Outsourcing Will Assume a More Defined Role in the Cloud Era

Given the ongoing challenges companies face with cloud services, the role of the value-added outsource provider—while it may change—is not about to go away any time soon. In this article for the Global Services website, Accenture’s Jack Sepple and Bhaskar Ghosh identify three classes of outsourcing services and providers likely to emerge in the cloud era.

One widespread thought about cloud computing, to use an electricity analogy, is that it is as simple as flipping a switch. That perspective, unfortunately, ignores the fact that enterprises require more than just raw power. While the cloud is certainly simplifying some aspects of IT, it is also forcing CIOs to manage a more complex, hybrid environment that includes externally provided cloud services along with their own IT services and older legacy applications.

Given the ongoing challenges companies face with cloud services—chiefly security; data integrity; system and service interoperability; and service availability issues—the role of the value-added outsource provider, while it may change, is here to stay.

In fact, the ability to advise companies on the proper design of their business models based on multiple service providers, and to help them harness the potential innovations arising from the interaction of these providers, is likely to usher in a whole new era of outsourcing.

The challenge is integrating data across multiple services and then understanding the end-to-end business process that is being serviced so that a company can be confident that its employees and customers will be properly served. This requires specialized skills in service integration, as well as processes and tools that will automate and monitor IT to ensure coordination and oversight between outsourcers and internal IT functions.

In short, it means not just integrating cloud services, but all the services IT provides the business. As companies increasingly rely on the cloud, the emergence of three classes of outsourcing services and providers is envisioned:

• Utility providers. Their value proposition will focus primarily on efficiency and cost.

• Business function providers. These are niche providers with deep expertise in a particular function, such as sales, HR or customer support.

• Orchestrators. These providers will help companies become “cloud enterprises,” or organizations that are more dexterous and agile because they can adapt their business designs on the fly.

While the future of life in the cloud remains unclear, it is indisputable that the rules of the game have and will continue to change—and that organizations will live in a hybrid of IT and legacy for the foreseeable future. Companies that intend to be successful in this environment will need to start changing how they manage their IT and business operations. They will be forced to carefully assess the risks involved with deploying new technologies, and understand at an ever more granular level the capabilities of their outsource providers.

Most importantly, they will need to learn what it means to operate in a multi-sourced environment, one where the integration of the different components promises to take on greater importance than ever before.

Jack Sepple is Accenture’s global cloud computing lead and Bhaskar Ghosh is global lead of Application Outsourcing for Accenture.