The cloud is taking business by storm. In fact, due to the extraordinary growth of the cloud, it has been described as a tornado, not a fluffy white floating object! Commercial research analysts consider cloud as one of the most significant trends with a potential to change the whole global IT industry. Governments, including those in the US, Britain, and Australia, have cloud-first policies now in place which mandate cloud over non-cloud services in ICT procurement. But CIOs and other senior executives, while it's on the majority of their agendas, aren't sure what it really means for their organisations - how to leverage the benefits, control the commercials, manage the business risk, and adapt their organisations. While it is important to set requirements, negotiate commercials (terms, service level agreements, and pricing), and sign the contract - it is also critical that we develop a clear plan for ‘Moving to the Cloud’ which realigns our business architecture, organization and most importantly our people. This course provides the answers that management must know to be successful and realise the benefits: • Where should I go cloud? • What are the commercials? • Where is my leverage? • How do I realign my business practices and architecture? • How do I gear up my people and structure my organisation? View the MOOC promotional video here: http://tinyurl.com/hvtz2ph
Student Debate: Is the Cloud the end of Traditional IT Outsourcing?
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Del curso dictado por The University of Melbourne
Moving to the Cloud
115 calificaciones
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Module 1: Introduction
Thank you for joining us in Moving to the Cloud! We begin your first week of this course by bringing you up to speed on all things cloud. This includes the cycles of disruptive technology cycle, the history of cloud and the terminology that is currently in use. We will also introduce some fundamental cloud computing concepts including what cloud computing is and how it works. We are delighted that Professor Leslie Willcocks from the London School of Economics and Vince Kellen form the University of California (San Diego) will be joining us for guest lectures. We also have a debate on whether the cloud is the end of traditional IT outsourcing. Make sure to check out what your peers have said!
Conoce a los instructores
Rod DilnuttDr
Computing and Information Systems, University of Melbourne
Sara CullenDr
Computing and Information Systems, University of Melbourne
[MUSIC]
Welcome all today, I have George with me and I have Febby.
Today we'll be discussing the proposition cloud computing will
mean the end of traditional IT outsourcing.
Now, just prior to beginning this debate that we're going to have here,
we need a couple of introductions about the definitions we'll be using.
First and foremost, is you might hear ITO, and this refers to IT outsourcing.
George, if you'd like to take us to the next definition.
>> Yeah, let's have a look at,
first of all, the traditional IT outsourcing definition.
And this is what we call the on premises model, where typically,
the IT outsourcer or the provider deliver the hardware, the software, and
all the applications that run with it, and manage all that infrastructure.
It used to be purpose built and deployed for a particular client.
>> So it's like if you go to someone's house and install a computer?
>> That's right, just like going to someone's house and install a computer.
This was done for an entire enterprise.
>> Okay. >> And there used to be a lot
of money in it.
You know, it was big dollars in that because there was a lot of infrastructure
involved.
It was all had to be dedicated, customised to that client and
there was big money in that, so that's the traditional model.
>> And the other definition was for the off premises model.
>> For this model, instead of going to someone's house and install it in their
house, we kind of offered them to access the services through internet.
So we used either public or private Cloud to deliver them IT services.
And what's different is because the relationship of provider and
client in the traditional IT is a bit special, and
this off premise model may change it because mostly now,
what's offered is standardised services.
True, so essentially many of these off-premises services
are offered in a standardised way.
That's what, so that in some ways does change the relationship.
>> So someone installs a computer in my garage,
and you and Febby can rent it using the Internet.
>> That's right, yeah.
>> Back to the proposition, that is,
cloud will mean the end of IT outsourcing, >> George,
you're going to take us through an argument for this proposition, aren't you?
>> Yeah, Cloud computing is a technological development,
the type of technological development that comes once in a generation.
It offers many benefits to enterprises,
in terms of lower cost of the IT infrastructure,
it offers them agility in terms of the applications they develop and deploy.
We've looked at aspects such as the take-up of Cloud, and
if you look at the year 2014 here, 30% of enterprises had
adopted Cloud computing as part of their IT infrastructure.
What we mean by that is that 30% of enterprises,
their primary platform was based on Cloud 50% or
more of their IT infrastructure was utilising Cloud based service delivery.
Now if you project that out further to 2018, the take up will increase to 60%.
So 60% of enterprises by 2018 are expected to be using cloud, so
the take up is quite dramatic and significant.
We're talking about take up rates of about 40% or more in the current year.
And also now, if you look at Cloud revenues, the Cloud service revenues,
they're also growing dramatically in line with the take up of Cloud services,
we're looking at somewhere of around $200 billion of cloud services by 2018
>> 200 billion?
>> Yeah, and that is quite quite significant.
Yeah. So if you look at public Cloud providers,
who are the major cloud providers here, this table here shows-
>> This table?
>> That's right.
We've got Amazon Web Services, Microsoft Azure, Salesforce,
Salesforce Provider TRM software.
Then there's Adobe as well.
These are- >> And these are public Cloud services?
>> Major public Cloud providers.
That's right.
What's interesting about this table is the rate of growth has been very significant.
Even though the revenues here we're talking about coming off a small base,
the rate of growth is 80% in some cases here.
If you look at Amazon Web Services, they just been growing phenomenally.
Now if you look at this other table here, it shows the traditional IT outsourcers.
You've got companies like IBM, they're experiencing a dramatic
declines in growth because again the traditional IT outsourcers, have had
large revenues, so a decline of 8% is quite significant for a company like IBM.
If you look at Accenture, they've managed to stay there, stay on course, they
haven't been experiencing a decline primarily because they're not dependent so
much on selling servers, providing the hardware, the basic hardware and software.
They're really more focused on integration services, consulting.
However, other companies like HP and Fujitsu,
their business model depended a lot on selling service,
so a lot of that hardware, and a lot of the software that comes with that,
and building that for specific clients.
So yeah, they are experiencing quite significant declines here,
as this table shows.
So, the relationship between the client and
the Cloud provider can vary, depending on the service,
the other thing though I'd like to point out here is those grey boxes.
This is where many of the traditional ITO providers have relied upon,
delivering that physical network, storage, and compute infrastructure.
That's no longer going to be there because that's being delivered through the Cloud.
>> Sure. >> And this is where the traditional
IT outsourcers
are losing business, basically.
And that's why, again going back to my proposition,
that's why it's going to mean the end of the traditional outsourcer.
>> Yeah, tough times for the ITO provider.
>> Very tough.
>> Yeah.
So I guess with the rise of the Cloud and the tough times for
the ITO's, we're in a bit of trouble here, Febby?
>> Yes, yes.
I have to agree with some points of George.
But in the perspective of client, I don't think ITO providers, we are really,
really gone from the market because there's some points that we need to raise.
Cloud servers have a limitation and special relationship
between ITOproviders and clients may provide benefits for their businesses.
So the limitation, for
now, Cloud services only addresses low level, standardised services.
This is a problem, the problem is, businesses have their own specific needs.
We'll go on to that final about specific needs.
And in the same time,
ITO can provide range of services that are tailored specifically.
>> True. >> That's point number one,
then we go by specific needs.
Why the specific needs occur because every business is unique, every business
have their own set of business processes that reflect their own core competencies.
It cannot be maintained in the same standardised services.
We need something customised for each business.
This is why traditional ITO, I think, will stay in the market,
even though the Could platform will be the feature platform.
>> That makes sense.
Not everyone wants a standard service, some people want that personal experience.
>> For example, you cannot offer a standardised service for
financial businesses, and shipping businesses,
they're a different business.
They have a different set of needs.
>> Yes, every type of business has its own unique needs,
but the point I'd make here is that
the nature of the business of the traditional outsourcer is changing though,
which means I have to rethink what their role is going to be in this new world.
>> But speaking about the role, in the traditional ITO sources,
to have a special relationship between
as I already said the special relationship between ITO providers and their client.
>> Yes.
>> And that's what leads to benefits for
the clients and first,
better understanding. They work together for longer time.
A longer relationship is kind of the nature of outsourcing,
because switching to one or two providers may lead to another cost.
Because of that, they may work together well and
have a possibility to develop an innovation together.
Business process re-engineering,
because two heads is always better in finding solution.
>> That makes sense.
>> Another point about relationship is better management of provider,
because they know each other for
a longer time, they will have a better way to
to monitor each others performance.
They will have a better service quality control,
they will have a lower KPI fail risk. And also cost reduction.
If Cloud service is offering cost reduction by eliminating IT
infrastructure cost, this one will lead to
avoiding future setup costs by switching to another ITO provider,
or maybe another cost because of legal problem in the future.
>> So you're saying the switching cost could be so
high to move from ITO to the Cloud that…
>> I believe so,
because some of studies we run across are showing something like that.
>> Well, I might challenge that.
I mean, switching costs,
you know, that's a once off cost, it should be once off cost, but
then you've got to look at the longer term.
>> Sure. >>It is aspect of it.
I mean, true, okay, staying with one provider your costs, you know,
are probably more predictable.
>> Yeah. >> But the question is what
offers you the best advantages longer-term?
>> So I guess you'd have to transition well, because if you
don't transition well, then I mean it could be the end of you, couldn't it?
>> Yeah. >> It could, yeah.
That's right. >> Yeah, that's right.
>> Well, thank you George, thank you Febby, you've made some good points,
George made some excellent points about Cloud taking over, and that was
quite a compelling argument you made there >> Febby,
you made some compelling arguments about why Cloud will not mean the end of ITO.
And you talked really about clients needing someone to talk about.
But George, we saw the figures there and you know.
>> That's right.
>> It's kind of undisputed that Cloud is huge.
>> Yeah. >> And it's something that
>> And the ITO's need to deal with.
>> That's right.
>> So there we have it.
Cloud computing will not necessarily mean the end of ITO,
and there is still a role for ITOs.
What that is exactly has yet to be explored.
It could be a broker, it could be an agent.
>> We're not sure, but thank you George for your time today, and thank you Febby.
>> Thank you, Shane.
>> Thank you.
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