Outsourcing to the Cloud….Are We Repeating Failures of the Past?

Blog Posts | Posted On Apr 30, 2013 | By:


Upon my recent return from an industry Cloud Computing Summit, I started to ponder if IT jobs as we currently know them will become a thing of the past. Will IntraSystems, as a provider of IT solutions, be selling into just large data center giants as opposed to our existing mid-market accounts? Moreover, will a CIO become a CAO (Chief Aggregator Officer) of multiple cloud offerings? Someone willing to outsource most IT functions to the man behind the curtain (hosted data center) in search of IT elasticity?

I use the word “outsourcing” very different than it has been used in previous years. In the past, “outsourcing” typically referred to the use of inexpensive labor in far off countries to perform help desk and software development. Today’s “outsourcing” is all about moving to the cloud, pushing workloads into far away data centers, copying files to Dropbox, and loading customer data into Salesforce.com…..leaving us to wheel our servers out the back door! However, as we outsource, companies who are reducing their data center footprint and staff also need to understand that as staff members leave, they take hundreds of person-years of knowledge with them.

Haven’t we been through this before? Didn’t the manufacturing exodus from the U.S. to foreign soil in the 80’s teach us anything? To refresh everyone’s memory, the country went from building far superior products than anywhere in the world to moving manufacturing to China and other minimal labor countries in an effort to increase the bottom line. What transpired from that process is that we lost jobs to an inferior workforce and manufactured second-rate products that would became disposable – rather than long lasting. The parallels with the cloud are similar to the manufacturing of the 80’s; the major difference is the need for compliancy and security around the data. We are responsible to protect one’s data. Should we just have blind trust in “The Mighty Cloud” as we did with third world country sweatshops?

For the past 20 years, we’ve all heard the phrase, “America doesn’t build anything anymore.” Interestingly enough, we’re now starting to see a change of events in today’s manufacturing plants. Rather than outsourcing, they are “insourcing.” Companies are bringing design and manufacturing back in-house and back into the United States from China. GE is building appliances again in its long-shuttered facilities in Kentucky. GE’s water heaters cost less, are better quality, and don’t incur long-distance freight delays and costs. A big reason for their move was to enable designers to talk directly to the implementers, such as the welders who assemble the heaters’ internal plumbing. GE pinpointed problems and made design adjustments that resulted in higher quality and faster assembly. Surprisingly, manufacturing jobs in our country are on the rise while the overall job numbers are consistently dropping at an alarming rate.

So, with that said, will cloud computing have a negative impact much like we have seen in manufacturing or have we learned from the past? I do believe IT has learned from past failures by rapidly understanding that cloud computing is a mix of on-prem and off-prem solutions, rather than a “one size fits all.” More and more vendors are committed to providing hybrid solutions for customer consumption based on their computing needs instead of just filling rack space. Rather than the responsibility for accumulation of multiple cloud services, the CIO will continue to rely on solution providers who, in addition to project-based services, will also be cloud “aggregators” of hybrid solutions – responsible for bringing to market and vetting the proper solution for the customer.

Therefore, before you decide to roll your servers out the back door in an effort to reduce costs, keep insourcing in mind in your decision to control the lifeline of your business for both corporate data and intellectual property. Your IT employees and the solution providers that currently support you are trusted resources that you can reach out to and communicate with on a daily basis – not just a company trying to fit your computing needs into cookie-cutter offering needing to live up to an SLA agreement.

Do you feel that everything should be moved to the cloud or do you believe a hybrid solution is more beneficial to your company? Share your thoughts and join the conversation via Twitter at #intrablog!

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