Interesting thoughts on IT outsourcing in the cloud era


blog It’s now been several years since cloud computing became mainstream in Australia. Small businesses are using it. Major corporations such as Australia’s largest banks and insurers are using it. And even the public sector has started using it.

With this breadth of adoption has also come a deepening of our understanding of how large organisations should use cloud computing. One quite mature view into the internal discussion about how major organisations are managing their cloud has come this week from insurer AMP.

In this article published by iTnews (I recommend you click through for the whole yarn), AMP CIO Craig Ryman discusses how the company’s long-running IT outsourcing deal with CSC is evolving, particularly its relationship to the insurer’s usage of Amazon Web Services Infrastructure. Most of the article is locked off (you need to register), but here’s the first paragraph as a preview:

“Finance giant AMP is restructuring its long-running outsourcing deal with main partner CSC as it works to implement a new model of supplier governance based on the service integration and management (SIAM) approach.”

I took two main things away from this article.

Firstly, it seems clear that IT outsourcers such as CSC would be quite unhappy about the rapid spread of commodity cloud computing platforms such as AWS offers. It is extremely obvious that major organisations have started shifting their dollars around as a result of the cloud, and that much of the relationship that IT outsourcers have with major organisations would be being adjusted as a result.

This may not be a net negative for outsourcers such as CSC — after all, most major organisations have quite steady IT spend these days. Even if they are spending less on IT infrastructure per se, they are often spending more in other, more complex areas. But there is no doubt it is a challenge for the IT outsourcers.

But this changing dynamic will require the outsourcers to adjust, especially in terms of providing services around platforms such as AWS.

Secondly what I am seeing here is the rise for the need for middleware to sit between the various cloud computing offerings out there and the systems of major organisations. Major organisations will use quite a few different cloud platforms; and will require software both to manage those platforms in a homogenous way, as well as to integrate them with their own internal IT infrastructure.

It reminds me of the way we’ve seen middleware management suites arise over the past few years to ensure major organisations can manage mobile fleets which might include Android, iOS and Windows devices.

In any case, I commend this article to readers; I’d like to see more of this deeper discussion about the way the cloud is changing the traditional IT outsourcing relationship. I hope to bring some more of this kind of material onto Delimiter in future.


  1. Cloud is nothing new, its just “hosting” which really has been offered as a service almost as long as the internet has been around. The only difference is “commoditisation” bought about by the likes of Amazon and a more granular ability to ramp up or down resources as required.

    Once the buzz is over, and a few large organisations data is hacked and leaked all over the internet, it will fade away again, Organisations will “in-source” their services back in-house, to more secure and controlled/controlable environments.

    • … a few large organisations data is hacked and leaked …

      I’m not sure The Cloud is going to change this, I’m not sure The Cloud is less or more vulnerable to a determined attack. I am sure that large and small enterprises will continue to fall victim to their own lack of security insights and procedures.

      I agree that “in-house” should be more secure, and provided the bean-counters appreciate the savings resultant from the expenditure it would be. However, JFK’s dictum holds true: “The price of Liberty is Eternal Vigilance.” I am yet to be convinced that management can sustain that level of paranoia indefinitely. Which is not to say the external hosting enterprises will/can/do sustain their paranioa indefinitely.

      I’m actually waiting for an AI form of “Cloud Hosting” (rather like Self-Driving cars), always assuming of course that the power supply to such an entity would be a 3-meter extension cord, and the HDDs would be easily removeable… Now where did that security go????

  2. I am seeing things balance between cloud/on-prem now (I wouldn’t go so far as to say a reversal) in small-mid, the thing that is driving it – ease

    It is easier then ever to do on-prem infrastructure than ever before, the next gen of hyper-converged equipment can give you “cloud” (bleh) like features. The gear is easier to administer, less inter-op issues, more reliable, and more efficient than ever before.

    The problem is M$ are still on a cloud or nothing path and making on prem licensing difficult to justify, but the market is identifying this and other options are opening up, interesting few years coming up

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