Archive for July, 2011

Cloud changes shape in a crystal ball

July 20th, 2011

“The mark of a successful technology,” says Simon May, tech evangelist at Microsoft, “is that it vanishes.”

By that measure, cloud computing has a way to go, as it is surely the most visible technology out there – if you are counting headlines, at least.

So it is interesting to speculate when it will fade from our discussions, be supplanted by the Next Big Thing and become part of the furniture in the way that the PC is now.

There are signs that cloud is beginning to mature and shift from being the preserve of the techie to entering the mainstream of business and consumer life.

As this happens, May says, it is giving people the opportunity to bypass the IT department entirely, either by bringing their own hardware in to work or by accessing commercial cloud services directly. He doesn’t think this is a good thing:

Follow the guide
“Some people see the IT department as a blocker. By stepping over IT, you remove the block, but you also get rid of the sensible control, the knowledge of compliance issues, security, and so on. So IT needs to steer this but as a guide, not gatekeeper.”

The mainstreaming of cloud is evident elsewhere and is having a counter-intuitive effect on industry bodies. The Cloud Security Alliance, for example, says it has to provide more information at a basic level because the pool of interested parties is much wider and less technical than anticipated.

Colvine
Beyond the wider appeal of cloud technology, the kinds of things companies are starting to use it for are also moving on, says Laura Colvine, UK and Ireland cloud strategy leader at IBM.

“At the start, we were seeing people simply virtualising their business. But now clients are seeing that cloud can let them take a totally different approach.”

Ferry tales
Take Red Funnel Ferries, for example, which runs ferries between Southampton and the Isle of Wight. This is a commuter line for a lot of people, and like many commuter communities they are a tight-knit group.

Red Funnel Ferries decided that instead of simply pushing data to this group – timetables, information about service disruptions, weather and so on – it would set up a cloud-based tweeting environment and let the users share information among themselves as well.

Colvine calls it the “Why can’t I just…” problem, as in: Why can’t I just print my documents to the place I am going? Why can’t my local council share information around its various silos, securely, in a way that benefits me?

“Cloud is allowing companies to respond to this push from consumers,” she says. “It seems like the simplest stuff, but making it work without cloud is much harder.”

Simon May tends to agree. He sees cloud as a great leveller, allowing a single mum working from home making felt bunting, for example, to run a business that is as scaleable and professional as an enterprise.

“Also, companies can move to a new region and be up and running overnight. We have a client who has just opened an office in Prague. Inside 24 hours they have staffed a call centre and added thousands of pounds in daily revenue.

“You can do that without huge upfront investment. The switch from capex to opex makes a huge difference.”

Watch it grow

Bradshaw: Specialisation
David Bradshaw, cloud specialist at analyst house IDC, sees differentiation as a key aim that most businesses pursue. Cloud – for all its standardisation – allows them to focus on just that.

“Technology is not a differentiator, unless you are a technology firm. I am not going to buy your product because of the extra features on the customer relationship management [CRM] system you use,” he says.

“Over the next five years lots of people will say: ‘we just don’t need to do this any more’. Why run servers and install enterprise resource planning [ERP] systems when large-scale ERP vendors can handle that? If this CRM just works, do you need to do it differently?”

The volume of software that companies will build or devise for themselves will be smaller, but the output becomes much more important: it will be key to how they differentiate themselves, according to Bradshaw.

He acknowledges that this shift is bad news for some IT services companies, but says the cloud market itself will get a big boost.

Cloud software – applications, application design and development (also known as platform as a service) and infrastructure software including security – will more than quadruple.

IDC forecasts that the market will climb from $3.3bn in 2010 to $15.3bn in 2015. Hardware services, which includes cloud servers and cloud storage, will grow from $1.2bn in 2010 to $5.3bn.

These numbers do not include private cloud, whether on-premises or hosted by a service provider for a particular client – in other words these are all “productised” services sold to a market and a substitute for on-premise systems.

Long distance run

Pearson: Grown-up version of chips everywhere
But this is all short-term stuff, a series of small steps on an evolutionary path. What about the sci-fi version?

Futurologist Ian Pearson describes cloud today as “a grown-up version of chips everywhere”.

“There are good bits and bad bits. Cloud has significant performance limitations, and raises serious concerns: privacy, security.

“But when you are dealing with a multiplicity of devices, cloud is the perfect way of solving the problem. And in business, outsourcing your security to a big firm can be a good plan.”

The communications network is the biggest roadblock to a fully clouded world, he says.

“It is simple: the further away the bits are, the more delay you will have. If you have an application with a lot of procedure calls, each extra kilometre means an extra 5ms delay in the transaction. On a long round trip, that is significant.

“It doesn’t matter for everything, but it does mean that it will continue to pay to keep some data locally.”

Pearson notes that while we have vastly increased the speed of computers by squeezing more transistors and then processing cores onto our chips, it is redundant power if your data is too far from the processor. The performance gains are simply eaten by the transmission delays.

Come the revolution
The ideal cloud network would need a revolutionary approach, he says. Instead of relying on massive centralised data farms, cloud presents an opportunity to develop a truly distributed network.

He envisions a world where access devices are secured at the hardware level and run stripped back operating systems. All the clever software would be kept in the cloud and accessed as needed.

“Lots of the operating system is concerned with scheduling. You can do away with that if you throw enough cores at the problem. The capability is there; physics says you can do it.

“You could cram the processing power of all the brains in western Europe into a yoghurt pot.”

“We’ve done Moore’s law. Now we need to think of multiple cores – millions – in an optical gel providing free space interconnections between them. You could make something that is currently unimaginably powerful.

“We did the sums and we calculated you could cram the processing power of all the brains in western Europe into a yoghurt pot.”

This is not a particularly flattering comparison, and it may be a touch idealistic to suggest a total reboot of our approach to technology. But it illustrates just how much computing power we could one day have at our fingertips, interconnected in the cloud.

There is a bigger problem even than starting a technical revolution that leaves us humans out-thought by a yoghurt pot: bandwidth.

I did it my way
“What we call broadband these days was not what we meant by broadband back in the 1980s. You need at least 140Mbps upload speed and multiple Gbps coming down. Until then, copies will still have to be kept locally,” says Pearson.

May sees the communications bottleneck as a problem too. He described his own experience of backing up his home data in the cloud. “It took two weeks,” he says in disbelief.

Until this is resolved, the hybrid approach to cloud is likely to dominate, with different companies doing it different ways.

“Companies with a large mobile workforce will probably put their exchange server in the cloud. It won’t increase the quality of any one individual connection, but it would mean that overall it would be more reliable. Meanwhile companies with large numbers of local staff might choose to keep that kind of IT in house.”

These early tastes of cloud services might well be driven by a desire to cut costs, to switch IT from a massive investment to a simple operational expenditure.

But all the vendors are banking on companies noticing what else they can do once the flexibility of cloud – even in its non-science-fiction form – becomes apparent.

Source:http://www.theregister.co.uk/2011/07/19/cloud_futures/

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Indian CIOs Want Stringent Security from Outsourcers

July 20th, 2011

Kahlil Gibran, a renowned poet and artist in the 19th Century said: “If you reveal your secrets to the wind, you should not blame it for revealing them to the trees.” But what if the wind promises to be an efficient, better and cost-effective way of managing your business? Like outsourcing?

When it comes to sensitive corporate information, an enterprise’s concerns regarding data leakage are not misplaced. Nor are these concerns new.

But with security breaches dotting headlines globally, trusting an outsourcing provider’s security capabilities is going to get difficult. Consider this: A 2010 Deloitte report on global security says that only 23 percent of enterprises in India (and 32 percent globally) were comfortable with information security practices of their outsourcing vendor.

This is evident from the security measures that CIOs from client organizations are demanding from their outsourcers.

“Although in a typical IT outsourcing model, the management and access of core data is always restricted to internal employees. But today, organizations want to put additional security controls and safeguards to ensure an extra layer of security around their infrastructure,” says Prasun Roy Burman, global head-Information Security Services, HCL Technologies.

While some want to increase security controls, others want expert advice. CIOs aren’t leaving anything to chance. “Earlier, our clients used to enquire about the kind of standards we follow. Now, before the deal is offered to us, they are bringing third party security expert consultants to do a due diligence on us and our existing processes,” says Prashanth Maranayakanahalli, CTO at Firstsource.

Third-party consultants apart, Indian organizations today are increasingly keeping themselves abreast of international security and auditing standards–like Statement on Auditing Standards (SAS70)–over and above their baseline security certifications such as ISO 27001. It is an auditing statement followed globally by service organizations. It provides guidance to service auditors while performing internal controls assessment of a service organization.

Also, new technologies are on the top of their list of worries when it comes to the security of outsourced data. For example, despite a slightly favorable response to cloud computing—compared to a year ago–CIOs are still wary of data co-location on the cloud. “Even in the traditional infrastructures, some clients still ask us for a complete physically segregated network as they don’t want to take any chances,” says Firstsource’s Prashant.

Technical requirements not withstanding, client organizations are emphasizing on scanning through employees at the outsourcer’s end–employees who are the privileged users of their data.

A 2011 Data Security Council of India (DSCI) study on insider threat reveals that all client organizations have mandated service providers to conduct background checks of their employees. In turn, vendor organizations are exploring new and innovative methods for employee screening such as social networking and credit card history check.

India’s new data privacy rules aren’t making life any easier for outsourcers. The good news is that CIOs are increasingly taking a closer look at security. After all, its a risk putting an organizations’ reputation at stake – and no one wants to take it.

Source:http://www.cio.in/news/indian-cios-want-stringent-security-outsourcers-149062011

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Outsourcing — There’s No Place Like Home

July 19th, 2011

utsourcing doesn’t have to mean India — it can be using people living in rural areas of America where costs and wages are lower than in cities, says Steven Kaye, a senior researcher at Novarica, an insurance consultancy.

“Often these providers focus on a specific market niche – call center and help desk services in the case of Caleris, or Oracle/Siebel Customer Relationship Management (CRM) and Oracle Business Intelligence (BI) implementation and related services in the case of Eagle Creek.” Domestic outsourcing could be a $100 million business, according to a ComputerWorld estimate.

In a recent report, Kaye lists some of the companies specializing in domestic outsourcing.

“While rural outsourcing may not be as inexpensive from a labor rate perspective as offshore outsourcing, it does eliminate many carrier concerns over differences in culture or language as well as work schedule. Other advantages include easier compliance with U.S. data privacy regulations and the obvious political attractiveness of onshore vs. offshore jobs.”

Outsourcing also offers a way to retain access to talented people who may have tired of 9 to 5 jobs or are planning to retire. IT staff in particular can move to contractor status and work from anywhere they have decent phone and broadband connections.

This is a particularly pressing problem in insurance IT because policy administration systems for life insurance are often running on Cobol. Companies are reluctant to move policy data to newer platforms because of the risks and costs, and life insurance policies persist as long as the policyholder is alive.

Ashwin Razdan makes some similar points about rural outsourcing in in Global Services Media.

Source:http://blogs.forbes.com/tomgroenfeldt/2011/07/18/outsourcing-theres-no-place-like-home/

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Outsourcing growth drops to single digit

July 19th, 2011

The global outsourcing industry, including offshoring and onshoring, is estimated to reach $464 billion in 2011, a 9.2-percent increase from 2010’s $425 billion. The year 2010 has seen stronger growth at 13.9 percent from 2009’s $374 billion.

This is according to the 2011 year-end forecast report of Canadian-based ICT research and advisory think tank, XMG Global as part of its mid-year review of the global outsourcing market.

The race to be the top offshoring destination continues in 2011 between China and India as providers seek other markets outside Europe and the US.

XMG Global said it estimates total revenue of the offshoring segment to amount to $144.8 billion.

India will capture 42.5 percent of the offshore market to reach $61.5 billion in revenues, while China will continue to lag India with revenues reaching $45.7 billion equivalent to 31.5 percent of the market, XMG said.

The Philippines will still hold the third spot with estimated revenue of $10.7 billion capturing 7.4 percent share, the analyst firm said.

According to XMG Global chief analyst Lauro Vives, “The US economy, which remains to be a large market for offshoring, is still on the road to recovery with a forecasted 2011 GDP growth rate of 2.6 percent, slowing down from last year’s 2.9 percent.”

The report added that Indian and Philippine providers, which are highly dependent on the US market, feel the effects of the US dollar depreciation. China, with a strong East Asian client base like Korea and Japan, is less affected.

The 2011 earthquake that hit Japan has only temporarily halted outsourcing contracts, XMG said. The disaster may in fact open more opportunities as Japanese companies consider increasing offshoring contracts for non-core operations to reduce business risk, it added.

China also has a stronger hold in the domestic BPO market. In 2010, more than 75 percent of service outsourcing revenue is from the domestic market. Chinese companies are looking at outsourcing locally as an option to compete globally, XMG said.

Indian outsourcers are also starting to realize the importance of the growing domestic market. Indian service providers such as Tata, Infosys, Wipro and Satyam, which used to shun the domestic Indian market three to four years ago in favor of higher revenues from the US and UK, are now looking to diversify their client base.

The Philippines is likewise taking steps to gain more of the offshoring market share from non-English speaking countries. The Board of Investments announced in July 2011 that it would be teaming up with IBM Philippines to conduct research and implement programs to build the multi-lingual talent pool of the country for business process outsourcing.

Vives concluded, “Given the continued growth of competition and increasing demand from other countries besides the US and Europe, XMG Global expects a sustained displacement and redistribution of market share not only between India and China but in other emerging outsourcing destinations such as Brazil, Mexico and Malaysia.”

Source:http://newsbytes.ph/2011/07/18/global-outsourcing-growth-drops-to-single-digit/

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JLL: Industrial Property Management Outsourcing Grows

July 19th, 2011

Faced with obstacles like environmental regulations, operational and maintenance costs, high-energy usage, and immense tax bills, industrial real estate owners are realizing the value a dedicated management team can provide and increasingly outsourcing property management services.

Jones Lang LaSalle alone has grown it’s industrial property management business to 160 million square feet to date in 2011-up from 134 million square feet in 2010. The firm was recently awarded a 15.4 million square foot portfolio, and anticipates adding 15 to 20 million square feet of space by the end of 2011.

Investors are outsourcing an increasing number of property management services for industrial properties because of the complexities involved with managing these real estate assets, said Brenda Crisp, Senior Vice President and one of the firm’s industrial property management leads.

“Industrial properties are unique, requiring specialized services beyond traditional management offerings,” she said.

Common services industrial owners need include:

· Risk mitigation services that help owners adhere to constantly changing environmental regulations so fines and reputational damage are avoided; as well as to ensure tenants are utilizing properties appropriately and not causing expensive damage

· “Boots-on-the-ground” engineering, operations and maintenance services that entail regular inspections, equipment testing and vacant space monitoring (among other things)-thereby combating the depletion of resources on equipment and facilities

· Energy and sustainability services that dramatically reduce energy and consumption costs, as well as sustain rental and asset value. In 2010, Energy and Sustainability experts documented $128 million in energy savings across all business lines, reduced 563,000 tons of greenhouse gas emissions, and saved 912,000,000 kWh.

· Tax management services-like reviewing tax bills for accuracy, ensuring appeals are filed for open tax years, and reviewing assessors’ appraisal records for approximate valuations-to significantly lower costs. In fact, real estate owners and investors could save between 10 and 12 percent in tax costs the first year after electing to manage their taxes more carefully.

Source:http://pittsburghrealestate.citybizlist.com/15/2011/7/18/JLL-Industrial-Property-Management-Outsourcing-Grows.aspx

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Optus inks $30m deal with Sydney Water as new outsourcing partner

July 19th, 2011

Telco service provider, Optus Business, has signed a four-year managed services contract worth nearly $30 million to deliver whole-of-business telecommunications services to Australia’s largest urban water utility, Sydney Water.

The contract merges the telecommunication services delivery to Sydney Water from a multi-supplier to single supplier model.

Under the agreement, Optus will supply Sydney Water with a range of fixed, mobile and managed services.

This includes fixed and mobile voice and data carriage, Optus Evolve network connectivity for 67 Sydney Water sites, local and wide area network management, in-bound voice services to support contact centres and service management and maintenance.

The preliminary contract term is four years, with a condition to lengthen it for a further four years.

Systems integrator, Dimension Data, will be partnering with the companies to provide certain service components.

Optus Business managing director, Rob Parcell, said the collaboration with Sydney Water adds to its track record of offering outsourced and managed telecommunications services to enterprise and government.

“This is a strategic partnership that leverages our Optus Evolve and mobile networks to help Sydney Water deliver operational efficiencies,

Source:http://www.arnnet.com.au/article/393940/optus_inks_30m_deal_sydney_water_new_outsourcing_partner/

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JLL: Industrial Property Management Outsourcing Grows

July 19th, 2011

Faced with obstacles like environmental regulations, operational and maintenance costs, high-energy usage, and immense tax bills, industrial real estate owners are realizing the value a dedicated management team can provide and increasingly outsourcing property management services.

Jones Lang LaSalle alone has grown it’s industrial property management business to 160 million square feet to date in 2011-up from 134 million square feet in 2010. The firm was recently awarded a 15.4 million square foot portfolio, and anticipates adding 15 to 20 million square feet of space by the end of 2011.

Investors are outsourcing an increasing number of property management services for industrial properties because of the complexities involved with managing these real estate assets, said Brenda Crisp, Senior Vice President and one of the firm’s industrial property management leads.

“Industrial properties are unique, requiring specialized services beyond traditional management offerings,” she said.

Common services industrial owners need include:

· Risk mitigation services that help owners adhere to constantly changing environmental regulations so fines and reputational damage are avoided; as well as to ensure tenants are utilizing properties appropriately and not causing expensive damage

· “Boots-on-the-ground” engineering, operations and maintenance services that entail regular inspections, equipment testing and vacant space monitoring (among other things)-thereby combating the depletion of resources on equipment and facilities

· Energy and sustainability services that dramatically reduce energy and consumption costs, as well as sustain rental and asset value. In 2010, Energy and Sustainability experts documented $128 million in energy savings across all business lines, reduced 563,000 tons of greenhouse gas emissions, and saved 912,000,000 kWh.

· Tax management services-like reviewing tax bills for accuracy, ensuring appeals are filed for open tax years, and reviewing assessors’ appraisal records for approximate valuations-to significantly lower costs. In fact, real estate owners and investors could save between 10 and 12 percent in tax costs the first year after electing to manage their taxes more carefully.

Source:http://pittsburghrealestate.citybizlist.com/15/2011/7/18/JLL-Industrial-Property-Management-Outsourcing-Grows.aspx

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