Are Cloud Services Really Outsourcing?

Technology is a tricky thing. It’s very, well, technical. Technology is not just complex, it also changes very rapidly. And of course, the names change as well. Today you see a lot of talk about “Cloud Services,” but the definition of this term is a little… well…
cloudy.  Today, we’re going to clear it up a bit and see how you can use it. Let’s get started!

What we call Cloud services today was called a number of things in the past: “internet services” was one term, with “pay as you go” as another and even “rental services” at one point. A Cloud service is a method of contracting for computer services, without actually buying the underlying software or equipment (or brining it onto your premises). The name
comes from an icon that was put on network diagrams, a “cloud” representing the telephone system. Later, the cloud was any complex system that you didn’t own and didn’t have the details to map out. But it’s not just a technical term for a service; it is also a method of outsourcing, since it leaves the work of providing and maintaining the service to someone else.

In the past when a firm outsourced technical services they often dictated the exact details of how the service would function. For example, when then management of a group
of servers was outsourced, every detail down to the brand and configuration of each server might be specified in a contract. With a cloud service, you contract for: five Terabytes of disk space, room for 10,000 photos, 500 new email accounts or even 100 hours of video conferencing. Cloud services have proven that it’s often better to buy a proven service than try to build (or configure) it yourself. By outsourcing to a company that “built the better mousetrap” your organization has an opportunity to move functions a quantum leap forward.

While a Cloud service can perform virtually any function for your organization, all Cloud services do share certain common elements:

  • OFF-PREMISES: While some element, an application or perhaps a communication device, may operate inside of your organization the primary service is outside… somewhere.
  • INTERNET: There are a few exceptions, but almost all Cloud services are accessed through the Internet, or the various parts of the service are connected via the Internet.
  • VIRTUAL: Your service may be located on a specific device (probably a server), or it may be on a cluster of devices at that location, or it may even be located on
    devices spread out around the world. You can’t tell the location, and your data
    may be located in multiple locations on multiple devices. However, the virtual
    nature of the service completely hides the physical structure. This is good for
    the function of the service, but it may raise questions within your organization about the security of your data, since you will not know the physical location of your data.
  • SHARED: The reason that almost all Cloud services are virtual is because this allows the provider to efficiently share all equipment and locations. This greater
    efficiency translates into a lower cost and/or better performance. A well-designed  Cloud service will provide a robust security model that ensures that sharing equipment doesn’t lead to your data being co-mingled with other users.
  • CHANGEABLE: Pre-Cloud outsourcing usually incorporated extensive notification and authorization approvals to change any part of the service they operated for you. Cloud services will continually change the location, hardware and software of their services without notice to their clients. If this is done correctly, the only sign that a change has happened is that performance improves. However, Cloud services will notify you when a visible feature is changed.
  • SUBSCRIPTION BASED: When you own software, whether you bought it or you built it, you pay a fee or a license. With a Cloud service you almost always pay a subscription, a set price per month or per hour of use or per user. In the old purchase model, you could choose not to move to the latest version, and put off the cost and effort of upgrading.  With a subscription, you pay for as long as you use the software, making the vendor’s revenue more stable and your upgrade path  (generally) less difficult.

Cloud services are definitely outsourcing! By moving away from the client directing every detail of the service to allowing the best providers to handle these details, the opportunities for service and cost improvement become much greater. Moving to this new model means that clients will need to let go of the little details of how services operate and focus on the bigger issues of how their entire technology infrastructure works. It’s a
big move, and it’s going to be frightening for a lot of technology departments. Firms that do not embrace this model will increasingly fall behind the early adopters, who will dramatically lower their operating costs. Don’t fall behind, take a look at Cloud services and see how they can improve your operations. And that’s my Niccolls worth for today!

This entry was posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services and tagged , , , , , . Bookmark the permalink.

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