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By Vincent Capo
According to Gartner, Chief information officers (CIOs) should take steps to manage inherent risks and unexpected costs during cloud services adoption.
Gartner in a recent report says cloud computing and offshoring are becoming mainstream, and are quickly changing the IT market.
During the next few years, the firm says, market dynamics will
determine whether cloud-enabled outsourcing will be the demise of
traditional outsourcing; whether it will lead to the convergence of
services and products currently marketed as a service, or whether it
will result in next-generation outsourcing.
Gartner research VP Frank Ridder says cloud service sourcing is immature and fraught with potential hazards.
“The hype around cloud computing services has increased interest as
well as caution for CIOs trying to determine where, when and if cloud
services can provide valuable outcomes for their businesses.”
Ridder points out that cloud computing is driving discontinuity that
introduces exciting opportunities and costly challenges.
“Organisations need to understand these changes and develop realistic
cloud sourcing strategies and contracts that can reduce risk.”
He says traditional IT services often find organisations locked in,
fighting with rigid delivery or hesitation to change when engaged in
traditional IT services deals. Innovation seldom materialises and
solutions fail to scale, and service providers often struggle with
their profits.
In the new cloud services scenario, however, flexibility, agility
and innovation are design principles and, over time, service providers
will succeed in delivering on these principles, he explains.
“The market also expects scalability, cost-efficiency and pay-per-use pricing models from cloud services solutions.”
Although cloud services already provide these, service providers
manage their risks through terms and conditions that are still
immature. However, Gartner believes that solutions and their commercial
terms are maturing quickly.
To avoid the potential pitfalls and hidden costs of cloud sourcing,
Ridder says organisations need to ensure they understand the short- and
long-term implications of cloud services, on the demand and supply
side, as well as on the sourcing life cycle itself.
The services sourcing life cycle includes four crucial elements:
sourcing strategy, vendor selection, contracting, and management and
governance, he adds.
“The life cycle is a critical area to plan and manage, regardless of
whether organisations source their IT services through internal or
external resources.”
Gartner's forecasts indicate that organisations spend 53% of their
IT services budget on external services, and that spending is growing
3.9% per year, while new categories of services are experiencing
double-digit growth.
Cloud-driven business and IT services include all types of solutions
that are developed, bundled and packaged as outsourcing service
offerings for which the business or IT service provider uses one or
more cloud computing technologies within the solution's overall
architecture, Gartner explains.
These services can be delivered directly by a cloud provider or via a
service aggregator for the delivery of pre-engineered and configurable
business solutions in a timely and cost-effective manner, the research
firm points out.
Published by myITview.com
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