Cloud Computing and IT Infrastructure Outsourcing: A Comparative Study

Cloud Computing and IT Infrastructure Outsourcing: A Comparative Study

Praveen K. Choudhary (XLRI, Jamshedpur, India), Monika Mital (XLRI, Jamshedpur, India), Rajeev Sharma (XLRI, Jamshedpur, India) and Ashis K. Pani (XLRI, Jamshedpur, India)
DOI: 10.4018/IJOCI.2015100103
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Abstract

Cloud Computing has caught the imagination of the CIOs across the world with rapid scalability being the most important feature of Cloud Computing, with very high degree of provisioning capability from the Cloud vendors in comparison to on premise IT infrastructure. It provides for the shift of spend from capital expenditure in IT budgets to a more flexible and manageable operating expenditure for the CIOs. However, as an emergent technology, there are initial adoption level concerns that are associated with Cloud Computing in most of the companies. Infrastructure as a Service or (IaaS) adoptions have not been high especially in the large companies which continue to opt for traditional IT Infrastructure Outsourcing. This paper compares Cloud Computing (Infrastructure as a Service - IaaS) adoption, outlined through two cases of Cloud (IaaS), with traditional IT Infrastructure Outsourcing outlined through four cases studies of traditional IT Outsourcing.
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Introduction

The ever increasing Internet bandwidth and the fast changing needs of businesses for effectiveness and integration within and with the partners and the distributed /mobile employee force is leading organizations to adopt information systems infrastructures that are cost effective as well as flexible (Chang 2013; Dubey and Wagle 2007). The key to cloud computing model is economies of scale, which makes the solution sustainable for the service provider (Chang 2013; Sääksjärvi,Lassila et al. 2005; Walsh 2003) and lowers cost of acquisition for the customer (Susarla,Barua et al. 2009; Walsh 2003). Cloud computing refers to the delivery of the software through the internet to multiple customers/tenants (multi-tenant) (Benlian and Hess 2011; Ramachandran 2014) on a subscription (i.e. fixed or usage based) basis, to be able to achieve economies of scale and scope through shared resources infrastructure for the service provider, to be able to achieve service continuity in a cost effective manner, and maintain system reliability, availability, supportability, and manageability (Chong and Carraro 2006; Ramachandran and Chang 2014) .In cloud computing, the consumer does not manage or control the underlying information systems infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings (Mell et al. 2011) . Cloud computing takes advantage of the thin customer, where all the software and the data reside on the server and the customer side needs an interface application like the browser, as against the packaged software provisioning model where the software is sold as a product. Cloud Computing has caught the imagination of the CIOs across the world with rapid scalability being the most important feature of Cloud Computing, with very high degree of provisioning capability from the Cloud vendors in comparison to on premise IT infrastructure. It provides for the shift of spend from capital expenditure in IT budgets to a more flexible and manageable operating expenditure for the CIOs. Cloud Computing has emerged as a distinct game changer in the IT Industry at large. Not only does Cloud provides the CIOs the flexibility to alter their IT landscape as and when they need it, it gives a massive shift in the way, IT investments are being planned for the future. Rapid Scalability being the oft quoted features of Cloud Computing, it provides for the shift of spend from CAPEX spend to OPEX spend. In terms of service to the business users, it provides for much faster and better interactions, thus enabling improved team productivities. Cloud also promises to promote improved team productivities through ease of collaborations. However, as an emergent technology, there are initial adoption level concerns that are associated with Cloud Computing in most of the companies.

Infrastructure as a Service or (IaaS) adoptions have not been high especially in the large companies which continue to opt for traditional IT Infrastructure Outsourcing. This paper compares Cloud Computing (Infrastructure as a Service - IaaS) adoption, outlined through two cases of Cloud (IaaS), with traditional IT Infrastructure Outsourcing outlined through four cases studies of traditional IT Outsourcing. The paper culminates with a decision enabling model for the CXOs to take decisions on the choice between traditional IT Infrastructure Outsourcing and IaaS, based on the identified common dimensions.

As per the latest estimates from Gartner, the global spending on public cloud services is expected to grow 18.6% in 2012 to $110.3B, achieving a CAGR of 17.7% from 2011 through 2016. The total market is expected to grow from $76.9B in 2010 to $210B in 2016. Gartner also predicts, that Infrastructure-as-a-Service (IAAS) will achieve a compound annual growth rate (CAGR) of 41.3% through 2016, the fastest growing area of Public Cloud Computing the research firm tracks (Lacity,Khan et al. 2010). Similarly, Forrester Research estimates that the global market was about $78 billion in 2014 and will reach $241 billion in 2020.

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