Culture Shift on IT Outsourcing, Cloud Computing

Brian Wood Blog

I thought the content of this recent Savvis press release was interesting enough to warrant re-posting in its entirety.

The findings are completely relevant and consistent with what we see with our own clients and prospects.

What is YOUR experience and what are YOUR opinions on IT outsourcing?

Emphasis in red added by me.

Brian Wood, VP of Marketing

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Global Savvis Study Finds Culture Shift on IT Outsourcing, Cloud Computing
More than Half of IT Decision Makers Admit Regret on In-House Infrastructure Purchases

ST. LOUIS, Sept. 11, 2012 — Three in five IT and business decision makers agree that owning and operating in-house IT infrastructure drives costs higher and wastes resources, according to an annual study from Savvis, a CenturyLink company (NYSE: CTL) and leader in global cloud infrastructure and hosted IT solutions for enterprises.

This view marks a sharp increase from 2010, when just 38 percent of IT decision makers attributed IT ownership to waste in resources and higher costs, and comes as nearly 60 percent of respondents now believe organizations must place the priority on outsourced infrastructure over traditional in-house services.

“This study reveals a significant shift in the way organizations analyze and approach IT services,” said Bill Fathers, president of Savvis. “IT departments are now looking to strengthen collaboration, efficiency and competitive agility – and they’re turning to secure, outsourced environments and cloud computing to help meet their objectives.”

Savvis commissioned international research firm Vanson Bourne to conduct the survey among 550 IT and business decision makers in the United States, the United Kingdom, Germany, Japan, Hong Kong and Singapore. The study offers global insight from key industries, including finance, media and entertainment, retail, healthcare, software and automotive, on trends in IT outsourcing (ITO), adoption of cloud solutions and the costs of owning infrastructure. This is the fourth consecutive year that Vanson Bourne has conducted a survey for Savvis.

The report shows growing interest in outsourced infrastructure and cloud computing as means for freeing up budgets, fostering collaboration and operational efficiencies, and building competitive advantage.

Global highlights from the 2012 annual report indicate:

  • Globally, organizations are now outsourcing just over 25 percent of their IT infrastructure. In five years, organizations expect to expand outsourcing to more than 40 percent of their IT services.
  • More than half of all organizations admit to having IT equipment they now regret purchasing. The attitude is highest among U.S. respondents (66 percent), compared to 34 percent of respondents in Hong Kong and Singapore.
  • 56 percent of surveyed IT executives keep most of their infrastructure in-house, with the practice more prevalent in Japan where 78 percent of respondents indicated reliance on in-house services.
  • Forty-two percent of organizations that do not currently outsource all of their IT are most likely to name contractual obligations as the main reason for not outsourcing, indicating a major shift in thinking. In 2010 and 2011, company culture was the most common inhibitor.
  • Momentum for cloud computing continues, as 85 percent of organizations today use private and public cloud for storage, big-data analytics and other applications. In 2010, just 39 percent of respondents said that their organizations were using cloud computing.
  • The need for increased agility is leading half or more of the decision makers in the United States, Japan and the United Kingdom to boost the amount of infrastructure they outsource.

“We continue to see changing views on why organizations make the move to outsourced managed services,” Fathers said. “As the business focus moves from IT budgets to enriching core competencies, we expect strategic ITO solutions to move to the forefront of decision-maker priorities.”

Savvis’ Strategic ITO Solutions blend the company’s enterprise-class service portfolio with a utility, pay-per-use delivery approach to provide complete outsourced infrastructure and application solutions. This broad set of services drives business agility, maximizes efficiency and mitigates risk for large enterprises around the world.

Visit www.savvis.com/FastForwardITO to download a copy of the 2012 Savvis report, titled “Fast-Forward to 2013: 550 Global IT Execs Share their IT Outsourcing Strategies.”

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