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Previous experience with traditional outsourcing may ease cloud adoption

publicado por Alfredo Saad

Figura - Previous experience with traditional outsourcing may ease cloud adoptionIt may sound surprising to some people that the probability of success in a cloud adoption project can be increased if the buyer organization has had a previous experience in the traditional outsourcing area. More surprising yet: this may be true even if such previous experience was not completely successful. Which facts support such conclusions?

Under an IT services outsourcing perspective, cloud adoption is merely one of the possible (and surely promising) options for the external contracting of IT services by an organization. Many aspects are common to all existing alternatives, and the long matured and learned lessons during a previous exercise may be a relevant facilitator for the exploration of such innovative option. This will avoid the same mistakes be made and will bring more effectiveness to the decisions taken along the cloud journey.

Such matured and learned lessons are normally identified during each step of the previous experience:

  • Identification of business drivers that motivated the decision to outsource
  • Definition of the implementation strategy
  • Definition of the operational model to be deployed
  • Provider(s) selection
  • Contract terms and conditions negotiation
  • Services transition planning and deployment
  • Contract governance and relationship among all stakeholders

Many of the activities performed in each of these steps are similar, no matter if we consider the traditional outsourcing or the cloud scenario, but be sure the applicable cloud specific components be added.

It should be emphasized that, on the contrary, if lessons learned are not adequately considered, success probability of a cloud project can be significantly decreased. More surprising yet, this trend can be perceived long before cloud specificities are added to the discussion.

Naturally, a cloud adoption project can be successful even if no previous outsourcing experience existed, but there is no doubt that the task will be harder because lessons will have to be learned in-flight, frequently in a trial-and-error process that will confront many unknown and/or unexpected hurdles.

Among the decisions to be taken along the cloud adoption journey and whose hit rate can be significantly increased as a consequence of the accumulated previous experience, we can mention, for each step of the process:

  • Identification of business drivers that motivated the decision to outsource
    • Typical traditional outsourcing business drivers are cost reduction, focus on core business, access to specialized skills, business processes transformation and standardization, regulatory and compliance requirements, among others.
    • Which of the above business drivers are still relevant in the cloud scenario for your organization?
    • Which “new” business drivers, typically aimed at in a cloud project, must be added and with which priority relative to the “old” ones still considered relevant?
    • “New” business drivers, typically prioritized in the cloud scenario are market-share increase, time-to-market decrease, customer experience improvement, apps innovation and workforce mobility, among others.
  • Definition of the implementation strategy
    • How the current scenario (which can be a mix of traditional outsourcing – ITO and/or BPO – and workloads still kept on-premises) will be modified as a consequence of the cloud adoption?
    • Which workloads will be moved to the cloud environment and with which progression rate? Which workloads will be kept, temporarily or permanently, in their current environments (ITO, BPO, on-premises)?
  • Definition of the operational model to be deployed
    • How the current model (sole sourcing or coexistence of a small number of providers are typical traditional outsourcing models) will be affected as a consequence of cloud adoption?
    • Which progression rate will be planned to deploy the new operational model, considering that typical cloud scenario shows tens of providers?
  • Provider(s) selection
    • Which typical selection criteria on traditional outsourcing stay relevant on cloud scenario? Among them, we can name: proven provider capacity, robustness and innovation of solution proposed, up-to-date technological infrastructure, available skills, delivery experience, list of customers and customers satisfaction.
    • Which “new” typical selection criteria on cloud scenario (sometimes associated to a certain cloud market immaturity) should be added and which is their relative priority to the “old” relevant selection criteria? Some we could name are finance and structural robustness, available infrastructure geo dispersion, ability to integrate with competitors’ solutions, security and compliance infrastructure and procedures.
  • Contract terms and conditions negotiation
    • Which previous critical negotiation factors became irrelevant on cloud scenario? Among them, we can name assets management and the transfer of human resources from the buyer to the provider
    • Which negotiation factors keep critical, although they should be negotiated in light of the cloud specificities? We can name: service level agreements and associated penalties, services charging metrics, volume consumption verification, contract cancellation and conflict resolution procedures.
    • Which “old” negotiation factors became especially critical on cloud scenario? Some of them would be: legal contract jurisdiction, responsibility concerning security and compliance issues, consequences concerning service failure, data integrity and recovery
  • Services transition planning and deployment
    • Which previous factors remain relevant on cloud scenario? Some of them could be named: joint planning and limits of responsibility between buyer and provider during transition, transition team definition and communication procedures between parties during transition
    • Which factors became critical on cloud scenario? Some of them would be the integration of services provided by a big number of providers and the dissemination among users of information concerning charging and additional services request
  • Contract governance and relationship among all stakeholders
    • Which “old” elements keep critical on cloud scenario? We could name a few: structuring of buyer governance function, selection of skilled governance team components and definition of executive and operational meetings periodicity and agenda
    • Which additional elements appear as critical on a cloud scenario? Among them we could name: definition of tools, skills and procedures needed for a cloud management function, aiming at agility, effectiveness and automation during new deployments, additional services request, cost control and performance monitoring

As shown, a previous experience on a traditional outsourcing project lets organizations anticipate how to deal with many of the aspects involved in each step of the adoption of the cloud alternative. The lessons learned along this previous experience permits a solid base be built for cloud deployment, over which all specific issues of the cloud scenario must be mandatorily and adequately considered.

Portuguese and English versions of this and many others of my articles concerning both the traditional IT outsourcing and the cloud scenarios are available here in TI Especialistas portal. You are also invited to access all of them and enrich the discussion with your comments.

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Alfredo Saad has been acting on IT area since 1970, taught more than 100 lectures in Brazil and abroad (USA, France, Portugal, Chile, Argentina & Uruguay). He has been acting on IT Strategic Outsourcing Services area since 1997. He negotiated and managed, as Varig's IT Technology Manager, the contract signed with IBM (1997-2004). In 2006 he published the book "IT Services Outsourcing" (Brasport Publishing House). He managed (2006-2009), as an IBM Project Executive, the South American section of Michelin's global outsourcing contract. Risk Manager of all IBM Strategic Outsourcing contracts in Brazil (2009-2014). From March 2014 on, he has been acting as an independent consultant, lecturer and writer on IT Outsourcing as the principal of his own company, Saad Consulting.

Alfredo Saad


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