Will cloud improve your relationship?

IBM cloud iconYour outsourcing relationship, that is. Will cloud strengthen the bonds with your current IT services provider or cause a big breakup?  These days, more and more outsourcing arrangements are being put to the test.

This IBM Center for Applied Insights study takes an inside look at how organizations are bringing cloud into their outsourced IT services mix.

A few years ago, cloud-based services made up just 10 percent of the typical outsourcing contract. By 2017, that figure is expected to grow to more than 50 percent[i]. Enterprises in outsourcing relationships are pursuing cloud for a whole host of reasons: lower costs, new business opportunities and greater flexibility, scalability and speed.

cloud4_600x456-smTo get the inside scoop on how organizations are bringing cloud into their outsourced IT services mix, the IBM Center for Applied Insights conducted a double-blind survey of CIOs and senior IT leaders who outsource some facet of their IT services via cloud. These leaders offered candid advice about the twists and turns you’ll likely encounter if you’re on the same journey.

Here are the top five things they said to expect:

A step-change in due diligence – When outsourcing traditional IT, companies had a clearly identifiable set of players to evaluate and a small cadre of internal stakeholders they needed to involve. There’s an exponential difference with cloud. The roster of cloud providers and point solutions is massive – and constantly expanding. And the nature of cloud engagements calls for involvement of far more internal stakeholders and closer collaboration with business leaders.

Extra scrutiny around security – Data residency will be top of mind. Where will data sit? How will it be managed and transmitted? How will you mitigate risk and meet geographic compliance requirements? You’ll need help from your provider to gain stakeholders’ confidence.

Stretching your provider relationship – Bringing cloud into the mix will likely alter the nature of your outsourcing relationship. Cloud contracts allow flexibility and change over time. Traditional outsourcing vocabulary like “steady state” is not particularly applicable in the fast-moving cloud world.

Getting everyone accustomed to cloud – Cloud-based services often require a different governance approach. Procurement and contracting processes may need to be altered. IT and business leaders need to be in sync on how solutions are selected and implemented. And once the business begins to see returns on their cloud investments, demand may outstrip IT’s delivery pace, making it critical to manage expectations.

The need for integration… and possibly an integrator – Unlike traditional outsourcing, cloud invites a “best of breed” approach. But how will you integrate these disparate solutions? How will you manage a hybrid, multi-vendor IT environment? Do you need an integrator or will you play that role? There’s no single right answer for these questions. But you do need a plan. Without one, as one CIO put it, “you’ll end up with a fragmented model.”

To learn how IT leaders addressed these five challenges and are now enjoying the benefits of cloud computing, check out “Cloud bound: Advice from organizations in outsourcing relationships.”


[i] Martorelli, Bill. “Forrester: The impact of cloud on outsourcing contracts.” Computer Weekly. http://www.computerweekly.com/opinion/Forrester-The-impact-of-cloud-on-outsourcing-contracts

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