Is Cloud Computing going to burst traditional outsourcing?

Cloud Computing

Creative Common Rights : Wing-Chi Poon

Now a days the term Cloud computing is used as by everybody Ad libitum. some define cloud computing narrowly as an version of available computing: where virtual servers are available over the Internet where as others other define it as any form of remote computing .

Wikipedia defines Cloud computing as Internet-based computing, whereby shared resources, software and information are provided to computers and other devices on-demand, like electricity. There are three broad categories of cloud computing- Infrastructure as a service, Platform as a Services and Software as a Service. Then you can have cloud computing as shared or private.

The real value comes out of the shared services as you have the computing power which can be flexible & available on demand in forms you would like to buy. Gone are the days you need set up a server, implement applications and get the computing done.

Now coming to question- Is the Cloud computing a threat to Outsourcing?

I would say, cloud computing is not a threat to outsourcing, it only going to complement outsourcing. However, It is A threat to Outsourcing provider companies there is going to be paradigm shift in the enterprises will source IT. It is going to create new Equations in the market, as the customers are going to ask for cloud models. And outsourcing companies have to develop their own set ups or make new partnerships.

Take a look on these quotes

At Sybase, a private cloud of virtual servers inside its data centre has saved nearly $US 2 million annually since 2006, Swartz says, because the company can share computing power and storage resources across servers. – Jim Swartz, CIO, Sybas

Source : Umbrella Cloud

A new server can be up and running in three minutes (it used to take Eli Lilly seven and a half weeks to deploy a server internally) and a 64-node Linux cluster can be online in five minutes (compared with three months internally). “The deployment time is really what impressed us,” Powers said. “It’s just shy of instantaneous.”

Dave Powers
Associate Information Consultant at Eli Lilly and Company

Source : Business Week

In Future, The role of cloud in making available infrastructure, software or even business processes as a service is definitely is going to get mainstream. The enterprises are going to weigh the risk and reward. The risk includes those of data stored in cloud, lock-in to cloud paltforms or loss of control of on resources related to manpower, applications or computing. The reward is in the form of flexibility, pricing and time to market.

My guess is the cloud computing in its shared format is going to give maximum benefit to small medium business enterprise. It will give a completely different level of scale and large corporations will loose that advantage of volume economics. It will give SMB enterprise a tremendous power to innovate and introduce new services and products. A completely new dimensions to social networks and business services.

The most fundamental shift would be business model will shift from human effort and pricing to computing power and pricing. It will create new benchmarks for the customer relationships as the implementation and transitions hassles will be less and would be taken care of easily and custmers can demand better measurable performance indices.

Check out this space again.

Some good pointers

Infosys Blog [ http://www.infosysblogs.com/microsoft/2010/02/saas_makes_financial_accountin.html#more ]

Google enterprise blog [ http://googleenterprise.blogspot.com/2009/04/what-we-talk-about-when-we-talk-about.html ]
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About Sudeep

I am an avid reader, an average writer, an amateur painter and a consultant by profession. I also did my mechanical engineering and MBA to earn my bread. If you liked my thoughts and images please do comment

4 Responses to Is Cloud Computing going to burst traditional outsourcing?

  1. sgupta says:

    A nice article on the computer weekly on the cloud computing. How Royal Mail is using the clound computing to cut the outsourcing cost and stay ahead of the curve in the IT requirements.

    However, they are planning to use the Micrsoft’s Business Productivity Online Standard. Current outsource is CSC, this added lots of complications. Also it is mentioned, the cloud computing services from Microsoft is not giving the full functionality as one gets from the Microsoft’s mail exchnage serve.

    http://www.computerweekly.com/Articles/2010/03/18/240642/Royal-Mail-How-to-negotiate-a-cloud-contract.htm

  2. Michael Miller says:

    There is a rapid growth of Outsorcing these days as manufactures try to cut cost and maximize profit.~~’

  3. Henry Barnes says:

    outsourcing is really necessary specially if you want to cut the cost of production.-~~

  4. Austin Cook says:

    outsourcing is always essential to businesses coz it helps reduce the cost of production;-*

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