Soaring costs of running business operations, economic recession, volatile US currency, etc. – all are becoming factors to create the most hostile environments for business enterprises across the planet. Companies are scouring far and wide to find ways to cut down on IT expenses so that they can squeeze something extra out of their budgets in order to compete in areas of prime proficiency. Outsourcing is the biggest strategy followed by corporations across the globe to counter rising domestic operational costs and as per a the most recent study by Savvis. The enterprises are embracing cultural shifts in their outsourcing ventures by focusing more on breakthrough technologies such as Cloud Computing.
According to the survey, nearly 60 percent of company decision makers favor outsourcing of critical business procedures to proprietary business models like cloud computing rather than opting for in-house infrastructure because they believe that cloud computing is going to be the trump card they need to cut down on costs. Since cloud based services eliminate the need to have expensive infrastructure and computer equipment in-house, organisations depending on it can reduce their IT budget considerably and reduce other associated costs such as power consumption, maintenance costs and so on.
Another interesting discovery from the survey was that nearly 3 out of 5 survey respondents believe that in-house infrastructure results in wastage of resources considerably. Rather than focusing on infrastructure requirements, IT companies are turning their attention to key organizational prerequisites such as competitive agility, strengthening collaboration and increasing productivity as well as efficiency of their operational models. Industry leaders believe that outsourcing combined with technologies such as cloud computing are the stepping stones to success in achieving these corporate objectives.
The software as a service model or commonly known as SaaS model is a growing technological strategy that companies undertake to make huge savings on software licenses and other utility procedures carried out via proprietary software. This model of operation allows business enterprises to leverage the benefit of using software services without having to buy or install them on their hardware components. The costs are much lower than a buy-and-operate model and this model of service delivery is made possible because of cloud computing.
On a similar note, infrastructure as a service (IaaS) models are also gaining attention. Here companies need not spend on exorbitantly priced hardware storage and computational hardware for processing information as they can use the service via a shared interface between the hardware vendor and the business process. This remote access of complex hardware at lower costs is courtesy of cloud computing. Such modes of operation are gaining widespread applause from industry gurus because of the savings they make for businesses.
As per the survey, global organisations which currently outsource 25 percent of their IT infrastructure are going to ramp it up to over 40 percent. More than 50 percent of the surveyed organisations now admit that they have wasted their money on buying infrastructure that they could have easily rented via a cloud service. However 56 percent of the surveyed organizations and especially 78 percent of Japanese organizations surveyed are still satisfied with their in-house infrastructure management and are yet to shift to a cloud based paradigm.
Surprisingly, 42 percent of the surveyed organizations stay away from outsourcing citing lack of contractual obligation from outsourcing partners as the main reason. The main reason that prevented outsourcing was because of company culture and not such obligations which clearly indicates that there is a shifting paradigm. Cloud computing is picking up affection as per the survey wherein 85 percent of the organizations surveyed are reportedly using some form of private or public cloud services for storage, Big Data, analytics as well as other key business processes.
As the need for competitive agility increases, companies would continue to strive for newer outsourcing regimes to boost their productivity. Organizations are continuously embracing new initiatives to ensure that outsourcing their managed services can prove to be even more fruitful than it is at present. The survey threw light on a clear statement. Business enterprises are changing their focus from saving IT budgets into enriching their core competency levels. More strategic decisions are expected to take place in coming years and we have to wait and see what happens.
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About the Guest Author:
Mandira Srivastava is a fulltime freelance writer who specializes in technology, health and fitness, politics, and financial writing. Equipped with degree of mass communication and having worked for both private and corporate clients, I have experience meeting a wide range of writing requirements and styles.