A Cultural Shift: The Basics On Cloud And Outsourcing

As the cloud has evolved over the last several years, it is interesting to compare its evolution to that of outsourcing during the previous decade. Many companies, seeking to control expenses, sought options for traditional IT and business operations functions, such as systems development and contact/call/ fulfillment centers. They hired new management, created new processes, and conducted worldwide searches for the most cost effective strategies in an effort to protect margins and reinvest in transformational opportunities to preserve their place in a competitive and evolving market space.

Now consider this:  if we look closer at the outsourced services and consider that the call centers are generally the first point of contact for external customers (the most valued asset), and that software or intellectual property (what customers buy from companies), have also been outsourced, why is the paradigm shift to cloud and utility computing evolving ever so slowly? If a company’s code and customers are being touched by resources around the world in both developing and developed countries, why are so many executives concerned about where a server sits when it is the least vulnerable part of the ecosystem? I’m not suggesting that the execution and integration is simplistic, but what has been easy about doing business in the the last ten years?

With the explosion of new systems being deployed since the 2008 financial crisis, server sprawl is abundant. That’s great news for the hardware and software vendors, but a red flag for the CFO.  At some point the CFO and CIO will eventually merge into one position, the CBO – the Chief Business Officer.  The result will be a more scientific and objective analysis of IT spend.

For the IT department to survive, it must transform into a service broker model, tasked with deciding what has to be premise-based with the remainder of infrastructure/services going to the cloud or to an outsourcer.  This decision will be predicated on financials first and security second. Security is vital, but starting and ending the conversation on that point alone prevents the dialogue from ever broaching what is possible.

I believe the future will be the inevitable shift from a centralized IT model to a decentralized one where the P& L includes a more closely aligned IT spend away from spreadsheets and towards sophisticated software that measures IT value as a commodity, not a value add.

Cloud and hosting technologies continue to mature and provide solution options. Not  all infrastructure/systems are candidates for consideration, but one must prepare for the eventual conversation with the CFO and be able to address the five “whys.”

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