What is the difference between outsourcing and cloud computing

Next SlideShares. Download Now Download to read offline and view in fullscreen. Download Now Download Download to read offline. Alan McSweeney Follow. Implementing agile iterative project delivery approach and achieving business Forget Big Data. It's All About Smart Data. Software Outsourcing: Why, When, What. IT Outsourcing of Cathay Pacific. Outsourcing for Small Businesses. Trends in the commoditisation of information technology and the need for stra Related Books Free with a 30 day trial from Scribd.

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Because cloud has a shorter track record, companies will start by using it for less critical areas of technology before getting more comfortable with it over time. As such, according to Thomas Reuner, principal analyst for IT services with Ovum, not everyone will put their enterprise critical applications in the cloud and most companies will want a mix of both.

There will be a mix between older, on-premise computing and outsourcing, he says, "and the cloud will nibble away at the overall spend on IT". Reuner also believes that this is an emotional issue, and that IT managers are very reluctant to lose control over their IT departments.

But while considerations like losing direct control over their company's IT resources may loom large in the minds of the IT staff, these, along with security issues, should not blind them to the potential benefits that cloud computing offers, Reuner says. In order to find out which it is, he thinks that IT managers need to look at all the options and that this could result "in some work being taken back in-house, because that is the best place for a particular type of work", he says.

Companies will continue to outsource, Reuner said, but he just thinks the decisions on what to outsource and where and how are just nowhere near as easy as people once thought. Luke Mansell, public sector lead at outsourcing specialists ISG, takes a different view. He sees the cloud and outsourcing as different shades of the same thing, the wish to push resources and responsibility out to others who may be better able to get the best results.

Yes, companies will welcome the cloud, he says, but not as an all-embracing solution. So in future more IT infrastructures will consist of a mix of in-house software and systems, cloud services and some outsourced - all layered with various degrees of complexity. Cloud is underpinned by technology and is essentially about the services a virtualised data centre, whether public or private, can deliver. The argument is that adopting cloud makes a business more agile and flexible because services can be turned up and down at will.

And economies of scale plus the plummeting cost of delivering IT — thanks in large part to Moore's Law and virtualisation — have seen the prices of cloud services also fall, making it highly cost-effective. Naysayers argue that security remains the biggest issue, and that it's difficult to get your data back if and when you want to switch providers.

Both of these objections are true but it seems hard to imagine them being long-term problems. In the meantime, unlike traditional outsourcing, cloud is a young industry: There will be shake-outs and many providers have a lot to learn. Not least of these lessons will be the need to earn customer loyalty which cannot be assumed, especially once it becomes easier to move data between providers.

So cloud provision differs from traditional outsourcing, where contracts tended to be defined by a particular project or period of time: Once locked in, it can be difficult to get out. This means cloud providers, just like every other provider of enterprise services, will need to develop impeccable service delivery and customer focus.

This will be achieved by some, but not all. It is arguably an area where providers of cloud computing may, over time, prefer to both look and develop fee structures like those of traditional outsourcing providers.

The emergence of cloud and its applications across different organizational functions easily paved the way for better contracting options. Both cloud computing and traditional outsourcing deal with storing data remotely, allowing for easy access, transfer, and processing. In traditional outsourcing, businesses partner with a third-party company who will be in charge of monitoring and handling data — making them an extension of the business.

Some companies offer professional services in marketing, accounting, and e-commerce functions. Cloud computing is a means of uploading data into the internet for easy access and to improve software performance. In a nutshell, the cloud is essentially a virtualized data center which allows business to be more flexible because of how easy it is to grab and store information.