It seems nearly every technology vendor is selling some sort of service "in the cloud"-the ubiquitous suffix has been attached to everything from critical systems like <a href="http://www.cio.com/article/679429/Microsoft_s_Cloud_ERP_Plans_Get_Mixed_Reactions">ERP</a> to mundane processes like printing. The latest pitch is for the cloud-based call center.
1. It’s insecure.
People are afraid of losing control,” says Leandro Balbinot, CIO of Brazilian retailer Lojas Renner. But “just because your data is somewhere else, doesn’t mean it’s less—or more—secure,” says Accenture CIO Frank Modruson. Test, monitor and review. That’s the only way to mitigate risk in or out of the cloud.
If at first you don't succeed with outsourcing, should you try again with a new provider? Many IT leaders are doing just that.
Frank Modruson has a thing for better, faster, cheaper. As CIO of business and IT service provider Accenture, that's what he wants to deliver to his internal customers and what they in turn promise to their clients. "I'm a big believer in technology and a big believer that technology helps the business in a lot of ways," Modruson says. "But it needs to be better, faster or cheaper. If you hit all three, it starts to get very compelling."
Ask CIOs what their biggest professional frustration is and the answer might surprise you, says former CIO Mark Hall. It's not rogue systems, shrinking budgets or network outages, says the now CEO of xPeerient, provider of an online community for CIOs.
"The repeated issue every year - what keeps CIOs up at night - is the sales and marketing practices of technology vendors. It's a cat and mouse game. It's not efficient for buyers; it's not efficient for sellers. The whole relationship is problematic."
Looking back on the last twelve months, most outsourcing analysts agree that the level of IT services deals sealed has held relatively steady, year-over-year. The total value of outsourcing contracts signed in 2010 was $62.4 billion, according to outsourcing consultancy TPI, a figure that's pretty consistent with their last five years of total contract value data. The number of IT services deals inked in 2010 grew by six per cent, according to outsourcing consultancy Everest, noting that eight of them were so-called mega-deals of $1 billion or more. About half of IT service providers polled by outsourcing consultancy EquaTerra reported growth in their business pipeline, despite expectations for a much stronger year-end close. Deal flow was uneven in the fourth quarter, EquaTerra reported, and subject to delays.
What happens if the country you outsource to suddenly goes dark? Early adopters of Egyptian IT and business process services are finding out today. Egypt's government reportedly blocked all Internet and cell phone service overnight Thursday as anti-government protests continued in the North African nation.
For nearly a decade, China has been touted as the biggest threat India's supremacy in offshore outsourcing, and its central government has been funnelling money into developing the country's growing IT outsourcing (ITO) industry.
But beyond the obvious similarities (they're both big-really, really big-and cheap in comparison to their Western counterparts), there remain major differences in the two mega-markets for offshore IT services, from language and management skills to industry focus to supplier and customer bases. We checked in to find out how the two countries compare today.
Competitive costs, robust government support, the largest labor market in the world. It's no wonder that for the past decade China has been deemed the biggest--and only--threat to India's dominance in the IT offshore outsourcing industry. In recent years, all the big names in IT outsourcing--from IBM, HP and Accenture to Wipro, TCS, and Infosys--have set up shop there.
Gartner research vice president Frances Karamouzis calls China "one of the most analyzed alternatives to India." Ovum principal analyst Jens Butler describes it as "a two horse race to the finish."
HP has revealed further details of its previously announced $1 billion investment in offshore outsourcing, selecting six countries - Bulgaria, China, Costa Rica, India, Malaysia and the Philippines - as its global delivery hubs.
Those six spots are "best for our clients and best for where our markets are headed," says Robb Rasmussen, VP and general manager, Best Shore, HP Enterprise Services. (Best Shore is what HP calls its global services delivery strategy within HP Enterprise Services.)
For outsourcing customers, benchmarking is billed as the great equaliser. Whether an IT leader is thinking about outsourcing, insourcing IT work performed by a external provider or renegotiating an existing contract, a third-party benchmark can provide pricing data that purports to put the buyer on a level playing field with the giants of the outsourcing industry. In fact, most outsourcing contracts contain a benchmarking clause that grants customers the right to benchmark their deals under certain conditions.
The drawback to third-party benchmarking is that it's expensive and time-consuming: It can take several months and cost some outsourcing customers hundreds of thousands or even millions of dollars.
<a href="http://www.cio.com/article/620914">HP's appointment of former SAP CEO Leo Apotheker</a> to replace <a href="http://advice.cio.com/thomas_wailgum/12454/oracles_new_co_president_the_hire_hurd_round_the_world?source=rss_Thomas_Wailgum-s_blog">Mark Hurd</a> has generated much discussion about the Palo Alto-based tech giant's future business focus. For HP's IT services customers (many of whom are legacy EDS clients), the question is what the arrival of Apotheker, whose résumé screams software--and a very specific brand of software to boot--means for its outsourcing business.
The traditional IT outsourcing industry will be dead in five years, A.T. Kearney's Arjun Sethi predicted in a recent interview with CIO.com. The culprit? Cloud computing services. Sethi's vision of the future of the IT services industry is quite clear, but he's unsure of the specific implications this industry transformation poses to traditional IT outsourcing customers.
Most outsourcing analysts and consultants will tell you that the future of the traditional IT services industry is uncertain.
IT departments continue to proceed with caution when it comes to cloud computing, according to the results of a recent survey conducted by TPI.