How will cloud computing affect traditional outsourcers?

Technology Articles | November 25, 2009

What effect will cloud computing have on the future of IT outsourcing? Graham Perry gives his views on how the IT market might evolve.

Interesting times ahead for systems integrators and outsourcers as cloud computing becomes more mainstream. At the moment the majority of deals are around desktop applications (eg CSC's recent deal with the Royal Mail), but as the market matures more powerful corporate applications will emerge.

Traditionally outsourcers and systems integrators have derived large revenues from integrating different platforms and managing these systems. In the new world, the applications will be hosted in the cloud and, assuming some universal standards appear, data integration will be relatively straightforward.

In the short term systems integrators will gain revenue from migrating businesses to the cloud, but beyond that what will be their role? Potentially the larger ones will emerge as cloud service providers and some will focus on business process outsourcing. Both options require fewer staff.

But think further ahead. If the provision of all of your IT comes from the cloud on a cost per user basis, why not manage everything in house? Project managers could enable new applications, service delivery managers could ensure those applications meet user expectations. The economics of outsourcing will cease to make sense.

Admittedly, there will be a few evolutionary steps before this happens. Security, service level agreements, data protection, even legal liability are just some of the aspects yet to fall into place. Also, a new raft of management applications need to emerge to cover serrvice provisioning and performance. But once the market has matured the landscape and industry structure will be totally different to the one we see today.

In fact it is not difficult to imagine a time when IT ceases to exist but becomes embedded within business functions. Now there's a thought!

Article Tags: Cloud Computing, Systems Integrators

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ABOUT THE AUTHOR

Graham Perry is Managing Director of Altica Ltd

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