloud is another way to reduce costs, improve service levels, focus on core business, and to provide access from anywhere to cutting edge solutions for both enterprise and SMB business sectors. Outsourcing for the sake of outsourcing is a no-win proposition. The focus has to be on the business and/or financial objectives that are trying to be realized, followed up with feedback and metrics to measure how effective it was in achieving the objectives.
Business needs and objectives will drive the move to the cloud. The cost reduction will come from the reduction in IT support, infrastructure, and energy costs – not from a pure license comparison, which I continue to see IT departments do when comparing an on-premises solution to a cloud solution.
And how do private clouds fit into this? The end user of a private cloud should realize all the same benefits as mentioned above. In the case of the private cloud, the IT department has used readily available cloud technologies and tools to achieve the same goals as a public cloud in regards to improved service levels, rapid provisioning, and upscale/downscale capabilities.
Whether public or private clouds, the business user wins since the promise of the cloud is to move the spotlight from IT technology and infrastructure to focus on the end user and business objectives.