Into the Cloud (Part 2)

To view Into the Cloud (Part 1), click here 

In some senses, of course, cloud computing can be seen as an entirely logical - perhaps inevitable - evolution of the outsourcing model. Global organizations have grown comfortable over the years (albeit with the occasional reservations highlighted in the first part of this article) with handing over the day-to-day operations of certain key processes to external providers, and the list of what can be outsourced grows longer each day; it should come as little surprise when IT architecture which would have been considered absolutely core only a few years ago gets swept onto that list by the wind of progress. It fits into the zeitgeist, too: with hundreds of millions of us worldwide now entwined in cyberspace via social networking sites and spending an increasing proportion of time, emotional capital and - crucially - cash in virtual environments, the concept of critical interaction and engagement taking place within a framework which supports and protects you but which you do not yourself operate is hardly an indigestibly difficult one.

From an individual end-user’s perspective rather than at organizational level, cloud computing’s impact on business is - at least at these comparatively early stages of the development of the sector - relatively minimal. For most working people - the overwhelming majority of employees on earth - who owns and operates what goes on behind and beyond their screens, keyboards, headsets etc is pretty much utterly irrelevant; whether they use one piece of email software or another, or which database or spreadsheet or design program they find on their workstations, almost certainly has been determined by the IT procurement people rather than themselves. Beyond a possible need to switch software, and a few ineluctable teething troubles (and the pressure will be on providers to minimize any disruption, retraining requirements etc) the immediate repercussions of the type of outsourcing represented by cloud computing for the "average" global worker are hardly of earthquake intensity. (Of course, the wider impact in terms of what cloud portends at a macro-economic level is a different matter.)

Within business services things understandably get a little less cut-and-dry; equally understandably the more IT-focused one’s position is, the greater the questions thrown up by cloud’s. Many SSON members have been involved at various levels with the development of the process architectures within which they operate; others are responsible for software procurement, or payroll security, or academic research, or countless other areas in which cloud will open up new fields of possibility. Even if only with the creation of another option, another way of doing things, cloud has already added to the complexity of daily life. And for those actively involved in the development of cloud systems, of course, this is very much more than mere added complexity: the money pouring into the arena manifests itself in thousands of new jobs at a time when those are a particularly high-value commodity, and has provided an electric kick-start to companies struggling in the face of a gloomy market outlook - not to mention offering another potential string to the bows of software and process providers globally.

It is to the providers, in the end, that the questions of cloud computing pose the greatest challenge. To say that there will be a "war" for cloud dominance would be to understate matters in that there will undoubtedly be numerous such conflicts, of which the heavyweight clash between Microsoft and Google forms perhaps the most fascinating: at the end of last year Business Week revealed that Microsoft was launching a project to build 20 new data centers costing "as much as $1 billion apiece"  as it attempted to seize the initiative. (It’s instructive, though, that while Business Week quoted a Microsoft VP as putting her firm "neck and neck with" its rival, the Google perspective was far more bullish: "We've got a pretty big head start versus a company like Microsoft.")

While those titans thrash it out a host of other major players are also jockeying for position - as has characterized the outsourcing space generally, of course. From IBM to Infosys, the powerhouse providers are maneuvering significant resources at a time of prevailing uncertainty to ensure they don’t miss out on their slice of the cloud. Which will prove the most successful of these various ventures is as yet probably too early to speculate upon with so many other factors at play; what is certain is that there are plenty of grounds for optimism for outsourcers who already provide large-scale services for major clients, in that not only have the initial obstacles of sales engagement, economic rationale and trust issues already been overcome, but synergies on a technological, commercial, interpersonal and cultural level been established.

"Global outsourcers, like consulting and SI firms (which they may in fact also be), believe they have something of an inside track on cloud, given that they have decades of experience of running IT for a vast array of clients," believes John Madden of Ovum. "Cloud is just another way for outsourcers to approach customers about running ‘your mess for less", as the saying goes. By leveraging their experiences in implementing and operating large-scale virtualized IT environments, hosted services and service management in traditional outsourcing engagements, outsourcers are starting to position themselves as de facto aggregators of cloud services, interested in developing orchestration capabilities between public and private clouds; in most cases this development is a work in progress."  

That progress, however, is both accelerating and diversifying in a perfect example of both internet-enhanced globalization and the time-honored effect of (to continue the military metaphor from earlier) throwing a new weapon into the arena. The struggle for supremacy in outsourcing is no new story and there have never been so many actors within it; the Darwinian shake-up predicted for so long and potentially smashed into motion by the financial crisis must be approached by organizations large and small with at least a coherent and realistic cloud strategy - as indeed must any vision of their future commercial architecture.

Next week: how the providers are chasing the cloud. 

1 http://www.businessweek.com/technology/content/nov2008/tc20081121_382269.htm