The Rise of Cloud and Software as a Service (SaaS) – an Opportunity or a Threat to Service Providers?
By Martin Molloy, Principal Consultant and Cloud Expert
When service providers were asked what the strongest process areas in their pipeline are specific to Information Technology, for our latest UK Pulse survey, they highlighted the strongest demand as being in Infrastructure Management (see chart below) – a trend very likely to be due to the growing interest in the use of Cloud for the delivery of services. This doesn’t necessarily translate into a significant number of outsourcing deals incorporating Cloud, but many are assessing the opportunities and costs.
The Cloud market remains very immature both on the buyer and service provider sides and how this market develops will be fascinating to watch. Will the likes of Amazon, Google and Microsoft encroach on the current domain of service providers to large corporates or will they be kept at bay? In the short term at least, I believe the odds are stacked in the favour of ‘traditional’ service providers – for very practical reasons. For example, there has to be a clear commercial migration path for an organisation to move from its existing data centre infrastructure to using Cloud services. This process is potentially easier and carries less risk when it is delivered by the incumbent service provider.
It’s likely that, in the short-term, service providers will develop combined Legacy / Cloud offerings and create contracts that are sufficiently flexible to accommodate a client’s desire to migrate to Cloud-based services. The longer-term development picture is less clear although what we can say is that we fully expect Cloud to grow as a percentage of the outsourced data centre market.
The charts below illustrate outsourcing demand by (IT) process area.
EquaTerra’s 1H10 UK Pulse survey findings have now been published. This survey polls the UK market’s leading IT and business process service providers and advisors to take the “pulse” of outsourcing market trends.
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