The Outsource Blog

General discussion, news & views about Outsourcing and Offshoring

Posts Tagged ‘CIO’

CIOs Lack Adequate Cloud Computing Knowledge

August 2nd, 2011

Traditional IT outsourcing customers are struggling with cloud computing, according to IT service providers and outsourcing advisors surveyed by KPMG Sourcing Advisory. IT service providers and advisors rated their IT executive customers’ facility with various aspects of cloud computing on a scale of one to five, where one represented “very unskilled” and five represented “very skilled.” IT executives earned embarrassing scores from their providers and advisors: None garnered even a middling score of three.

When it comes to managing and governing cloud initiatives, IT leaders earned their lowest scores from respondents: 1.69 from advisors and 2.19 from providers.

Their skills in cloud sourcing and structuring cloud engagements didn’t fare much better. Advisors gave their IT customers a ranking of 1.81. Providers were marginally more generous with a ranking of 2.35.

IT executives also received low marks for their ability to assess the near-term maturity of cloud computing and its viability to support enterprise computing needs: 2.19 by advisors and 2.68 by providers.

Outsourcing providers gave their highest score of 2.81 to customers for understanding how cloud computing options can complement or supplant traditional enterprise systems and outsourcing investments. Advisors gave customers a score of 2.03.

Stan Lepeak, director of KPMG Sourcing Advisory Global Research, was not surprised by the low scores. “Most of the cloud computing focus has been around long-term futures, not scrutinizing real short-term opportunities and deciphering the reality from vendor and service provider claims,” says Lepeak.

Notably absent are clear business cases that verify cloud computing vendors’ claims of lower costs, he adds. “It’s not so much that buyers are not skilled at cloud computing capabilities,” says Lepeak, “but that they have not had much real-world practice at utilizing them, or that there is not enough relevant, real-world data available from providers to do meaningful business case assessments.”

Despite the low ratings IT executives received, IT service providers are bullish on buyer uptake of cloud-based solutions. Forty-two percent of service providers polled said that their clients have one or more live cloud services deployments and that cloud engagements would increase to 66 percent in the next year, according to the KPMG survey.

It’s that fast-moving nature of the market that has made it difficult for customers to keep up, says Lepeak, who compares cloud computing to the early days of the Internet, when buyers struggled to define and execute strategies to exploit its full business potential.

The cloud computing learning curve for traditional IT outsourcing buyers is “elevated, but not steep,” Lepeak says. “It’s as much a function of practicing the skills as acquiring them.”

The same general framework and processes that customers use for traditional outsourcing contracts can be employed for cloud computing deals: define the scope of the deal, create a business case, vet the vendor, determine measurable metrics for success, plan for transition and ongoing management, and outline a change management plan.

Source:http://www.networkworld.com/news/2011/080111-cios-lack-adequate-cloud-computing.html

Share and Enjoy:

Comments Off »

Posted in News

Tags: CIO Cloud Computing

CIOs See Promise in Public Cloud Storage

July 13th, 2011

Share

Three quarters of companies are either currently using or plan to use public cloud storage offerings. What’s more, all organizations with more than 500 employees are using or planning use of public cloud storage, mostly for e-mail, data protection and front-office applications like CRM, especially SaaS-based CRM solutions such as Salesforce.com.

That’s the upshot of a recent survey of 133 CIOs/CTOs and their operations staff in North America conducted by SNIA (Storage Networking Industry Association) and our industry analyst firm, Storage Strategies NOW. The survey paints a picture of a technology that’s poised for takeoff — if providers can overcome user apprehension over two big concerns: security and performance.

Anand Kapoor, vice president of technology of WNS Global Services, a business process outsourcing firm in Mumbai, India, puts it this way. “Generally you see two sets of early adopters: smaller enterprises and SMBs that cannot afford the redundancy that an enterprise-class infrastructure would cost, and larger enterprises that need rapidly scaling infrastructure that is managed by organizations with the core competencies related to storage,” says Kapoor.

Making the Cloud Storage Case

In a way, public cloud storage is like any outsourcing decision. Companies are faced with ever increasing storage requirements, many of which imply permanent retention of archives. So is it better to leave long-term storage management for generic applications like e-mail and CRM to external organizations whose primary business is providing those services, leaving IT more time to focus on critical business applications? Clearly, many CIOs and CTOs believe it is.

Cloud access appliance manufacturer Nasuni’s CEO, Andres Rodriguez, likens public cloud storage to an electric utility. “You wouldn’t try to build and manage a power generating station in your back yard, so why try to recreate the economies of scale that the cloud storage provider has available?” he asks.

Speed of deployment is another issue, says Hisam Ahmad, global head of architecture and engineering for T-Systems, a hosting service provider in Bonn, Germany, which both uses and provides cloud storage access. “It takes time for an IT organization to plan for increased data center infrastructure, find a vendor and finance a storage acquisition, and then it has to wait months for installation,” he says. “We are seeing end-user organizations going around IT and directly contracting cloud storage and using it within days if not hours.”

Potential Cloud Pitfalls

With many good reasons to deploy public cloud storage, what’s the downside?

Fear of security breach, loss of control and access to critical data are major concerns, according to the SNIA/SSG-NOW study. Perpetuating these issues is the lack of a standard for public cloud data interchange. Each provider has its own version of an HTTP command structure that is foreign to existing applications. Modying existing applications to use a proprietary public cloud is not feasible, so this relegates public cloud to only those applications that are already cloud ready.

SaaS providers and Microsoft, for its Exchange email offering, have transparent interchanges developed and massively deployed, for example. Likewise, data protection and disaster recovery products that have a public cloud interface are available from a number of vendors and cloud service providers such as Nasuni and TwinStrata.

WNS Global is addressing the security issue, according to Kapoor. “At WNS, our primary concern is the security of data. All customers are segregated first at the network level and then, using technologies such as Multi-stor, we make sure there is complete segregation at the storage level,” he says. “As a result there is no part of the infrastructure that overlaps between customers.”

So what will it take to make cloud storage viable for applications beyond e-mail, CRM and data protection? The answer is simple: Cheap bandwidth.

As tablets and smart phones become everyday business tools, new applications in many organizations will embrace browser-based HTTP application interfaces to primary storage. As more of these devices are deployed in business-critical applications served up over the Web, in a way, cloud storage automatically becomes primary storage, particularly if the storage is not maintained on the local device.

This is a good thing, until you run out of bandwidth. SSG-NOW is involved with a number of companies that are working at various levels within the TCP/IP infrastructure and it is our opinion that there is plenty of headroom in the existing and developing network infrastructure to handle the increased loads that the new generation of client devices will require.

In Search of a Standard

In addition to bandwidth, respondents to the SNIA/SSG-NOW survey were adamant that standards development is essential. Nearly four out of five respondents (78 percent) indicated that standards were either very important (47 percent) or important (31 percent) to their future deployment. The greatest support (53 percent) was for the SNIA CDMI (Cloud Data Management Interface) standard.

This support notwithstanding, it is our opinion that the work being done by the Open Stack interest group — supported by Dell, Rackspace, NASA, Citrix, Cisco, Canonical and over 50 other organizations — will deliver the most useable interface code the soonest, offering a de facto standard that is likely to precede ISO standard adoption by years. The code can be obtained under the Apache 2.0 open source license. (Information on the organization can be found here).

Short of widespread adoption of a standard set of interfaces, cloud storage users have access to a number of virtual and physical appliances to connect their existing systems using block storage or file storage interfaces. These provide several advantages.

First, the appliance provides an interface to cloud storage as if it is any block or file storage system. Second, an appliance that provides a transparent interface to a number of cloud service providers is an insurance policy against either technical or contractual difficulties with a service provider. This has been referred to as the Hotel California syndrome – you can check out but you can never leave.

Finally, these appliances offer WAN acceleration features like compression and network flow optimizations that address the bandwidth cost issue.

With increased pressure to provide more storage at lower or similar capital and operating expenses, the catalyst to adopt a public cloud strategy will continue to increase adoption across organizations of all sizes.

Source:http://www.networkworld.com/news/2011/071211-cios-see-promise-in-public.html?page=1

Share and Enjoy:

Comments Off »

Posted in News

Tags: CIO Cloud Public

CIOs increase investment in outsourcing and select multiple suppliers

May 16th, 2011

Share

CIOs plan to spend an increasing proportion of their IT budget on outsourcing in 2011 as they emerge from the downturn.

One in 10 plan to devote more than half, and almost one-third plan to spend a quarter of their IT budget on outsourcing, a survey of 2,500 CIOs and IT leaders worldwide reveals.

The trend will change the nature of IT departments, which will increasingly be made up of professionals with the skills to manage strategic relationships, the research by recruitment firm Harvey Nash and PA Consulting reveals.

“In the past 12 months, two trends have emerged around how CIOs are outsourcing. First, more CIOs than ever before are investing in outsourced activity. Second, they are engaging a more diverse group of partners,” says Tom McEwan, global head of IT at PA Consulting.

Pressure to cut costs and the need to access a wider range of skills are the two most important drivers for outsourcing, the survey reveals.
Multisourcing

But the nature of the deals are changing, as more CIOs seek to form partnerships with a larger number of smaller, specialised outsourcing partners.
Some 39% of global CIOs expect to increase their dependence on multisourcing in the next 12 months, the survey reveals.

These smaller companies are able to deliver innovative technologies in mobile commerce, private cloud and social networking, says McEwan.
Offshoring up

The survey reveals that offshore outsourcing has grown in popularity over the past 12 months, with 50% of CIOs planning to increase their spending on offshore outsourcing this year, up from 20% in 2010.

India, still the outsourcing destination of choice for the majority of CIOs, has seen its popularity rise over the past year. But Brazil, China, Malaysia, the Philippines, Russia and Vietnam are taking a growing share. By contrast, the UK, US, Ireland and Canada are becoming less popular outsourcing destinations.
Flexible workforce

CIOs are transforming their IT departments into flexible organisations with a smaller full-time workforce, instead relying on temporary contract staff and outsourced teams during busy periods.

The majority of CIOs have up to a quarter of their IT workforce employed in this flexible way, and one in 10 use a flexible model for up to half their workforce.
Only 16% expect their reliance on a flexible workforce to fall within the next two years.

Skills

The trend will demand IT professionals with the skills to engage with customers and the ability use IT to deliver innovation, says McEwan.

“Those CIOs with experience of managing complex relationships with lots of moving parts are likely to become more attractive to employers which are now faced with
the growing management headache of ensuring that all suppliers are working in harmony,” he says.

Source:http://www.computerweekly.com/Articles/2011/05/13/246652/CIOs-increase-investment-in-outsourcing-and-select-multiple.htm

Share and Enjoy:

Comments Off »

Posted in News

Tags: CIO Outsourcing

CIOs must take steps to manage risk and unexpected costs during cloud sourcing revolution, says Gartner

April 29th, 2011

Share

The $820bn IT services market is changing quickly and dramatically, as cloud computing and offshoring become mainstream, and CIOs should take steps to manage inherent risks and unexpected costs during the cloud services revolution, according to Gartner, Inc.

During the next few years, market dynamics will determine whether cloud-enabled outsourcing will be the demise of traditional outsourcing, if it will lead to the convergence of services and products currently marketed ‘as a service,’ or if it will result in next-generation outsourcing.

Cloud-driven business and IT services include all types of solution that are developed, bundled and packaged as outsourcing service offerings for which the business or IT service provider uses one or more cloud computing technologies within the solution’s overall architecture. Gartner refers to these services as ‘cloud-enabled outsourcing service offerings.’ These services can be delivered directly by a cloud provider or via a service aggregator for the delivery of pre-engineered and configurable business solutions in a timely and cost-effective manner.

“Cloud service sourcing is immature and fraught with potential hazards. The hype around cloud computing services has increased interest, as well as caution, for CIOs trying to determine where, when and if cloud services can provide valuable outcomes for their businesses,” said Frank Ridder, research vice president at Gartner. “Cloud computing is driving discontinuity that introduces exciting opportunities and costly challenges. Organizations need to understand these changes and develop realistic cloud sourcing strategies and contracts that can reduce risk.”

Mr. Ridder said that traditional IT services often find organizations locked in, fighting with rigid delivery or hesitation to change when engaged in traditional IT services deals. Innovation seldom materializes and solutions fail to scale, and service providers often struggle with their profits.

In the new cloud services scenario, however, flexibility, agility and innovation are design principles and, over time, service providers will succeed in delivering on these principles. The market also expects scalability, cost-efficiency and pay-per-use pricing models from cloud services solutions. Although cloud services already provide these, service providers manage their risks through terms and conditions that are still immature. However, Gartner believes that solutions and their commercial terms are maturing quickly.

To avoid the potential pitfalls and hidden costs of cloud sourcing, Mr. Ridder said that organizations need to ensure they understand the short- and long-term implications of cloud services, on the demand and supply side, as well as on the sourcing life cycle itself. The services sourcing life cycle includes four crucial elements: sourcing strategy, vendor selection, contracting, and management and governance.

“The life cycle is a critical area to plan and manage, regardless of whether organizations source their IT services through internal or external resources. Our forecasts indicate that organizations spend 53% of their IT services budget on external services, and that spending is growing 3.9% per year, while new categories of services are experiencing double-digit growth,” said Mr. Ridder. “Organizations can use Gartner’s extensive analysis of changes in delivery, pricing, investment and cost to more effectively develop their cloud sourcing strategies, negotiate their cloud services contracts and manage the performance of their providers.”

More-detailed analysis is available in the Gartner Special Report on Cloud Sourcing. The Special Report includes extensive research around key cloud sourcing issues related to emerging market trends, offerings, contracting, and pricing. There are also links to Gartner’s Talking Technology series, as well as links to recent and future webinars.

Source:http://www.ameinfo.com/263481.html

Share and Enjoy:

Comments Off »

Posted in News

Tags: CIO Cloud Outsourcing

CIOs focused on using IT for growth in 2011

January 4th, 2011

Share

More chief information officers (CIOs) will be concentrating on growth in 2011, as the recession becomes a more distant memory.

This is the view of industry commentator Maryfran Johnson, who said this year will be about enhancing productivity, investing strategically and fuelling growth, rather than cutting costs.

Writing for CIO.co.uk, she claimed that business renewal is “under way with a vengeance”, with IT investment leading the way.

Ms Johnson claimed that CIOs will be focusing on strategies which enhance employee collaboration, increase product quality and improve IT security and risk management.

She added that cloud computing, mobile devices and social media are set to change the way everyone works, as the technologies become more widespread.

Neil S. Hirshman, a strategic advisory board member at the International Association of Outsourcing Professionals, recently claimed that many companies will obtain integrated IT solutions from outsourcing providers in 2011.

Source:http://www.ihotdesk.com/article/800321498/CIOs-focused-on-using-IT-for-growth-in-2011

Share and Enjoy:

Comments Off »

Posted in News

Tags: 2011 CIO IT

The price of outsourcing

November 26th, 2010

Share

At a recent CIO conference in Phoenix for insurance industry executives, I gave a presentation on how to improve the relationship between CIOs and their IT management. At the end of the presentation I received exasperated responses from some of the CIOs about how there was little to no need to enhance the relationship because for some of the attendees, all of their IT management and IT staff had been long ago outsourced and there was effectively no “relationship” or vision collaboration to improve.

What I saw was the logical end to an evolution of the USA insurance industry to minimize costs to the degree that essentially all IT was now the domain of non-employees for many insurance companies. With this delegation and discharge of employees has been the lost of corporate knowledge, loyalty, and innovation as well that ability to use the combination of CIO vision and IT technology to achieve a competitive advantage.

The road to this evolution was paved by the greed and shortsightedness of CEOs running some of the largest insurance companies to achieve maximum profitability by gutting their IT operations (some have virtually no in-house employees in IT), and outsourcing the work off-shore. Effectively assuming that IT is nothing more than a commodity that can be reduced at will and to the maximum extent possible with little to no effect on the operations of the company.

Having completed this over-optimization of IT these large organizations (most of which use SMB insurance agents), find themselves being challenged and beaten by newer entrants into the business that are totally on-line with no agents to be beholden to. In essence these new competitors have used IT as a technical/business advantage whereas the big guys have destroyed their IT investment and are now reaping the harvest of their money saving ways.

The ultimate conclusion of some analysts at this conference (and which I agree with) is that the insurance industry as it now exists with agents, small agent offices, and paper and pencil ways will be dead in 15 years or less as the next generation of consumers that are Internet savvy become financially dominant.

The lesson to be learned is that loyalty to employees and the ability to exploit the synergistic relationship between the CIO and IT can still be a powerful force for competitive advantage. For those that fail to plant their seeds for the future will end up in the mining or dust business. This appears to be the model for the future of companies where CIOs have no loyal IT staff that are full time employees. In the new model for many CIOs, they are nothing more than hanging ornaments at the C-level that used to be visionaries and leaders, but are nothing more than hatchet men to reduce costs and tidy up the deck chairs as well as pass out iPads to clueless executives as the Titanic slowly sinks.

As I understand it, this brave new world provides great financial incentives for CIOs that continue to drive down costs. Like a car that accelerates to a thrilling speed and then plunges off a cliff, these CIOs will be in for a hell of a ride…all the way to the end of the line.

Source:http://www.microscope.co.uk/industry-views/the-price-of-outsourcing/

Share and Enjoy:

Comments Off »

Posted in News

Tags: CIO IT Outsourcing

CIOs speak is in-house IT dying?

September 6th, 2010

Share

Is the influence of the IT department waxing or waning in today’s organisations? Or is it transforming? Or, will cloud computing make IT almost completely obsolete? These are the kinds of questions that are bouncing around the IT space in 2010.

TechRepublic has taken up the topic with its CIO Jury to ask the leaders of IT where they stand. See how the jury ruled and then read our selection of interesting comments from the IT executives.

The jury vote
TechRepublic polled its 100-member panel of US IT executives on 31 August and asked, “Will the average in-house IT department of 2015 be much smaller than it is now?” The jury, made up of the first 12 respondents, was split exactly down the middle with six “Yes” votes and six “No” votes.

The jury for this topic was:

Matthew Metcalfe, director of IS, Northwest Exterminating
Michael Knibbs, CIO of CompWest Insurance Company
Joel Robertson, CIO of King College
Laurie Dale, director of IT, Ability Beyond Disability
Kevin Quealy, director of IS, Southern Baptist Conservatives of Virginia
Lance Taylor-Warren, CIO, H.A.W.C. Community Health Centers
Mitchell Herbert, director of IT, McCormick Barstow
Michael Hanken, VP of IT for Multiquip Inc
Chris Ricciuti, CIO, Needham and Company, LLC
Randy Krzyston, director IT, Thomas Jefferson School of Law
Michael Foerst, CIO, Missouri Employers Mutual Insurance
Robert Culpon, director of Information Systems for Anderson ZurMuehlen
The changing role of internal IT
Lou Hablas (director of IT for RZIM): “Cloud computing will undoubtedly reduce the need for staff at the organisational level, but likely increase the need for staff at the cloud level and the outsourcing level. I think the rise of locally-based consulting and tech support companies — many with ties to the cloud as well — is evidence of this accelerating trend.”

Mike Wagner (CIO for Stone & Youngberg): “The tendency to outsource the pure technology function to managed service providers will continue to increase, and resources with a purely technical skill set will work for service providers rather than internal IT Departments. In other words, the generic and commoditised aspects of IT that do not provide competitive advantage will be outsourced to service and cloud providers. However, IT functions that provide competitive advantage and cost savings via process optimisation and decision support (ie, business analysts, IT architects, BI and statistical analysts) will continue to grow and slightly offset the headcount loss associated with the outsourcing of commoditised functions to managed services and cloud providers.”

Chris Riccuiti (CIO of Needham and Company, LLC): “While it’s true that infrastructure jobs will shift to vendor data centres, those jobs will be replaced with more ‘business-centric’ IT folks that will still reside in-house.”

Jeff Relkin (director of IT for Quadel): “As technology becomes ever more commoditised and as the availability of objects for application construction without traditional development continues to expand, the need for in-house IT resources will dwindle. The overall organisation of IT will also change, along with the skill sets required. IT professionals will need to become more mainstream business resources than ever before, with more emphasis on contributing to revenue generation rather than expense reduction.”

Delano Gordon (CIO of Roofing Supply Group, LLC): “Smaller but not eliminated. Cloud computing affords some reduction in staff positions but will not eliminate the need to have SMEs [subject matter experts] on staff.”

Michael Foerst (CIO of Missouri Employers Mutual Insurance): “Yes, on average it will be smaller but not because it is all outsourced. IT departments will leverage the capabilities of the cloud in order to allow their internal resources to become more familiar with the business and deploy technology solutions that will help differentiate their organisations in the market.”

Ren Johnson (IT director of Professional Dynamics, Inc.): “IT departments and skill sets for what is required is changing due to cloud computing. We are looking at an industry on the verge of reliable cloud computing that will solve IT’s maintenance and disaster recovery issues. The role of IT will be reduced to help desk/desktop support and IT leaders who manage vendors to maintain key critical applications and systems. The only vertical markets I see building internal cloud computing supported by their own IT departments would be regulated sectors such as financial and healthcare, although there could be some strides made into making these effective on the cloud as well.”

Smaller? No, IT will grow
Kurt Schmidt (IT director of Capital Credit Union): “With the ever-increasing usage of technology, the need for technicians to support it will only increase.”

Michael Woodford (executive director of IT, USANA Health Sciences, Inc): “I don’t believe that cloud computing will have as dramatic effect as everyone thinks it will. There may be portions of an IT shop that could be outsourced, but with an ever-growing reliance on IT as a corporate resource IT shops should expect to have concurrent growth.”

Martin Szalay (director of IT, FWE Co): “I, and others, have come to find that outsourcing is a not always as cost effective, agile or as wise a decision as others would have us believe. The threat of IT downsizing has loomed over me for over 20 years now; with the evolution of newer technology, IT automation or cutting edge business processes. Yet, we need more developers and admins than we’ve ever had before.”

Kevin Leypoldt (IS director for Structural Integrity Associates): “While I do see [and forecast] dramatic changes in the way that IT functions, I believe that the department numbers will remain relatively stable. However, the roles that make up the department will change in relationship to these shifts in technology. [For example], the pending shift to cloud computing will likely see a shift in resources to networking and security from server and desktop support.”

Booming IT in healthcare and finance?
Brian Wells (CTO of Penn Medicine): “Not in the healthcare sector. The systems are only getting more complex and automation is spreading to more and more of the enterprise requiring more and more diverse expertise and support.”

Lance Taylor-Warren (CIO of H.A.W.C. Community Health Centers): “Cloud computing is just one of many options that a company has to look at moving forward. No one knows what the next big thing will be. IT departments may shrink in certain markets, but healthcare IT is on the cusp of a huge growth phase due to healthcare reform and the requirements being forced on the industry by the Federal Government. Outsourcing can’t address the hands-on need.”

John Gracyalny (director of IT, SafeAmerica Credit Union): “No, it will be larger. At least in the Finance industry, primarily due to increasing regulation.”

Jeff Cannon (CIO, Fire and Life Safety America): “No. Proportional to the rest of the business, the in-house IT department will be roughly the same for best-in-class companies. Roles may shift. An IT department that is very tactical today — systems maintenance, security, backup, archiving, user support, etc — may see its focus shift towards strategic planning, partner/vendor management, audit and compliance tasks. Whether it’s private cloud, public cloud, non-cloud or some future permutation we have yet to see, there is still risk to manage.”

Source:http://www.zdnet.com.au/cios-speak-is-in-house-it-dying-339305798.htm

Share and Enjoy: