Cloud Computing: What It Means and How It Could Threaten the Traditional Outsourcing Model

by HSG on Apr 25, 2014 in Articles from Software Fans

Cloud computing is the recent rage in the IT industry. According to the report by Forbes, the estimated global market for cloud computing is expected to reach $35.6 billion in 2015, from the $12.1 billion market of 2010.

How it began

The idea of cloud computing was inspired by the concept of “utility computing” which introduced the idea of computing using the virtual servers. These virtual servers do not actually exist anywhere physically and can be moved anywhere without causing any disturbance to the end users. Thus it minimizes the cost involved on the devices to a great extent and provides innumerable benefits to the companies that adopt this system.

Cloud Computing Types

The varied models of deployment of cloud computing can be divided into four categories – Community Cloud, Public Cloud, Private Cloud as well as Hybrid Cloud.

Cloud computing vs. Traditional computing

·         Since cloud computing is by design web based, access to data is accomplished by any device on the web.  This makes data retrieval and storage  a lot simpler than trying to access that information from a PC, espcially one that is turned off or not online.  Moreover, the typical cloud computing environment offers unlimited storage;  it's nice to know that you can grow storage space when you need it.

Benefits of Cloud Computing

There are a lot of compelling reasons for moving onto cloud computing. This article details out the various business benefits of moving to cloud computing which includes reasons like cost benefits, scalability, higher speed, ease of upgrade etc.

However, it is to be noted that Cloud computing requires specialized skillsets to deploy. Thus, it is marginally difficult for enterprises to move to cloud on their own. This is where the role of companies that are specialized in cloud computing becomes important. Such companies could help the corporates move to cloud in an easy and seamless manner.

How Cloud Computing Is Changing IT As We Know It

·         It has brought a dramatic change in the IT infrastructure. Optimal utilization of resources is achieved.

·         applications and their respective architecture are undergoing an evolution on daily basis in the way that they store or retrieve data.

·         Data driven applications are becoming mainstream.

·         The volume of the data is reaching new levels:  petabytes and zetabytes.

·          With greater quantities of data being hosted on the cloud, there is an increased need for search optimization to avoid having the not so visible data producers from being lost in the cloud.

·         Disaster recovery has a new meaning in cloud computing that is different from traditional disaster recovery constructs.

Impact on IT Outsourcing

Reduced Need for Maintenance

IT Application/Infrastructure maintenance is a key reason why most corporations engage an IT outsourcing partner. Since, maintenance is generally a 24/7 operation it is always benefitial to outsource it to countries where the hourly rates are cheaper.

Cloud Computing is for the most part a web enabled service and most cloud software providers offer robust support/maintenance services which makes it easier to manage and maintain the IT application infrastructure. In such a scenario, the need for a dedicated maintenance outsourcing partner is drastically reduced

Reduced Need for Software Customization

One of the fundamental premises of Cloud Computing enabled services such as SaaS is that software’s are now much more standardized and these softwares do not allow for mass customization unlike traditional enterprise solutions as ERP softwares that required corporations to engage with an IT Outsourcing firm to customize the vendor provided software to their own needs. SaaS based solutions are much standardized thereby leaving little room to engage a third party IT partner to provide customization

Reduced Manpower Requirements

If there is one common theme that emerges from the increasing of Cloud Computing it is the fact that there is a huge decline in the need of manpower. Some of the earlier IT jobs have totally disappeared from the scene while some other new job skills are at the demand. This article on economic impact of cloud computing makes a good read in this regard. As cloud has become more dominating, the ‘Old IT’ has lost its charm and is experiencing a rapid decrease in revenue.

 

The IT industry is undergoing the biggest change ever before. Cloud computing is the trend that had caught up in the early 21st century and is literally ruling the world. It has paved the way to reduce the cost by reducing the resource consumption and lowering the energy bills. Like every coin has two sides, Cloud computing also has few drawbacks like security, reliability and privacy issues. But if used properly it will be the best asset to any organization. It is for sure going to evolve overcoming these pitfalls in the future and there will be no looking back. While the increasing adoption of cloud computing is a good sign in many ways, IT Outsourcing is bound to see a negative impact in terms of new contracts

The way forward for IT Outsourcing in the wake of Cloud Computing

Leading IT Outsourcing companies are already taking steps to embrace cloud computing by offering,

·         Companies such as Accenture are offering Cloud computing consulting services helping clients develop a cloud computing adoption and roadmap strategy

·         Companies like CSC are offering Cloud migration services to help clients migrate their existing solutions to cloud based servers

·         Leading outsourcing companies from India (e.g. Infosys) are offering Cloud ecosystem integration services to help clients make their traditional and cloud solutions work together seamlessly

Cloud computing has slowly become a force to be reckoned with, and has grown to become a strategic differentiator, which is an amazing leap from the earlier use of cloud computing for fulfilling just the technological needs.  So, IT Outsourcing companies will be foolish to not consider it a threat and take corrective measures.

Related:

5 Disruptive Technologies for the Enterprise: What are the Implications?

Key Considerations Before Adopting Cloud Technology in Your Organization

Will Microsoft Be Able To Slay Cloud Giants?

Who Are the Main Players in Big Data?

Is Cloud Computing Safe for Your Business?

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