( 3 Votes )
Historically the move to outsourcing was seen as the traditional method of removing entire cost lines/centres from an organisations operational budget. Very often this meant that the IT staff simply TUPE'd over to a large IT outsourcer to provide the same service, very often on the same physical hardware, whilst application licenses and contracts remained with the end user. For the first year at least the IT understanding of the business remained as did boundaries of responsibility.  So what's the difference with cloud.

 

If we cover what's the same first. The main similarity and the reason that organisations are pressing now especially for Cloud is budget control. Over the past 18 months the restrictions on IT budgets have held back upgrades in infrastructure and cancellation of new application rollout as businesses tighten the belts. In house delivered services are nearing saturation and organisations are faced with a stark choice, buy new equipment and support resource or outsource. Now however where simple outsource was once the answer now Cloud can give key differences.

The first is the ability to remove responsibility for the infrastructure completely from the Client's concern. No assets to run down, and no 3 yearly tech refresh to consider. By focusing purely on standard software delivery and SLAs, companies can remove entire capex cycles from the budget which in the current market is extremely attractive.

The next difference is that suddenly security and the dynamic nature of modern virtualised systems means that these services can be delivered far more cost effectively than before. As recently as 2 years ago it was a struggle to get different departments within an organisation to share a piece of infrastructure, let alone potentially share it  with a competitor. The words shared infrastructure still raises concerns in many companies, but call it cloud and suddenly its modern and the way forward.

So really Cloud is more an accepting attitude than a technology.
 
A major international bank recently introduced an in house cloud (IaaS) because as part of the modern image it was essential to say that they had embraced cloud. The fact that the same dynamic infrastructure was already in the machine room and available didn't count because it wasn't called cloud.  As yet no new "clients" have been identified for this cloud. I feel that there is a lot of "keep up with the Jones" attitude.

That said there will be challenges. Organisations may struggle to find companies that give the real value add of cloud. Providing infrastructure is well and good but if an organisation still needs to invest in skills to manage the database or application software some may decide that the additional skills needed to for that hardware can be rolled into the same resource. Flexibility will be the challenge for those taking Software-as-a-service (SaaS). If an organisation accepts out of the box configuration then this will be a growth area. If, as has been seen for many years with SAP installations, companies require significant customisation to match the busienss process SaaS providers will need to be very skilled at client management and have a strong technical and project management team backing them up.

Financial institutions in particular will struggle with SaaS uptake because of the ongoing changes required in such highly tailored applications. Every financial institution has ongoing changes required for their application’s design, workflow and customisation so it would prove very challenging for an outside provider to meet these requirements on a regular basis or at a price lower than internally supplied.