February 7, 2011 11:00 AM

My colleague Kevin Smilie recently wrote of the importance of an integrated, centralized IT Service Management (ITSM) system dedicated to demand management, capacity management and service integration in order to maximize the benefits of Cloud Computing. These elements will become even more important in the future as the very nature of Cloud Computing enables the growth of healthy new “tensions” in the sourcing landscape.

Sourcing alternatives are billowing up from some of the least likely places. Why? Classical sourcing approaches for data center and infrastructure services have typically been monolithic, with clients selecting a single long-term partner to provide these services. But they simultaneously turn to separate providers for their managed network services and to carriers to provide their transport services. While these three “buckets” of services have always had some overlaps (carriers providing more integrated Managed Network Services and infrastructure service providers also providing the same), Cloud ignites a new dynamic that promises more rumbling in the service provider space.

Data center and infrastructure integrators will remain strong contenders for Cloud Computing opportunities because they’re often already situated with the client and also because they have the resources and skills. These service providers have already begun to build their Cloud Computing offerings and demonstrate their value propositions.

Some integrators that focus on Managed Network Services have been making investments to build more of their wares into the Cloud, such as voice and firewall services. For example, Voice as a Service places investments related to call management, corporate dial plans, directories, etc., in the service provider’s space and minimizes the footprint of equipment and support required on the client’s premises. Extending this experience and capability to support other non-network-related Cloud Computing services is a natural progression.

Carriers have long provided transport and Internet access services, and many have built Internet data centers to support co-location requirements of their clients who have high-speed, low-latency Web applications. Some of these carrier-integrators have begun to build out their facilities to support Cloud Computing services. While some have been struggling to contract for and deliver Managed Network Services, the characteristics of Cloud Computing services may be in their sweet spot because these are well-designed and managed centers with close proximity to major network hubs and carry little if any additional network cost considerations for their clients.

The sourcing landscape for Cloud Computing services is shaping up to provide new alternatives for clients. While most will continue to seek a primary data center/infrastructure provider, a global Managed Network Services provider and one or more carriers for transport, that portion of the client’s workload that can more readily utilize Cloud-based services may be sourced from any of these service providers as needed based on a new competitive paradigm.

Is your company taking advantage of the competitive "tension" that Cloud-based services are fostering? What other newer choices are you investigating?

Originally posted by George McLawhon, Director, TPI, on Consider the Source

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TPI is the leader in guiding organizations through effective, lasting transformation of their business support operations. Around the globe we have helped hundreds of clients reduce operating risks, streamline complex operations, improve the cost of support functions, achieve sustainable improvements and make competitive gains. Decisions to change and successful transition of existing operations to new service delivery models is hard — and replete with risks. While the decisions are never formulaic, the hard-earned lessons of hundreds of prior evaluations are invaluable.

Posted by Sue Ansell at February 7, 2011 11:00 AM

Categories: Cloud computing Outsourcing

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