What’s the advantage of cloud computing over traditional IT outsourcing?
May 14, 2010
Cloud computing, like Web 2.0, is the latest buzzword to gain popularity in technology circles. In fact, many technology experts say cloud computing could be the next big thing to revolutionize both IT and IT outsourcing.
What is cloud computing and how does it compare with IT outsourcing? Simply put, IT outsourcing has normally been about providing a tangible service involving servers, data centers, computer networks and man-hours while cloud computing is really just a bucket description for providing IT infrastructure, an IT development platform or software resources as a service. More importantly though, cloud computing alows for these services to be increasingly provided on a flexible, asset free and as-need basis for more aspects of enterprise technology.
So what’s the advantage of cloud computing over traditional IT outsourcing? Take an example cited in a March 2010 article in Barron’s about how Hallmark uses cloud computing. Apparently, Hallmark’s new digital products will generally require extensive testing and development prior to any launch and hence, their demand for computing power will tend to increase during any testing period prior to a launch. So instead of purchasing or leasing enough servers to handle these requirements and having them sit idle for periods of time, they simply “flip on a switch” and tap computing capacity on a private cloud that is owned and managed by Sawis.
In other words, cloud computing allows for computing power to be used and sold like electricity with customers only paying when they actually use it. This alone has the potential to revolutionize IT because according to a recent article in the Financial Times, Wipro has calculated that the world’s servers are running at only a 27% of their full capacity but by employing cloud computing, this server usage rate could increase to 75% of capacity level. Moreover, some IT experts predict that cloud computing could reduce corporate computer cost to a tenth of their former levels while an April article in CIO noted that Gartner has predicted that 20% of businesses will own virtually no IT assets by 2012.
So what will happen to India and Indian outsourcers? Seattle Times columnist Brier Dudley has recently made an interesting observation that India was the original cloud that offered enormous data-processing and on-demand computing capacity for companies around the world. Today though, non-Indian companies are pitching their data centers as “virtual Bangalores.” However, Dudley quoted Nandan Nilekani, the co-founder of Infosys and the “Bill Gates of India,” that there is a big opportunity for Indian firms to provide both the software and the services that will run on emerging cloud computing platforms.
In addition, CIO magazine quoted Phil Fersht, the founder of outsourcing consultancy Horses for Sources, that cloud computing services will be the foundation for next-generation enterprise sourcing solutions. Moreover, Fersht believes that cloud computing services will make the traditional delivery of IT services more efficient and cost-effective by creating a delivery mechanism for true business process services that has the potential to unlock tremendous value for customers.
In other words, cloud computing is more than just another new buzzword. It has the potential to be a real game changer for IT, IT outsourcers and India in particular.
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