Just about every analyst firm out there has found cloud adoption is growing. There is also widespread consensus that cloud will alter the outsourcing landscape, though it’s too early to tell exactly how.
IDC, for example, predicts the number of companies with some services in the cloud will grow from today’s 30 percent to 50 percent within five years. David Tapper, VP of Outsourcing and Offshore Services Market Research for IDC, said during a recent webinar that the outsourcing industry is in the first phase of what he called a “fundamental shift toward cloud.”
Gartner and the Everest Group are among other analysts predicting big gains for cloud and noting that both outsourcing buyers and providers will need to modify their business models as cloud usage grows.
Such bullish forecasts are not surprising, given the experiences of current cloud users. According to a whitepaper from management consulting company Navint Partners , 90 percent of cloud adopters had attained 100 percent of their projected cost savings and 64 percent of respondents said cloud had a significant impact on process efficiency and effectiveness.
Global Delivery Report’s Ann All connected with Navint partner John Robosson for a more detailed take on the survey and some suggestions on working with cloud providers.
GDR: Which model will likely dominate — private cloud, public cloud or a private/public hybrid?
Robosson: Public clouds will dominate based on sheer numbers, supported by the fact that there are many more small and mid-market companies than larger, publicly-held firms. The bar is much lower from a price point and accessibility standpoint for public cloud offerings.
GDR: What are the key questions companies must ask themselves in determining which services to move to the cloud?
Robosson: Which processes are relatively “pedestrian” (i.e. email, financials, document management, CRM) and can be easily migrated to the cloud? What are the critical integration points between cloud applications and on-premise apps?
GDR: What kinds of providers of cloud services are companies working with?
Robosson: It runs the gamut, from across the entire applications (email, ERP, CRM) and infrastructure (application hosting, operations, support, and security) spectrum.
GDR: Do you think the cloud presents an alternative to traditional outsourcing providers?
Robosson: Yes, to the extent that cloud companies develop capabilities to handle the scale and complexity of larger global organizations, they will be free to move away from traditional outsourcers.
GDR: Conversely, could the cloud be an opportunity for outsourcers?
Robosson: Absolutely, the fact that cloud offerings are expanding does not mean that process complexity is going away. Companies will continue to have needs to define, execute and measure their business processes, whether or not they own and/or host their technology on-site.
GDR: What criteria should companies consider as they evaluate providers?
Robosson: Criteria for selection should include: 1) Process fit – Is the offering compatible to the business; 2) Capabilities – Does the provider have sufficient capabilities to manage and scale with increased demand; 3) Security – Is the provider SAS70 Compliant? 4) Privacy – Is the provider compliant with the privacy safe harbor guidelines both domestically and in the EU? 5) Data – What access will there be to company data on an ongoing basis?
GDR: Any other questions buyers should ask providers?
Robosson: What is the provider’s uptime history? Have there been any outages of significance? What are the standard contract durations and termination provisions? What are the contractual rights and access to our data?
For more great advice, read Adding Cloud to Outsourcing Agreements by Kenneth Adler, chair of the Technology and Outsourcing Practice at the Loeb & Loeb LLP law firm.