Outsourcing in the Age of the Cloud

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The line dividing the IT services delivered with internal resources from the services delivered with outsourced resources used to be fairly clear. In 1989, when outsourcing in its modern form first emerged as a recognized and viable business strategy, outsourcing was a way to supplement internal capabilities in narrowly defined functions. In terms of IT outsourcing, the exact location of the line between internal and outsourced varied from company to company—one business might outsource database management, while another outsourced telecom. But those lines are starting to fade—if not disappear completely.

At Dell, we work every day with customers across many industries, and we hear firsthand how they approach outsourcing. There's no question; cloud solutions have had a significant effect on outsourcing strategies.

Recently, Jeremy Ford, Executive Director and General Manager of Dell Cloud Services, sat down with Greg Cleveland, Managing Director at Alsbridge, an advisory firm that specializes in information technology outsourcing. They discussed a range of trends in outsourcing and managed services, and the evolution toward being both service-centric and strategy-centric.

 Watch the video

Their discussion includes the implications of the cloud-based "as-a-service" model in the context of outsourcing. Because many of these services are highly specialized, the vendors providing them are also specialized. In some cases, it may not even be readily apparent that the services are being provided by multiple vendors; the outsourced components of a complex service may be that opaque. In this way, outsourcing is no longer simply a considered and planned engagement with a particular set of suppliers of services. To continue to add value and remain core to the business, IT organizations must adapt and change.

For example, it is growing increasingly difficult to separate technology from business objectives, so IT organizations must ensure that they are aligning themselves to the business, rather than requiring the business to align to IT's capabilities. The practical impact of this evolution is that key performance indicators defining success now typically include not only the standard operational metrics around efficiency, and cost savings, but also metrics that are business-oriented.

I invite you to view Benefits and Challenges of Cloud Outsourcing. As part of Dell’s Cloud Insight series, this two-part video shows how cloud outsourcing is changing the role of IT, and how organizations can apply these changes to build outcome-based cloud strategies. Be sure to click on the “Research” tab at the top of the page to download the accompanying whitepaper, 5 Things You Should Do Now To Benefit From Cloud Computing, which addresses specific steps you can take in order to improve performance through outsourcing cloud services.

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