Everest Group, a global consulting and research firm that comprehensively serves the outsourcing and offshoring market, has announced that according to a study conducted by the firm, cloud computing as an IT outsourcing, or “ITO,” strategy presents a viable business case for companies with traditional enterprise platforms, although the technology doesn’t seem to be that useful when compared to a virtualized setup. 

The company conducted a new ITO study named “Hype and Reality of Cloud Computing – Mind the Gap!” The study says a buyer’s investment in a cloud infrastructure can save 40-50 percent over a traditional enterprise platform, as the cloud proposition over enterprise setups is based on IT suppliers’ abilities to leverage scale to improve asset utilization, lower costs for asset procurement, standardize delivery and processes, and offer labor flexibility that reduces labor support ratios. In contrast, large organizations running virtual datacenters may not find added value from cloud services unless IT demand is very volatile or through labor savings gained by large-scale sourcing options, the report suggests. 

According to Ross Tisnovsky, vice president, ITO Research, the IT industry is working to woo enterprise buyers to the cloud, and many suppliers are positioned to deliver on most of the cloud’s benefits. Further, the cloud conundrum lies in the fact that IT demand best served by the cloud is also the most challenging to serve from the cloud, as although cloud services offer a strong business case over a traditional enterprise setup, the buyer’s cloud adoption strategy should not be based on cost savings alone. 

Buyers also must factor in associated risks, which need to be understood in the early stages while evaluating long-term strategies and approaches to cloud computing, Tisnovsky added. 

A number of challenges such as fragmented application portfolios, lack of cloud standards, security, system performance and management control hinder enterprises from adopting cloud computing. Apart from it, other factors including security breaches, downtime, business disruption, and regulatory non-compliance issues also pose significant concerns to buyers, as broad-based standards won’t come for 18 months or longer, according to the study conducted by Everest. 

The study further says that while internal applications workload and customer applications can be managed effectively from the cloud, the cloud hosting of customer applications is more difficult as hosting requires higher levels of security and risk management, presents significant integration issues, and bears more business continuity risks due to lack of control over suppliers’ recovery processes. 

Tisnovsky continued that widespread adoption of standards will be further complicated by the notable absence of public cloud providers, such as Google (News - Alert) and Amazon, as well as hosting and enabler product vendors and suppliers are responding to buyers’ concerns by focusing attention on robust management toolsets to manage risks. 

March 2010, Everest Group selected EPAM Systems, Inc., a software engineering and IT Outsourcing or ‘ITO’ provider in Central and Eastern Europe or ‘CEE’ as the 'must-know' service supplier in Central and Eastern Europe.

 

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