70% of IT Will Outsource to Hybrid Cloud Within Five Years

I read an interesting Savvis report recently about Global IT Trends and what kind of decisions senior IT personnel are making. Since they found outsourcing to be the largest trend, and a driver of business growth, I thought I’d share some of their findings here.

First let’s talk about how Savvis defines outsourcing, pretty straightforward – the contracting out of a business process or function to a third party.

Traditionally this is seen as a way to simply reduce costs, but Savvis argues that in recent years there is in fact a better reason to outsourceOperational efficiency and the desire to focus on the core business has moved to the front of the line. After all, odds are that ‘priority number one’ at your business is not up-time, security, and backups – but that’s exactly the main goal of who they’re outsourcing to.

According to Savvis, within 5 years, 70% of IT will be outsourced. Which is actually the inverse of today’s model.  Why is this? Because it’s the only way to truly fulfill the strategic goals of IT, which are controlling costs, finding cost effective infrastructure solutions, and of course, better collaboration across the business.

How is IT Making the Transition?

So how does senior IT plan to smoothly transition on this five year journey? The answer lies in a hybrid infrastructure model.  Which is basically picking and choosing what part of your IT infrastructure makes sense to outsource.

There are applications that are ready to be outsourced right now according to the report.  The top three are email, website and microsite (SharePoint), and company intranets (SharePoint).

Moving on from the application level: Private cloud infrastructure as a Service (IaaS) is popular mainly because IaaS is considered a safe place for testing and development. For IT decision makers, these are great places to start your transition away from 100% on-premises IT.

Why is IT Taking the Plunge?

So, why choose the cloud? According to Savvis, outsourcing saves an average of 11% on annual IT budgets. In addition to savings, what used to be a barrier to cloud adoption is becoming a reason to move to cloud: security. In fact, Savvis found that it was the number two driver for adoption, just behind lower costs. Beyond that, IT decision-makers like to have the ability to scale computer, storage and bandwidth consumption to mirror their fluctuating needs. The final driver was improved reliability, since cloud providers only job is to keep their infrastructure running optimally, they do it better than the on-premises world.

IT has some serious challenges as well, but it could be summed up by saying IT has to do more with less.  Particularly dealing with a shortage of skilled IT staff.  Why not let a cloud provider, who has an abundance of skilled IT staff, solve that issue right away?  Another big challenge is the updating of your technology infrastructure – 24% of IT decision-makers see this as a key issue that is staring them in the face.  It’s interesting that moving to an outsourced model will solve all of these challenges at once.

Get the Edge on Your Competition

IT infrastructure is evolving and there are some major changes coming in how you pay for and manage IT. The Savvis Global IT Trends report suggests now is the time to prepare for this shift, because your competitors certainly are!

My final take away from global senior IT was this: don’t just try and slash costs for the survival of your business, use the advantages of outsourcing to gain a competitive advantage. The tools are there, so become an innovation engine for your company – spearheading the movement towards outsourcing isn’t going to get you fired, it may just get you a raise.








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2 Responses to 70% of IT Will Outsource to Hybrid Cloud Within Five Years

  1. Nice writeup Jim. Here are my 2 cents:

    It all depends on how you define Hybrid. If Hybrid definition includes on-premise legacy applications then I would agree (that 70% of application footprints will utilize hybrid model). If definition is move to a service provider model (not on-premise) regardless cloud model, I am not so sure about it.

    Statement, that IT industry can move 70% of more than 2 trillion USD worth IT assets to service providers in 5 years is hard to justify. Keep in mind that getting to first 30% took 10+ years and that was low hanging fruit. It’s going to be a long journey. If we can hit 50% (going from 30% currently) in 5 years that will be great! Tough part is that whatever was easy to be moved to service providers has been (for most part) moved to service providers.

    I think context is very important in all cloud discussions, I am assuming we are talking about enterprise IT here (not including small and medium business).

    ALL WORKLOADS ARE NOT CREATED EQUAL!

  2. Pingback: Moving to the Cloud: Choosing a Multi-tenant or Dedicated Environment for Your Business

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