Five years ago, the cloud was comprised of three components; compute, network, and storage. Hence, when you compared the cloud to legacy hosting arrangements the main difference was that cloud operated a pay-per-use/pay-as-you-go model with instant capacity. From a services perspective, it was essentially the same as a virtual environment. Today, the cloud means value added services on top of the IaaS layer, and there are only three players with a complete offering: Amazon Web Services, Google Cloud Platform, and Microsoft Azure.

The big three cloud players are all solving horizontal IT problems with services ranging from databases, data warehousing, mobile push notifications, and IoT solutions. Companies leverage these services to get their products to their customers faster and to reduce project and support costs. New services are also introduced each month – all with the same billing and security framework. Today, all hosting providers are competing simultaneously with AWS, Azure and Google, which creates an element of risk in long-term hosting contracts.

What implication does this have on cloud-sourcing?

It is important to ensure that hosting and cloud sourcing arrangements do not prevent your ability to leverage the cloud to the maximum. Traditional outsourcing is often done in a way that creates a deep frozen environment that responds very slowly to changing business requests – that is why digital transformation quite often starts as shadow IT. Therefore, any cloud RFP should consider a breadth of cloud services, support for DevOps and self-service, separate cost models for capacity and support services, as well as proven capability to increase IT productivity with the cloud.

Additionally, the delivery of commercial software is changing. Increasingly the software is delivered as service in IaaS, such as an MS SQL server in Azure and Amazon. Cloud vendors also have marketplaces which provide pay per hour licensing models for a growing number of ISV software as preconfigured images. This reduces the cost of buying as there is no license management and pricing negotiations to worry about, but it requires the IT organisation to ensure the necessary spend controls.

The cloud is changing the IT sourcing game and we’ll be having a series of events that will explore this topic in more detail. If you would like to learn more on cloud-sourcing best practices or our future events, then please contact us and a member of the Nordcloud team will get back to you shortly.