Cloud outsourcing? Let’s look at the facts.

October 2, 2018

A blog post by David Linthicum, managing director, chief cloud strategy officer, Deloitte Consulting LLP

Cloud outsourcing could precipitate an extraordinary change in the sourcing world. Cost reduction is expected, although many organizations expect to invest some of those savings by increasing budgets within a specific function. This information and more can be found in the Deloitte 2018 global outsourcing survey “Disruptive outsourcing trends, technology, and innovation.”

The survey finds that “…most survey respondents have accepted that they should change their outsourcing strategy. They are now thinking about how to change solutions, which partners can elevate them, how to construct an incentives regime that motivates them to continually innovate, and how to implement and manage this new outsourcing paradigm.”

What once was correct is still correct, but new value is being defined. “While cost optimization is still a critically important criterion for outsourcing, it is no longer at the top of the list (nor even in the top five), since disruptive outsourcing, when executed well, can deliver competitive advantage by transforming the way organizations operate, and making them more agile, efficient, and effective.”

If you’re monitoring the emerging world of cloud computing, “the cloud” has been undergoing a similar reevaluation. Where cloud computing was all about operational cost savings in the beginning, the strategic advantages of cloud computing, including agility and compressing time-to-market, have proven much more important.

At its essence, cloud computing is about outsourcing IT platforms, including storage, compute, databases, etc., as well as the analogs. Newly popular managed service providers now place a layer of services around the use of public and private cloud resources in a quest to push more and more out of the company to organizations that are better equipped to provide those services.

A few cross benefits of outsourcing and cloud computing can include:

• The ability to place volatility into a domain that promotes business agility. No matter if you are outsourcing business processes or compute instances, the use of outside resources means you can change and expand faster. 
• The ability to understand costs, since they are explicit and not baked into overhead. 
• The ability to invest money saved into other strategic parts of the business.

Outsourcing and cloud computing are not “magic bullets.” However, when it comes to improving businesses, both are proven strategies that have become standard best practices to potentially improve business. Now is the time to figure out the value of each to your organization.