Outsourcing Trends in 2011

The new year will be marked largely by -- smaller contracts, cloud-related chaos, increased off-shoring…

1. Progressive Outsourcing

The year will be marked by the inking of smaller IT services deals, many of them by first-time buyers. Providers, happy to have a foothold, will push such customers to expand the scope of their relationships over time--the old penetrate and radiate approach. Contract activity will creep back throughout 2011, as the recover stutters and buyers pull the trigger on sourcing activity.

2. Diving for Dollars

Facing a slow economic recovery, IT leaders will continue to scour their existing outsourcing arrangements for savings. There's a pot of gold in every contract, and in some cases a pot worth millions. IT services customers may reconcile their invoices with their original contracts with an eye toward under-delivery or over-payment  or replace contractors from large sourcing providers with IT professionals from local temp agencies.

3. Outsourcing, Meet Cloud-sourcing

Even if some of the discussion of cloud-based offerings from IT service providers is largely hot air, it will continue to be a hot topic in the industry. The emerging cloud sourcing market will cause the destruction of the outsourcing market as we know it today. The two markets will merge and cloud sourcing will drive the rebirth of outsourcing.

Cloud players like Amazon, Google, and Rackspace are hitting traditional service providers like IBM and HP where it hurts. The current low cost leaders are forecasting the need to be able to remain profitable while seeing the price of some of their services drop by 70 percent over the coming year.

Look for mergers and acquisitions as legacy providers fumble their way forward. Customers will need help stitching together old and new. IT is going to be coordinating an increasing portfolio of third -party applications hosted externally. The theme in 2011: SaaS-to-SaaS integration.

4. Back-Door Deals Put CIOs at Risk

Many of the discussions and decisions about cloud-based offerings will be handled by business unit or function owners rather than IT. That could pose problems down the road. CIOs must get ahead of business users reasonable zeal for the power of focused SaaS applications that could back the enterprise into stealth architecture decisions that could be expensive to undo. Business stakeholders want cloud, and they know smart CIOs can mitigate its risks. However, IT professionals must tool-up to deliver cloud to their business stakeholders, otherwise they risk a gap growing between business demand and IT supply.

5. The End of Customization

Clients will be increasingly open to changing their internal processes and accepting standard 'vanilla' services . Service providers will put renewed emphasis on internal initiatives to standardize their own offerings to leverage economies of scale and stabilize profit margins. It's the stuff of benchmarking dreams, but economic conditions may turn it into a reality. More process, technology, and location standardization including platform-based solutions.

6. Prices Get Firm

Remember when you could persuade (read: bully) your provider into lower pricing? Days of auld lang syne, my friends. Outsourcing providers have filled up their prior excess capacity and will be driving to secure higher price points. Pounding on the table for price reduction is unlikely to be effective this year.

Customers seeking savings will have to bone up on delivery models, deal structures, and value drivers instead. And vendors will have to woo clients with performance rather than a low bid; as a result, we will see select players grow disproportionately, taking clients away from others.

Cloud-computing prices could also become less--well, cloudy. Pricing models will mature and buyers will better understand the specific offerings.

7. M&A: East Meets West

A merger between a major Indian IT service provider and a U.S.-based outsourcer? It could happen next year and an Indian company may be on the buying end. Western providers have adopted the process and cost initiatives first embraced by their Eastern counterparts. Indian providers are skilling up to try to win more consulting and integration work. The cultures are moving closer together. Twenty eleven will see the first mega-merger between a major Indian services provider and one of the Western incumbents.

8. Providers Embrace Mass Automation

To meet the pressure of keep costs down and rive performance up, outsourcers will rely more heavily on automation. Applications that reduce the labor a client is required to perform the services will be offered at lower implementation and running costs than they have in the past. This will continue to create demand for additional opportunities and reduce the staff necessary to support critical business applications.

http://www.cio.in/

-Cheers

Do SME Know how and where to use Cloud?

SME are still consfused on uses of cloud services. How to use SaaS based solutions.

Key characteristics of Cloud Services-

 

1. Cloud Services are on demand services, typically charged on a monthly or annual basis. Payments are made either as a utility (similar to an electricity bill) or as a subscription.

2. Cloud Services are flexible. A user can and should have varying amounts of the service – at any time.

3. Cloud Services are fully managed by the provider, with the user requiring little more than a PC and Internet access to get started.

Advantages of the cloud computing model for SME -

Its low barrier to entry

Risks are limited

Contracts with service providers are often covered by service level agreements and can be cancelled at any time.

-Cheers

Cisco Virtualization Experience Infrastructure

Cisco has announced along with partners -

Desktop virtualization vendor Citrix

Storage vendors EMC and NetApp

Virtualization player VMware

Thin client vendors Wyse and Igel

the launch of its desktop virtualization system and solutions.

Desktop virtualization can reduce per-user PC support costs by 51 per cent, an item that accounts for 67 per cent of PC related expenses.

Virtual desktops also help protect the security of corporate intellectual property by keeping information in a data centre rather than on physical devices.

Cisco's new desktop virtualization solution, called Cisco Virtualization Experience Infrastructure (VXI), incorporates Citrix XenDesktop and VMware View 4.5, desktop virtualization software offering from Citrix and VMware, also supports management and security application storage systems from EMC, NetApp and Microsoft applications.

The Cisco VXI supports a wide range of endpoint devices including Cisco unified IP phones, laptops, business tablets including the Cisco Cius and smartphones. Devices from thin client vendors such as Wyse, Devon IT and Igel have been validated for it.

Once you build a Private cloud based on VCE VBlock and VMDC PoD; This would be the quickest application of such a vast available elastic infrastructre...

Comments?

-Cheers

Industrialization of IT & IT-as-a-Service - Driving towards low cost IT

Like many movements before it, IT is rapidly evolving to an industrial model. A process or profession becomes industrialized when it matures from an art form to a widespread, repeatable function with predictable result and accelerated by technology to achieve far higher levels of productivity. Results must be deterministic (trustworthy) and execution must be fast and nimble, two related but different qualities. Customer satisfaction need not be addressed directly because reliability and speed result in lower costs and higher satisfaction.

IT should learn from agriculture and manufacturing, which have perfected industrialization. In agriculture, productivity is orders of magnitude better.

Genetic engineering made crops resistant to pests and environmental extremes such as droughts while simultaneously improving consistency. The industrialized evolution of farming means we can feed an expanding population with fewer farmers. It has benefits in nearly every facet of agricultural production.

Manufacturing process improvements like the assembly line and just-in-time manufacturing combined with automation and statistical quality control to ensure that we can make products faster and more consistently, at a lower cost. Most of the products we use could not exist without an industrialized model.

The industrialization of IT services is also enabling a greater orientation toward outcome-based and pay-per-use services. Early offerings like infrastructure utilities or cloud e-mail show that providers can deliver one-to-many services at price points that are one third of in-house/traditional costs, due to the right combination of industrialized one-to-many services, offshore outsourcing and technologies such as virtualization and automation. Based on the proliferation of advertising 'IT as a service' as a pricing model, business buyers would force traditional providers to switch to PUPM pricing models by 2012.

Economic fluctuations and business uncertainty, accelerated service globalization, and increasing competition of IT services are major factors that could force businesses to move further toward low-cost IT, according to Gartner, Inc.

-Cheers

2011 Predictions : Gartner & IDC

Gartner 2011 Predictions:

By 2015, Tools and automation will eliminate 25 percent of labor hours associated with IT services:

As the IT services industry matures, it will increasingly mirror other industries, such as manufacturing (Industrialization of IT), in transforming from a craftsmanship to a more industrialized model. Cloud computing (IT as a Service Model)will hasten the use of tools and automation in IT services as the new paradigm brings with it self-service, automated provisioning and metering, etc., to deliver industrialized services with the potential to transform the industry from a custom environment to one characterized by automated delivery of IT services.

Within next 4 years, 90 percent of organizations will support corporate applications on personal devices:

The trend toward supporting corporate applications on employee-owned notebooks and smart-phones is already under way in many organizations and will become commonplace within four years. The main driver for adoption of mobile devices will be employees — i.e. individuals who prefer to use private consumer smart-phones or notebooks for business, rather than using old-style limited enterprise devices.

In next 5 years, Information-smart businesses will be increase IT spending per head by 60 percent:

Those IT-enabled organizations that successfully navigated the recent recession and return to growth will benefit from many internal and external dynamics. Consolidation, optimization, and cost transparency programs have made decentralized IT investments more visible, increasing "recognized" IT spending. This, combined with staff reduction and freezes, will reward the leading companies within each industry segment with an IT productivity windfall that culminates in at least a 60 percent increase in the metric for "IT spending per organization employee" when compared against the metrics of peer organizations and internal trending metrics.

IDC Predictions for 2011:

IT industry revolving more and more around the build-out and adoption of this next dominant platform, characterized by –

Mobility, Cloud-based Application and Service Delivery, and value-generating overlays of social business and pervasive analytics.

What really distinguishes the year ahead is that these disruptive technologies are finally being integrated with each other–

Cloud with Mobile, Mobile with Social Networking, Social networking with Real-time Analytics.

Any Comments?

High Performance Organization

The new logic of High Performance Organization turns the traditional equation of who adds value to the organization’s products and services upside down.

It constantly pushes for individuals throughout the organization to add more value by -

·         Doing more complicated tasks

·         Managing and controlling themselves

·         Coordinating their work with the work of other employees

·         Suggesting ideas about better ways to do their work

·         Developing new products and ways to serve customers

This is in sharp contrast to the traditional hierarchical organization where individuals at lower levels carry out prescribed, routine, low-value-added tasks in a controlled manner while senior management adds major value through their work on organizational design, strategy, and co-ordination of the work of different groups and functions.

Any Thoughts on How implementations around world for HPO and Role based organizations have given better results to organizations?

Are we ready for this now? I think so.

-Cheers

On Line Office Suite: Is it Google & Microsoft only in race...?

July 2007…..

http://googlesystem.blogspot.com/2007/07/zoho-vs-google-docs.html

While Google still works on completing its online office suite by adding a presentation app and integrating JotSpot, an Indian company called AdventNet already has one and it includes everything from word processing, spreadsheets, presentations, notebooks to wikis, online databases, project management. It's called Zoho and it keeps getting better every day.

In December 2009 Zoho says….

We have many Google (and Google Apps) users using Zoho applications and integration between Google and Zoho Apps is increasingly becoming one of the most requested features. We previously integrated Zoho and Google at Sign-on level (both Google & Google Apps) and now, we are extending this integration to the application level.

CIO News in May 2010…

While Google Apps may not be a knockout threat to Microsoft's enterprise business this year, a cloud apps battle continues to brew between the two companies. Google and Microsoft are the forerunners in this competition, but other rivals are nipping on their heels.

·         IBM Lotus Symphony and Lotus Live

·         Zoho suite of cloud apps

·         OpenOffice

What's your thought?

 -Cheers