ITO, Cloud and Next Generation Outsourcing
Upcoming SlideShare
Loading in...5
×
 

ITO, Cloud and Next Generation Outsourcing

on

  • 1,374 views

New cloud and next generation IT models are starting to deliver global enterprises disruptive improvements in cost and performance. Unfortunately, many organizations that have outsourced parts of ...

New cloud and next generation IT models are starting to deliver global enterprises disruptive improvements in cost and performance. Unfortunately, many organizations that have outsourced parts of their IT environment have been unable to capture these benefits. In this webinar, learn:
How next generation IT models can reduce infrastructure costs by 30+% over ITO solutions, how cloud solutions can be leveraged even when an ITO solution is in place, The myths around ITO contractual constraints to cloud migration
Why your ITO vendor may not be incented to migrate you to the cloud, new approaches for IT vendor governance and management in cloud environments, and how to develop a migration strategy and roadmap in preparation for ITO end-of-term

Statistics

Views

Total Views
1,374
Views on SlideShare
1,374
Embed Views
0

Actions

Likes
1
Downloads
67
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

ITO, Cloud and Next Generation Outsourcing ITO, Cloud and Next Generation Outsourcing Presentation Transcript

  • ITO, Cloud and NextGeneration OutsourcingOctober 20, 2011
  • Today’s Webinar is brought to you by Everest GroupToday’s WebinarITO, Cloud and Next Generation OutsourcingSynopsis:New cloud and next generation IT models are starting to deliver global enterprises disruptive improvements in costand performance. Unfortunately, many organizations that have outsourced parts of their IT environment have beenunable to capture these benefits. In this webinar, learn: How next generation IT models can reduce infrastructure costs by 30+% over ITO solutions How cloud solutions can be leveraged even when an ITO solution is in place The myths around ITO contractual constraints to cloud migration Why your ITO vendor may not be incented to migrate you to the cloud New approaches for IT vendor governance and management in cloud environmentsAbout Everest Group How to develop a migration strategy and roadmap in preparation for ITO end-of-termEverest Group is an advisor to business leaders on the next generation of global services with a worldwide reputationfor helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-officebusiness services. With a fact-based approach driving outcomes, Everest Group counsels organizations withcomplex challenges related to the use and delivery of global services in their pursuits to balance short-term needswith long-term goals. Through its practical consulting, original research and industry resource services, EverestGroup helps clients maximize value from delivery strategies, talent and sourcing models, technologies andmanagement approaches. Established in 1991, Everest Group serves users of global services, providers of services,country organizations and private equity firms, in six continents across all industry categories. For more information,please visit www.everestgrp.com and research.everestgrp.com.For more information, contact Mark Williamson at mark.williamson@everestgrp.com Proprietary & Confidential. © 2011, Everest Global, Inc. 2
  • Introductions Scott Bils Partner, Next Generation IT Practice Leader Everest Group scott.bils@everestgrp.com Marvin Newell Partner, Strategy Practice Leader Everest Group marvin.newell@everestgrp.com Proprietary & Confidential. © 2011, Everest Global, Inc. 3
  • Agenda How The Cloud Delivers Enterprise Class Value ITO and Cloud Migration – Myth vs Reality Enterprise Cloud Roadmap – Implementation Proprietary & Confidential. © 2011, Everest Global, Inc. 4
  • Enterprise Cloud Infrastructure EconomicsImproving utilization and eliminating excess capacity are the key to realizing costefficiencies from cloud infrastructure models 3 Eliminate  Eliminate spend Excess Capacity on unused ‘peak’ capacity Private Cloud Server Utilization 2Move ‘Peak’  Shift peak loads to Load to Public public cloud(s)  Leverage on-demand ‘pay-as-you-go’ flexibility 1Keep ‘Base’  Shift loads to fill valleys (where Load in Private possible)  Maximize private cloud utilization Proprietary & Confidential. © 2011, Everest Global, Inc. 5
  • Cloud Infrastructure Services ImpactInfrastructure delivery based on the cloud has the potential to unlock extraordinaryworkload-level economics and flexibility benefits Enterprise Workload Cost by Platform1 • Hybrid models can drive truly $ / GHz hrs, Indexed vs Dedicated ‘disruptive’ economics • Applicable at individual workload 100 and portfolio level • Dynamic bursting not required to capture initial benefits 65 60-65 ‘Peak’ Load Public Cloud • Shift ‘spike’ compute hours to public cloud 25 • Pay only for consumption ‘Base’ Load Virtualized/ Public Private Cloud Dedicated Hybrid • Keep ‘base’ compute Physical Private Cloud Cloud Model hours in private cloud Server 7% 18% N/A 40% • Maximize utilization Utilization: (service provider)1 Assumes average workload mix and profile; 15% of total peak workload hours shifted to public cloud in an on-demand model; does not include application migration costsSource: Everest Group Cloud Value Assessment Model Proprietary & Confidential. © 2011, Everest Global, Inc. 6
  • Value Creation PotentialNext Generation IT services can deliver value to customers at an enterprise level thatwill drive disruptive adoption impact in the market Alternative IT Infrastructure Solutions CLIENT EXAMPLE  Only ~25% of compute Cost Index hours moved to hybrid private / public models  40% of workloads Baseline remained dedicated Traditional delivery models Outsourcing Procurement  Public cloud concerns not applicable to Next private / dedicated Generation models IT Services Solution  Workload placement critical to unlocking economicsNotes: Baseline and Traditional Outsourcing Procurement based on actual client projections and executed service provider contract, including transition costs Next Generation IT Services Solution estimates potential from executing roadmap of Next Generation IT initiatives to implement private cloud and hybrid private/public cloud solution over 4 years, including projected migration costs Proprietary & Confidential. © 2011, Everest Global, Inc. 7
  • Agenda How The Cloud Delivers Enterprise Class Value ITO and Cloud Migration – Myth vs Reality Enterprise Cloud Roadmap – Implementation Proprietary & Confidential. © 2011, Everest Global, Inc. 8
  • Why Are Enterprises Slow to Pursue the Opportunity?Several common misperceptions are preventing ITO clients from movingquickly to capture value from cloud economics ’We Still Have an ITO Deal’ Perceived Contractual Constraints ‘Our ITO Vendor ‘The Cloud Will Get Us There’ Isn’t Ready Yet’ Perceived Incentive Perceived Market Alignment Immaturity Proprietary & Confidential. © 2011, Everest Global, Inc. 9
  • Issue 1 - Perceived Contractual ConstraintsMany believe that their current ITO contracts severely limit their ability tomove quickly to cloud solutions Solution Constraints – The Myths • Contractual terms prevent the adoption of alternative solutions • Performance needs can not be met through cloud platforms • Regulatory requirements can not be met through cloud solutionsCommon Perceptions - Examples Exclusivity – “contract limits services that can be contracted to other providers” Revenue commitment (floor) – “minimums preclude moving workloads” Performance guarantee – “service levels cannot be met by cloud solutions” Regulatory compliance – “regulations cannot be satisfied by cloud solutions” Warranties – “can’t cleanly separate scope for cloud services” Proprietary & Confidential. © 2011, Everest Global, Inc. 10
  • Issue 1 - Perceived Contractual Constraints (cont’d)Based on a review of multiple deals, most outsourcing agreements do notprevent the introduction of cloud solutions into the enterprise IT portfolio Solution Constraints – The Reality • Contractual terms prevent the adoption of alternative solutions • Performance needs can not be met through cloud platforms • Regulatory requirements can not be met through cloud solutionsTypical Contract Reality Exclusivity  Not present; tower termination Revenue commitment (floor)  Demand exceeds floor Performance guarantee  Engineered outcomes Regulatory compliance  Vertically-oriented clouds Warranties  Scope / change management Proprietary & Confidential. © 2011, Everest Global, Inc. 11
  • Issue 2 – Are You Truly Aligned With Your Vendor?Significant disincentives exist for many legacy ITO vendors to migrate theircustomers to cloud and next generation IT platforms • Many ITO vendors face 30-40+% Financial revenue ‘hit’ on client cloud Disincentives migration Causes of Vendor Misalignment • Lack of cloud delivery platforms Platform and technologies across private, Gaps public and hybrid models • Shortages or absence of key Skill cloud solutioning and Gaps architecting capabilities Proprietary & Confidential. © 2011, Everest Global, Inc. 12
  • Issue 2 – How Quickly Will They Get You There?Anecdotal evidence of misaligned incentives among vendors offering bothtraditional ITO and cloud services is not hard to find “SAP can’t be delivered as a “We’re seeing ~33% less revenue hosted, private cloud on cloud ITO clients – this is service…” creating a lot of internal - Sales rep, major IT services vendor resistance to move our clients” - Sales Engineer, leading IT services “Yes, we can provide you vendor SAP in a cloud environment!” - Same sales rep, one week later “Names have been changed to protect the innocent !!!” “We have found that cloud “All our sales team knows is solutions cannot economically revenue – until we change our compete with our data center comp plans, they’ll never drive to solutions" cloud solutions” - From IT services vendor client presentation - Executive, leading IT services vendor Proprietary & Confidential. © 2011, Everest Global, Inc. 13
  • Issue 2 – Most Enterprises Don’t Have Time to WaitEnterprises face pressure to respond to extreme market demands forefficiency and flexibility Demand for Efficiency Demand for Flexibility Increasing Pace of Increasing Value Focus Innovation  Ongoing budget pressure  “Consumerization” of IT  Demand for business value  Device proliferation  Vendor pricing  Compressed cycle time  Security and regulatory  Strategic focus compliance Drive to Improve Utilization Need for Responsiveness  High cost “single-tenant”  Rapid volume growth; high models variability; explosion of data /  Underutilization of Extreme complexity dedicated hardware Demands on  Anytime / anywhere access  Suboptimal skill mixes IT and Business  Speed / on-demand service  Underachievement of  Configurability Functions economies of scale Proprietary & Confidential. © 2011, Everest Global, Inc. 14
  • Issue 3 – Perceived Market ImmaturityCloud solutions are being deployed across a variety of enterprise use cases ILLUSTRATIVE Improved Efficiencies / Wave I – Migration Utilization DR/ Extending Low Risk Costs BCP Use Cases ‘Spiky’ LOB Low applications Medium Web High sites Backup/ ERP archive Test / ‘Big Data’/ development analytics Virtual desktop Email Transactional HCM applications Wave II – Driving Value Collaboration SCM Marketing Wave III – applications CRM Attacking the Core Adoption New Business Driver Capabilities Proprietary & Confidential. © 2011, Everest Global, Inc. 15
  • Agenda How The Cloud Delivers Enterprise Class Value ITO and Cloud Migration – Myth vs Reality Enterprise Cloud Roadmap – Implementation Proprietary & Confidential. © 2011, Everest Global, Inc. 16
  • Enterprise Cloud RoadmapDeveloping an overall cloud migration strategy that optimizes enterprise economicsrequires a portfolio-based approach Workload Workload Portfolio Migration Opportunities Analysis Enterprise Cloud Roadmap Portfolio Utilization Analysis Dependency + Assessment  Overall 3-5 +year Workload Utilization Dynamics cloud migration roadmap  Supporting business Migration case and plan Economics Current Traffic text text text text text text text Proprietary & Confidential. © 2011, Everest Global, Inc. 17
  • Next Generation ITO SolutionsEnterprise will operate a “mixed” environment to maximize value by aligninginfrastructure needs with distinct solutions Next Generation IT Open | Integrated | Secure Dedicated Private Cloud Public Cloud SaaS  Hosting services  Cloud appliances/  Open source  LOB and selected  Next Generation data hosting services compute and storage mission critical centers  Next Generation services applications  High-density servers data centers  vCloud, Azure-based  Integration services  RIMO  Virtual architectures IaaS / PaaS solutions  RIMO  RIMO  RIMO  Hybrid Delivery Models  Note: RIMO = Remote Infrastructure Management Outsourcing Proprietary & Confidential. © 2011, Everest Global, Inc. 18
  • Developing an Enterprise Cloud RoadmapThe approach for developing an Enterprise Cloud Roadmap requires rigorous, fact-based problem-solving focused on actionable business resultsObjectives Assess the business case and build a strategic roadmap for IT transformation driven by cloud-based IT services, including identification of opportunities to:  Portfolio-based priority for workload migration to the cloud  Improve non-migrated workloads and infrastructure  Leverage remote infrastructure management Clarify goals and Identify portfolio Define future state Design roadmap objectives opportunities IT environment for transformation Potential of Next Data Collection Detailed Analysis Business case Generation IT Workshop Transformation Application Mapping to Future Migration Workshops Rationalization State IT Environment Recommendations Total Saving s% Opportunity Scenario Testing Migration Roadmap Identification Proprietary & Confidential. © 2011, Everest Global, Inc. 19
  • Q&A Attendees will receive an email enabling them to download today’s webinar presentation as well as access a recorded audio version For advice on Next Generation IT, please contact: – Scott Bils, scott.bils@everestgrp.com – Marvin Newell, marvin.newell@everestgrp.com For background information on Everest Group, please visit: – www.everestgrp.com – research.everestgrp.com Thank you for attending todayTo ask a question during the Q&A session Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen. This will open the Q&A Panel Be sure to keep the default set to “Send to All Panelists” Then, type your question in the rectangular field at the bottom of the Q&A box and click the send button to submit Proprietary & Confidential. © 2011, Everest Global, Inc. 20
  • Related Content Complimentary Cloud Service Provider Profiles Amazon Web Services Profile Rackspace Profile Windows Azure Profile Upcoming WebinarsSave the Date: Market Vista Q3 2011 Tuesday, November 8, 9 a.m. CDT Registration details coming soon; Visit our Webinars page for most up-to-date information Proprietary & Confidential. © 2011, Everest Global, Inc. 21
  • Everest Group leads clients from insight to actionContact us for more information about our consulting, research, and industry resources. Dallas (Corporate Headquarters) Canada info@everestgrp.com canada@everestgrp.com +1-214-451-3000 +1-416-865-2033 +1-214-451-3110 New York India/Middle East info@everestgrp.com india@everestgrp.com +1-646-805-4000 +91-124-496-1000 +91-124-496-1100 United Kingdom Netherlands & Continental Europe unitedkingdom@everestgrp.com benelux@everestgrp.com +44-870-770-0270 +31-20-301-2138 www.everestgrp.com | research.everestgrp.com | www.sherpasinblueshirts.com Proprietary & Confidential. © 2011, Everest Global, Inc. 22