Cloud vs. Outsourcing in Public Sector

In many ways, Cloud Computing is closely related to a commercial concept of outsourcing: a 3rd party is providing key elements of IT service in an organisation. To an extent, some of the scepticism that exists around the Cloud Computing Industry is routed in this similarity. Many of the local authorities we are working with have initially asked whether cloud will lead them to exactly the same problems and conflicts that many have with their current outsourcing. However, it is important to understand the difference between Cloud Computing and outsourcing.

Outsourcing principle is simple: a 3rd party will come in and take over most if not all of the IT services within the organisations. After all, such 3rd parties are far more competent at delivering these services; they can leverage procurement across several customers, they can also introduce knowledge and experience across their customer base. Thus this 3rd party is likely to be more efficient at delivering IT services than the organisations, which does not see them as “core competence”. Evidently, Outsourcing has been proven beneficial to many public sector organisations. Nonetheless there are significant drawbacks: the 3rd party typically takes the IT skills and competence away from the organisation and as time goes by, it is harder to manage the relationship with the provider. We have seen some real horror stories with the relationship breaking down, costs spiralling, on-site support ballooning, and the only way out is to extend the contract yet further. With the current climate, capital grants available to most public organisations are likely to reduce, or dry up altogether – making outsourcing as above a lot less sustainable.

Cloud Computing on the other hand does not necessarily envisage the transfer of resources or control to the service providers. The framework allows the organisation to manage the building blocks of IT, provided by other people in the same way they would their in-house infrastructure, but without the challenges that such complex architecture would normally produce. Simply put, most of the benefits of the outsourcing are achieved, without the majority of drawbacks. Control is retained, the cost of switching vendors is low, and the risk profile and commitment for the organisation are minimal. Arcus Global portal, which is currently in development, will allow a much greater level of control over each aspect of cloud resources, with tools to facilitate a quick an easy change of provider if necessary. IT management will see an easy dashboard which will allow them to deploy, or decommission any part of a resource or application at any time. To demonstrate this, we are performing pilots of applications which show just how easy it is to keep control of your infrastructure and software in the cloud.

The other excellent aspect of the cloud, is its flexibility with regards to increasing / decreasing resources. If you want to quickly deploy 400 extra licences of an application for 2 weeks, and then discontinue them – not a problem, you only pay for the month you do this in – try replicating that with traditional software model or your outsourcer.