Cloud Computing could provide a viable alternative to firms that are renegotiating long term outsourcing contracts.
That was the message from the Gartner Outsourcing Summit in London this week where the analyst firm cited Cloud Computing as one way of avoiding having to sign new outsourcing deals that didn't favour clients.
The next two years will be a “critical period” for the outsourcing and IT services market,” said Claudio Da Rold, vice president and distinguished analyst at Gartner. “Organisations are concentrating on IT cost reduction and aiming to improve their business performance and flexibility,” said Da Rold. “We predicted in the first quarter of 2009 that the global IT services market will decline 1.7 percent in 2009, and we are reviewing this forecast with an even more cautionary orientation.”
Da Rold advised companies to look at alternative outsourcing models such as Cloud Computing or SaaS. “Clouds don't need long term contracts to make profits. They've already invested in service delivery for other clients. Also the costs go down over time, in the utility model, year over year,” advised the Gartner analyst.
Businesses want to cut costs, but not at the cost of future opportunities, he added. If clients commit to long-term agreements with suppliers they could miss out on the advantages of The Cloud. In turn, suppliers could also miss out by sticking to current delivery models rather than being more innovative about how they deliver and charge for IT services.
Gartner analyst Linda Cohen advised: "Do not sign 10-year deals today to cut costs because you will be bound by them when things pick up. They will not be enduring value for businesses or suppliers.”
Post new Comment