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Outsource magazine: thought-leadership and outsourcing strategy | August 20, 2017

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Outsource – or cloudsource?

Outsource – or cloudsource?
Daniel Sasaki

There’s no question that cloud computing is here to stay. A recent infographic released by IT consulting firm Avanade shows that globally, 74 per cent of enterprises are using some form of cloud services – a 25 per cent growth since 2009. It is clear that the uptake of cloud computing is changing the IT outsourcing landscape, and one might wonder where the UK fares amidst these global statistics. A 2011 survey by VMware, a leading provider of cloud infrastructure, has found that the UK SME sector is in fact behind the rest of Europe when it comes to cloudsourcing, with 48 per cent of British SMEs adopting it compared to a European average of 60 per cent.

This is not the first time UK enterprises have been lagging behind the cloud curve: a survey by last year showed that 74 per cent of the smaller British companies didn’t use cloud computing and a worrying 43 per cent of those didn’t even know what the term meant. So what exactly is it, what are our concerns, and are these insurmountable?

In a nutshell, cloud computing is where shared resources, software, and information are provided to computers and other devices, typically over a network such as the internet. End users can access cloud-based applications through a myriad of web-based devices like mobile phones, desktops, or iPads, whilst the business software and data are stored on servers remotely. The easiest way to understand its potential is to think about being able to access IT and business services as easily as a homeowner accesses electricity – an analogy first explored by Nicholas Carr, the well-known American writer on technology, business, and culture and whose book, The Shallows: What the Internet Is Doing to Our Brains, was a finalist for the 2011 Pulitzer Prize. Over a period of 50 years companies moved from generating 90 per cent of their own electricity to consuming 90 per cent from public utilities, and this same shift is occurring in cloud computing today, only faster.

This is significant because it allows companies to concentrate on core systems and processes that support and grow their business and to spend less time and resources on building out an IT infrastructure. A 2011 Cloud Industry Forum survey shows that it is increased flexibility that is the primary driver for cloudsourcing in the UK. Smaller companies especially value flexibility as it enables them to compete in the wider market without investing heavily in in-house technical resources. Other benefits include improved efficiency and simplified IT operations, and most importantly it can be as much as 85 per cent less expensive than the costs of an IT outsourcer.

So what about the three quarters of British SMEs that still say cloudsourcing isn’t in their plans? Roadblocks include a lack of knowledge, data privacy, and a dependency on internet access. Probably the greatest concern is: data security. Research shows that not only is it a global worry, but that there are grounds for concern. Nearly a quarter of global companies report a security breach with a cloud service, and in fact, 20 per cent of business leaders have turned off cloudsourcing and moved back to traditional applications. However, that still leaves the majority very much in the cloud.

It’s pretty clear that cloudsourcing is here to stay – a study by IT advisory services provider EquaTerra predicts that it will dominate the IT outsourcing market this year. Although cloudsourcing isn’t for everyone, embracing it could allow companies to keep competitive. The bigger question is how companies should approach the market, as its fast-changing nature means it is essential that CIOs manage the inherent risks of moving to the new model?

Companies need not be afraid about entering the cloud because of security concerns if they follow a clear plan and implement proven methodologies and practices. Business objectives and a clear, user-centric cloud strategy must be defined to accommodate users’ needs as best as possible, and a migration roadmap should be identified to determine which applications are prime targets for moving to the cloud.

This strategy must be communicated throughout the organisation, and companies should have ongoing dialogue with users to educate them about the risks of using rogue cloud services. Companies should also revisit their cloud strategies often and adjust based on user and business needs.

A flexible and responsive IT service can increase the value of a business by improving efficiency and productivity and going forward increasingly cloudsourcing could be the key.

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