Presentation #2: Business Strategies for Outsourcing to the Cloud

Presentation #2: Business Strategies for Outsourcing to the Cloud

Outsourcing & the Future of the Journey to the Cloud

Jack McAlpin

Woodbury University

WMBA 509 – Management of Information Technology

Dr. Nathan Garrett

4/22/13

We know that the Cloud is here and here to stay.  It has made an indelible mark on the realms of IT and business.  But like all technologies, Cloud is constantly evolving.  Cloud has evolved from a marketing buzz word to a primitive business model to a rudimentary process of off-site computing and is now a highly developed on-demand commercial product that businesses can leverage to lower costs, increase efficiency, and create greater business and customer value.  But, as a fluxing phenomenon, where is the cloud going?  What is the future of the enterprises’ journey to the cloud?

The hotness and popularity of cloud is evident in the manifold number of cloud providers that keep emerging.  We find everyone from start-up software companies that are backed by VC all the way to established fortune 500 technology companies jumping on the cloud bandwagon.  There is no doubt that cloud is the future of IT and those that do not accept this will be left behind and outperformed by competitors that understand and capitalize on this business opportunity. 

              Cloud in the enterprise is all about outsourcing.  What aspects of the ‘traditional’ IT department should the enterprise outsource to the cloud and what aspects should they not outsource to the cloud?  This is the key business problem with regard to the future of cloud computing.  According to Dr. Nathan Garrett, an organization should outsource whatever is not related to its core mission so that it can allocate the maximum amount of internal resources solely towards realizing that mission.  Organizations should outsource on the basis of cost and expertise.  The theory of outsourcing is intertwined with the theory of competitive advantage because an organization should focus solely on its mission and core competency while reducing costs by outsourcing areas of IT that it does not have an expertise in.  This means that what gets outsourced to the cloud is dependent upon the unique mission and core competency of the specific organization.  What to outsource or not is dependent upon the unique nature of the organization (Garrett, Nathan).

              It is the opinion of this writer that 2 main aspects of IT will not be outsourced to the cloud in 10 years: ‘Big Data’/HPC and Compliant data.  ‘Big Data’ and HPC applications are too large and complex to be hosted, secured, and retrieved from the cloud with the current technology (internet infrastructure, processing power, and data management).  Because of regulatory compliance and governance, some aspects of IT such as compliant data(banks, hospitals, R&D) will not be outsourced to the cloud because legally they cannot be.  Just because a cloud provider like AWS says that their system is secure, that doesn’t necessarily mean that it satisfies the unique compliance and governance requirements mandated for specific industries.  Just because AWS says they’ve never been breached doesn’t mean they’re telling the truth or that they could even know for sure if and when their system has been compromised. 

              When asked what he thought about cloud in 2009, Larry Ellison replied, “Cloud is water vapor” (youtube.com).  Ellison, the Founder & CEO of Oracle, the 2nd largest software company in the world, has a point.  Cloud is everything and nothing at the same time.  Cloud is whatever you want it to be.  Cloud means so many things to different people in different contexts.  Cloud is about the relationship that people and business either directly or indirectly have with IT and computing.  In 10 years, there’s no telling where the cloud will be, what will be in it, and who the dominant players will be.  That’s the exciting thing about cloud and about technology in general.   

 

 

References

 

Garrett, Nathan.  (4/1/2013).  Outsourcing.  Woodbury University WMBA 509.  Lecture

              conducted from Burbank, CA.

 

Churchill Club.  (9/21/09).  Larry Ellison & Ed Zander.  Retrieved from

              http://www.youtube.com/watch?v=rmrxN3GWHpM&t=44m45s

 

 

 

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