Outsourcing in a Changing IT landscape

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Without question, the IT landscape is undergoing a significant transformation. Where once enterprises of all sizes built and maintained data infrastructure for their exclusive use, organizations are increasingly turning to third-party co-located and cloud-based infrastructure.

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Outsourcing in a Changing IT landscape

  1. 1. ARTICLE Outsourcing in a Changing IT landscape Without question, the IT landscape is undergoing a significant transformation. Where once enterprises of all sizes built and maintained data infrastructure for their exclusive use, organizations are increasingly turning to third-party co-located and cloud-based infrastructure. It’s gotten to the point that such deployment options are no longer considered novel but rather as basic elements of the modern data architecture. In many ways, this is reminiscent of the midpoint of the industrial revolution when manufacturers began to shed their owned-and-operated power-generation systems, in favor of electrical grids provided by municipal or privately owned enterprises. Of course, change of this magnitude does not happen without reason. And the forces affecting the enterprise and data environments in general, will continue to increase the pressure on IT Departments to do more with less. The needs of Big Data, wireless connectivity and the like require not only more infrastructure, but entirely new ways to deploy, provision and ultimately manage that infrastructure. The Cisco Visual Networking Index (VNI) Forecast (2012-2017), says that the global Internet protocol (IP) traffic will grow three-fold between 2012 and 2017. Global IP traffic (fixed and mobile) is expected to reach an annual run rate of 1.4 zettabytes, more than a trillion gigabytes per year, by 2017. India IP traffic will grow 6 times from 2012- 2017 with a 44% CAGR, which is the highest growth rate across the globe. On a monthly basis, India IP traffic is expected to reach nearly 2.8 exabytes per month by 2017, up from about 454 petabytes per month in 2012. And that presents the enterprise with a fundamental problem: the legacy infrastructure that served so well in the physical, silo-based past is simply not up to the challenge of today’s complex data environment. Existing infrastructure is optimized for the large volume, low-packet data loads generated by database and business productivity applications. However in today’s world of web transactions and near-instant mobile data communications, traffic is characterized by high numbers, literally millions, of low-data packets – quite often only a few bits or bytes. As well, application-to-application communication is becoming increasingly frequent as newly automated data environments embrace higher levels of intelligence and collaboration.
  2. 2. ARTICLE 02 And this situation will only grow multifold over time. With competitive pressure ramping up in an increasingly globalized marketplace and regulatory regimes turning their focus toward infrastructure-level concerns like power consumption and disposal of used hardware, the enterprise is being squeezed in its ability to maintain its competitiveness and efficacy, both at the same time. This has left IT executives with 2 primary options: undergo the time-consuming and expensive process of upgrading existing infrastructure to present day standards, or turn to the outsourcing model for a fully realized, modern data environment right away. From a purely cost/benefit perspective, outsourcing offers a number of key advantages. To an outsourcing provider, IT is the core business, not a cost center, so the need to maintain state-of-the-art facilities is paramount. All capital expenses for day-to-day operations and maintenance are borne by the provider, so the client enterprise can shift current fluctuating CapEx costs for IT infrastructure to predictable OpEx, where they can be more closely matched to budgetary needs. In other words, last minute scalability concerns, expanded capabilities and advanced architectures can be addressed and implemented with little or no confusion in accordance to business needs, ridding you of the restrictions imposed due to an in-house server, storage or network component having completed its product lifecycle and requiring replacement. A key example of this is Flamingo Pharmaceuticals Ltd. The company had deployed SAP ERP applications on an internal HP UNIX infrastructure running Oracle database platform. But as its business grew, the company realized that it could not continue in the fashion without a major capital expense. By outsourcing both the hosting and management functions, Flamingo has seen a 40 % reduction in overall costs. Indeed, responsibility for infrastructure maintenance and expansion can be shed entirely under the outsourcing model. Through service level agreements and advanced application/service management solutions, enterprise executives need only concentrate on the performance they receive from their provider. These days, advanced virtual and cloud architectures make it easy to distribute data loads across wide-ranging hardware platforms, so if performance starts to lag on one set of resources, the load can easily be shifted to another or dispersed onto a wider physical or virtual footprint to ensure that performance is meeting expectations. This requires a change in thinking among IT professionals – no more worrying about servers, switches and storage systems – but this ultimately frees internal IT teams from many rote tasks so they can concentrate on higher order responsibilities related to overall data performance. Note, however, that the changes affecting the datacenter are not merely providing knowledge workers with new tools to complete their tasks. They are fundamentally altering the relationship between users, data, applications, infrastructure and the IT departments that provide and manage them. Nowhere is this more evident than in users’ newfound ability to provision infrastructure on their own using third-party resources. Indeed, the rise of “rogue clouds,” in which business users circumvent IT entirely to obtain needed resources is a direct result of the static, silo-based architectures that most enterprises are saddled with. When users, who are under pressure themselves to perform at increasingly higher levels, fail to get the response they need from their own IT departments they logically seek help from an outside source. This puts the enterprise in a bad position, however, because it means sensitive, even critical, data can be placed at risk, or lost entirely, because the central authority responsible for its welfare, the IT department, is not aware that data has been placed in someone else’s cloud. According to software developer Symantec Corp., more than three quarters of enterprises worldwide have encountered rogue clouds in the past year, and 40 % of that group says they have been used to store confidential data. Netmagic Solutions
  3. 3. ARTICLE 03 Again, though, this is where outsourcing proves itself to be a valuable tool for the enterprise. By entering into formal service contracts with reputable providers, the enterprise can offer its user base instant cloud-like capability where resources can be scaled up or down according to load requirements. In this way, the enterprise gains the flexibility to accommodate increasingly complex data environments, plus the security that comes from knowing exactly where data resides and how infrastructure is being designed and provisioned. This also buys the enterprise some time as it works to add cloud, mobility and other architectures to internal infrastructure. Many organizations are still working out the details regarding the conversion to virtual infrastructure, which is only the first step toward the cloud. Ultimately, the goal is to enable a dynamic hybrid environment, most likely through an integrated IaaS architecture, in which internal and external infrastructure is provisioned and managed as a single entity. Of course, enterprise executives will need to establish a well-considered outsourcing plan in order to reap the maximum benefit from what will be a mission-critical business relationship. What, then, are the best ways to evaluate capacity requirements, costs and other factors in order to implement an optimized outsourcing strategy? Individual requirements will vary from enterprise to enterprise, but as a general rule, executives should weigh outsourcing like any other strategic decision; that is, does it enhance or diminish the organization’s competitive advantage? Certainly, lowering the cost of business operations is a positive attribute to outsourcing, but it needs to do so without increasing latency, compromising security or adding unnecessary complexity to data environments. To that end, it is incumbent upon the enterprise to provide a careful analysis of present day infrastructure requirements, as well as expected future needs. In this way, both the enterprise and the outsourcing provider can make an accurate determination regarding resources, scale, architectural components, levels of integration and various other facets of service operations. Again, the ideal situation is one in which outsourced infrastructure is indistinguishable from internal infrastructure, both to centralized management and end users. Key to this process is a thorough evaluation of the provider’s capabilities and infrastructure. Does the provider possess the resources need to meet not only your service needs, but those of other clients? Do they possess state-of-the-art technologies capable of dynamic resource allocation and rapid recovery in event of a service interruption? (Remember, outages are inevitable, so the wisest strategy is not to strive for 100 % uptime but to limit downtime as much as possible.) The most important thing for enterprise executives to realize in times of rapidly changing IT infrastructure is that outsourcing is not the enemy. In fact, through its ability to provide a seamless, integrated data environment that can be fully controlled and placed under the same security protocols that protect internal infrastructure, IT infrastructure outsourcing could very well be the enterprise’s best friend. www.netmagicsolutions.com 1800 103 3130 http://blog.netmagicsolutions.com http://twitter.com/netmagic http://linkedin.com/company/netmagic The content you have downloaded has been produced with thoughtful, original research efforts by Netmagic. Please do not duplicate or misuse it. You may quote portions of our research in your own material provided you include a proper attribution to this original source. You are free to share this content on the web with friends and colleagues. © 2013 Netmagic Solutions Pvt. Ltd. All rights reserved.

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