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To outsource or not to outsource...

To outsource or not to outsource...

Published on 12/06/2013

Should a business outsource the delivery of all or some of the software it employs to an external cloud service provider?

Ultimately, this question can only be answered by the firm’s CEO. A typical CEO has an unwavering focus on bottom line results and the ability to remain competitive in the future.

This doesn’t mean that the decision should simply be framed in dollar and cents. The decision process should focus on whether the firm considers the ownership, maintenance and support of infrastructure to be a critical link in its value chain.

For a business to remain competitive over the long run, every link in the value chain it operates to deliver value to the firm’s customers must be critically examined to determine whether it makes sense to retain those tasks or whether a third party could provide them more cost effectively.

On a purely objective basis, it is very hard to imagine a situation in which the ownership of IT infrastructure could be a core competency the firm must have to be competitive. No added value can be created from an internal cloud.

The reality, however, is that shifting to an external cloud provider is a bridge too far for many naturally conservative CIOs. This situation is changing rapidly. The sky hasn’t fallen on those who have already made the move. Dipping a toe in the waters with non-critical hosted email is a great way to become comfortable.

When a CEO asks what the CIO is doing about the cloud, and sooner or later he or she will ask because they hear about the benefits of “cloud” daily, the CIO will need to have a good answer ready.

If a CIO replies with words to the effect that: “Don’t worry, we are building our own cloud because it is cheaper and more secure if we do it ourselves”, the days left in the CIO’s job will now be numbered.

Your CEO is talking to his or her peer group all of the time and hearing how companies who have unshackled the burden of running infrastructure to an external cloud have been able to concentrate on IT investments that make a real difference to their competitiveness.

Download the PDF, as featured in IT Brief, June 2013.