Survey Predicting 70% of IT Will Be Outsourced Misses the Point

Analysis predicts shift to new platform; data shows move toward a mix of several

A survey released this week by hosting- and cloud-services company Savvis predicts more large companies will shift their IT strategies so dramatically during the next decade that outsourcing will replace insourcing as the primary corporate IT strategy by 2018.

The drive to cut costs and focus IT spending on the achievement of specific business goals will upend IT infrastructures so completely that they will shift from 65 percent insourced in 2013 to outsourcing as much as 70 percent of the IT infrastructure by 2018, according to Savvis, which has sponsored similar reports for the past five years.

The report’s conclusions are based on a survey of 550 “IT decision makers” in the U.S., U.K., Germany Canada, Japan, Hong Kong and Singapore conducted by U.K. market-research firm Vanson Bourne.

The survey shows there will be a different “IT infrastructure of choice” during each of the next five years, starting with those that are fully in-house to in-house private clouds, followed by co-location, managed hosting and eventually to the dominance of outsourced external clouds.

While the shift is considerable, it is the plurality of the responses that is most consistent with other studies of cloud-computing trends. Rather than a complete shift from in-house, staff-built IT infrastructures to one almost completely outsourced to third parties – a model more common during the ’70s and ’80s than now – even Savvis’ respondents voted for a mix of internal and external environments.

A September survey of customers by VMware showed 73 percent already have some IT infrastructure elements housed in external clouds and 51 percent plan to increase that commitment.

Eighty-six percent said they prefer private cloud to public, however, and that they expect their infrastructure to develop into a mix of public- and private cloud, on-premise and hosted facilities as well as traditional outsourcing.

An April survey from cloud-management provider Rightscale found 75 percent of large businesses expect to use multiple clouds, most of them a mix of private and public that would allow them to put specific workloads on the platform that suits them best in both cost and performance.

A June survey from North Bridge Venture Partners and research firm GigaOm confirmed the trend toward hybrid cloud and outsource infrastructure, but pointed to a division in the population of IT decision-makers as part of the cause.

Business-unit managers have become increasingly willing to buy IT services from external cloud providers with little or no input from IT in order to get the services they need quickly and cost-effectively, the North Bridge/GigaOm report found.

IT departments are much less willing to put elements of the infrastructure on public clouds, so the business as a whole ends up pushing hard in opposite directions – one to add as much external cloud as possible, the other to cloud-enable as much of the internal IT infrastructure as it can.

While the basic results of Savvis’ survey gibe with other studies on the future of cloud computing, its conclusion that the bulk of IT will be outsourced may be misleadingly oversimplified.

The shift in IT isn’t from in-sourced IT to outsourced; the trend is from rigid technical and ownership requirements to the ability to choose the best platform on which to house or run a particular set of workloads.

The almost inevitable resolution of that dichotomy is a mixed environment in which everything is virtualized or cloud-based to some extent, but there is no single dominant model or IT services provider as in the past, when the vast majority of IT was either in-sourced or outsourced.

In five years, rather than viewing enterprise IT as being “70 percent outsourced,” the organizations themselves are more likely to consider all the IT assets as part of the enterprise infrastructure, whether they’re housed, owned or managed by members of the staff or outside service providers.

“The inevitable adoption of cloud is here,” the North Bridge/GigaOm report concludes. “In fact, someday soon, the cloud will just be called computing.”


Image: Savvis/CenturyLink

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