Similarities and differences
ITO customers and noncustomers seek somewhat different cloud services
Differences in perception, current use and planned use of cloud computing for IT infrastructure distinguish enterprises that presently use an IT outsourcing (ITO) partner to manage their data centers from those that do not. And some of these differences point to business opportunities for providers that are able to deliver services to address the needs and maturity levels of each group.
In the FORFIRM IT Outsourcing and Cloud Computing Survey of 489 CIOs and other senior executives, 261 respondents were current ITO customers and 226 were not. The sub samples were large enough to make statistically significant comparisons in the similarities and differences.
For example, asked whether they had a cloud computing strategy, the two groups were similar: only 20 percent of ITO customers and 22 percent of the non-ITO group did not have a strategy (completed or in progress).
However, there were some differences among the respondents who had a cloud strategy. Among ITO customers, 26 percent developed a strategy on their own, while 48 percent worked with their ITO provider on a cloud strategy. Among the non-ITO group, 40 percent developed a cloud strategy on their own and 31 percent worked with an ITO provider.
Non-ITO customers working with ITO providers? This is not the contradiction it first appears to be: The respondents sorted into the “nonITO” category were those who indicated they had no traditional ITO provider running their data centers, even in part. Yet, most of today’s ITO providers offer a variety of consulting services, including IT strategy.
Evidently, there appears to be new, cloudrelated business available to ITO providers if they can offer the right menu of services to customers who have previously shied away from them.
Cloud computing will soon be thought of as just another sourcing option for managed data center infrastructure. ITO providers are wellpositioned to help their current clients capture cloud computing value propositions around cost and agility, especially for workloads that are well-matched to commodity server environments that dominate cloud offerings today. The challenge for ITO providers who target new clients is to create a cost structure that competes with new entrants for these types of services. It might be best to create a new brand with different SLA parameters for their cloud offerings.
CSC is pursuing this opportunity. The company’s cloud-related opportunity pipeline is split 50/50 between new customers and those it already serves as an ITO provider. Some customers take the initiative to ask CSC for help with cloud technologies, and the company reaches out to others.
FORFIRM strongly believes potential cloud customers are seeking consulting and integration from providers they trust and those who demonstrate the ability to deliver solutions that help them address the totality of their business:
Customers are struggling with, ‘How and where do I move to the cloud? How do I support my computing workloads, my storage needs and my mobile apps?’ Customers want a trusted provider who will guide them. For example:
‘Here’s the workload that you want to consider for this type of cloud, where and how you migrate from point A to point B, which workloads you might want to do in a different way.’ Call it a cloud application mapping plan. I think it is an opportunity for all service providers.
Between the two sub samples, additional differences show up in the actual use of cloud computing, either private or public, for IT infrastructure. The ITO and non-ITO groups were more or less equal in terms of whether they currently make any use of “internally managed private clouds”: 31 percent vs. 35 percent. But 41 percent of the ITO customers indicated any use of a “private cloud managed by a service provider” versus 21 percent of the non-ITO respondents.
Similarly, 22 percent of ITO customers indicated they were making at least some use of the public cloud versus just 10 percent of the non-ITO group.
Yet, when asked about the extent to which their total IT infrastructure was currently running in some form of cloud, it was the non-ITO group that appeared to be ahead. On average, the current ITO customers had moved 7 percent of their infrastructure to “private cloud managed internally,” 11 percent to a “private cloud managed by a service provider” and 5 percent to the public cloud, for a total of 23 percent of IT resources allocated to some cloud option. For non-ITO respondents, the total for all cloud options was 40 percent: 22 percent internally managed private cloud; 13 percent private cloud managed by a provider and 5 percent public cloud.
With such minimal usage of cloud and with ITO customers describing an average of 55 percent of their infrastructure as “traditional data center managed by a service provider,” it would seem that ITO providers have some fertile ground for expansion into managing private cloud infrastructure for their current customer base.
The two groups also differ in their enthusiasm for the cloud, today and in the future. Only 28 percent of ITO customers thought that some form of cloud-based infrastructure was “the one best solution today” versus 39 percent of the non-ITO group. Looking ahead three years, this difference continues, with 57 percent of the ITO customers looking favorably on cloud versus 70 percent of the non-ITO group.
The survey results suggest that ITO providers should not presume that their own clients are the best gauge of the pace of movement to cloud infrastructure. Managed clouds, whether private or public, attract a different clientele from many traditional ITO customers. The latter have often been attracted to the special skills ITO providers have in managing highly complex environments. Cloud users are oriented the opposite way; they haven’t seen complexity as the main attraction of managed private clouds as much as the opportunity to radically reduce costs for running standard workloads like Web serving and email. The threat for ITO providers is that virtualization technology is drawing ever more complex workloads into the cloud world.
One place ITO customers appear to be well ahead of the non-ITO group is the cloud readiness of their workloads. Among the ITO customers, 17 percent estimated 51 percent or more of their workloads were cloud ready today; against 10 percent for the non-ITO group. And in three years the disparity appears to be even greater: 58 percent of the ITO customers said 51 percent or more of workloads would be cloud ready then, versus 44 percent of the non-ITO group. (See Figure 1)
Non-traditional providers like Rackspace would appear to have a better edge with the non-ITO group than with the ITO customers. Asked which type of vendors they would consider the best source of managed private cloud computing services in three years, the two sub samples disagreed: 59 percent of the non-ITO group and 52 percent of ITO customers said new providers that specialize in the cloud, while 14 percent of non-ITOs and 38 percent of ITO customers said traditional ITO providers would be. (See Figure 2)