subject: How Cloud Computing Changes IT Outsourcing [print this page] Everyone has a lot of distressed experiences when referring to outsourcing. My favorite woe I have heard comes from a software vendor who outsourced a new development project: "They were amateurs and couldn't hit a deadline. It's also why we switched from PHP to Java. It was the wrong platform to start." A majority of them will complain in agreement, recalling their own horror stories.
However, some bigger questions begin to appear. Who picked the platform? (The unhappy customer did.) Did the customer check the work daily? (No.) Did it have automated status reporting? (It didn't.)
Outsourcing is an essential part of every modern IT group. However, the problem is that it doesn't seem to that we can do it well. Among the 530 business technology professionals inquired by the InformationWeek Analytics 2010 Business of Outsourcing Survey, twenty-nine percent of them have fired a vendor during the last 12 months. You can blame the partneror grab a mirror.
Two big trends have visualized from this year's survey of companies who use IT outsourcing, and both of them come to the importance of IT managing outsourcing better.
One trend is the growth of cloud computing and software-as-a-service initiativesand the disturbing trend of IT trusting performance monitoring to the vendors, and the other trend is the fact IT outsourcing is steadily moving up the stack since vendors adopt increasingly strategic functions. About 6 of 10 IT outsourcing shops take over some critical function, including management, engineering, or development, and nearly one-fourth keep executive and management functions in-house but look forward to outsourcing everything else. A lack of oversight, management, and even monitoring can have catastrophic consequences, since companies rely more on outsiders.
Our survey shows that all types of outsourcing continually rise, including everything from traditional hardware services and staffing to cloud applications and full-blown data center operations.
However, there is some sharp dissatisfaction against it. More than half of the respondents surveyed criticize that outsourcing has delivered lower quality, with end-user support and development of customer-facing applications. Cloud computing and SaaS receive more favorable reviews, since many people insist that it has delivered better quality and 44% of them are planning to expand use. Nevertheless, there are problems there as well, with almost six out of 10 respondents depending on their cloud vendors to monitor their own performance.
Most IT shops have set the right targets for outsourcing: the most-valued benefit is freeing up staff for more strategic initiatives, just above cost savings and better alignment of IT staff and costs with business trends. Besides, there are other right problems they're worried about: unforeseen costs, communication problems, and the time required to manage subcontractors.
