Because of the media frenzy that was Cloud Computing last year, most of us are pretty educated by now about the pros and cons of the technology. For those who don’t know, it’s very simple. The advantage of cloud is the ability to rapidly and cheaply scale IT and software services up and down according to the needs of your project – something that usually incurs high costs from vendors. The disadvantage is that security of your software and data in the cloud is still iffy, since everything runs on shared IT infrastructure. So companies are reluctant to use it much without fully understanding the risks.
The one aspect of cloud that hasn’t received much attention however, is how it will change the outsourcing market landscape. As firms slowly become more confident with cloud and build strategies around it, the way they approach outsourcing will also change. An article by Michael Vizard called “How Cloud Computing Levels the Business Playing Field” has some great insight.
Self-service business processes
The most obvious aspect of cloud is that firms can pick and choose what software or IT solutions they need. But Vizard says that as the technology evolves, we’ll see entire business processes being offered on the cloud, and firms being able to select which one best fits their project. In other words, instead of piecing together the entire tech infrastructure to support a business process, one by one, what if the components of the business process itself were available on the cloud? It’s a little hard to conceptualize, but he explains it well – “Business folks will not only be able to request an IT service through [the self-service cloud] portals, but they will be able to stitch together entire sets of pre-fabricated business logic to create a business process.”
So instead of building an entire cash-to-order system from scratch, that platform itself will soon be available on the cloud. As Vizard says, “When a business person decides they want to construct a business process, more often than not, all they need to do is interconnect a series of prefabricated business processes in the cloud. In effect, what cloud computing will really enable is the next evolution of business process outsourcing.”
If we think this scenario through to its logical conclusion, it seems like the need for third party service providers will be diminished, at least for the software sector of the market. And there have been some who think this will be the case. But what we need to realize is that the best that cloud can ever do is provide ready-made software, which will be extremely useful to buyers…..but only up to a point. As the market becomes more refined, buy-side clients are increasingly seeing the need for custom-built software solutions – made to fit each project, and modified as often as market trends change. For high end iterative software development like this, buyers need providers.