Accenture Cloud Future Business Costs Innovation

8/3/2019 Accenture Cloud Future Business Costs Innovation

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In association with

The Outsourcing Unit

London School of Economicsand Political Science

Cloud and the Future of Business:

From Costs to InnovationBy Professor Leslie Willcocks, Dr. Will Venters, Dr. Edgar WhitleyThe Outsourcing Unit, Department of ManagementLondon School of Economics and Political Science

Part One: Promise


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Table of contentsntroduction

Challenges, Impacts and Innovation

Cloud as TechnologyWhat Kindofransformation?

Cloud TechnologiesFour Elementsf Desire

Conclusion: Future Papers

A Note on Methodology

ndnotes

2 | Cloud and the Future of Business: From Costs to Innovation


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steroids?1 However, one must point

out some significant differencesfrom what has gone beforenot leastmore powerful computing/processingcapabilities, fatter transport pipes,broadband wireless access, more openand flexible protocols (IP), to mention

just a few. Our report finds that cloudis in many ways (finally) deliveringon the promises of the pastintoan environment that appears moreprepared to put these capabilities towork due to dynamic changes in internaland external factorscompetition,innovation, globalisation, userdemographics, management readiness,and supplier ecosystems. Moreover,cloud has real consequences, not allof which are fully or well understood,and we are finding that expectationsare running very high, particularlyamongst business users. Organisationsand CIOs need to be anticipating andplanning the journey now for major

changes that will begin over the next3-5 years, and which will fully have

Introduction

While the subject of cloud is every-

where being discussed, there is a lackof substantive, objective research intonot just technological trajectories butinto the potentially more far reachingbusiness implications of cloud. Hencethis report. It is important not to buytoo heavily into the language of allchange and radical transformation,and crucial to avoid the relatedresponse to business hype and fashionswhich one book dubbed ratheracerbically as fad surfing in theboardroom. Cloud must be seen inthe context of previous so-calledrevolutionsparticularly in technologyand in service outsourcing. Indeed fromone perspective cloud can be portrayedas a back to the future phenomenonfor example, there are resonances ofapplication services provision, shareddata centres, and even SystemsNetwork Architecture (SNA), with itsdata and application bunkers feeding

multiple devices. Is cloud really justa more open SNA architecture on

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realised their potential by 2020. Cloud

computing is taken as the consequenceof the evolution of two distinct strands:technological innovationbased aroundvirtualisation and shared computingprovisionand a distinct service basedperspective on computing. Cloudcomputing changes the risk profileand status of many IT developmentsand offers the opportunity to experimentwith, seed and grow innovative businessservices. In this introductory paper wefocus on the kind of transformationcloud is going to represent, and weprovide a perspective on the directionof travel of cloud technologies.

Cloud has real consequences,

not all of which are fully or well

understood...expectations are

running very high, particularly

amongst business users.

With cloud computing becoming an increasingly importantelement of the IT function of most organisations, thisfive-part report presents a state-of-the art review of thekey features of cloud computing and its likely neartermand longerterm development trends. It draws on researchundertaken from late 2010 into 2011, including a survey ofover 1035 business and IT executives and more than thirty-five interviews with key international players in the cloudcomputing ecosystem including cloud providers, systemintegrators and users of cloud services.


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some have offered the rule of 10/10.

This means it takes ten years todevelop fully the technology set andanother ten for it to be implemented,accepted, institutionalised andexploited in a society. Recently socialnetworking has perhaps broken thisrule dramatically, but cloud, as aconvergence of a range of technologies,in our view looks more like a 10/10transformation (though this doesnot mean we are starting from the

beginningmany aspects of cloudcomputing are already quite progressedalong this timeline). The reasons forthis, as we will argue in later papersrelate to the challenges cloud presents,the major impacts that will have to beworked through, and the management,organisational and sectoral changesthat will need to occur if the moredramatic innovations in service, businessoperations and the way businesscompete and government agenciesrun themselves, are to be realisedwithin the next ten years.

In this first paper we provide acommentary on the likely size anddirection of the technological changesimplicated by cloud. From this base,we then outline the subsequent fourpapers that describe in detail ourassessment of clouds implicationsfor the future of business, and how

business needs to respond to thechallenges if it is to achieve the sortsof dramatic payoffs being touted, not

just in terms of cost, but also in termsof business innovation.

Challenges, Impactsand InnovationIn the near term, cloud computing

faces a number of challenges clearlyidentified by our research. These includelegal and regulatory complianceconsiderations, managing the contractualrelationship between client andcloud provider, including lockinand dependency, as well as managingthe very flexibility that cloud provides.Nevertheless, many of these types ofchallenges have been faced previouslyand effective solutions have evolved.

For example, safe harbour provisionsaddress legal and regulatory issuesabout transferring data abroad, andover twenty years of IT outsourcinghas resulted in a skill base that iscapable of managing contractualrelationships with key partners. Enduser computing, whether in the formof desktop computers or, increasingly,smart phones has become effectivelyintegrated within the IT infrastructureof the organisation. Cloud computingcan, and should, learn from theseexperiences if it is to achieve itsfull potential.

We see it as important to differentiatethe short-term from the long-termpossible impacts of cloud technologies,and not to conflate the two into tooimmediate a timeline. Our respondents,especially those working closely withexisting systems and technological

infrastructures, invariably warnedus against assuming that full cloudfunctionality would be delivered veryquickly. Business executives, on theother hand, understandably wantedthe significant benefits that cloudcould bring within much shortertime horizonsa familiar story. Theimpact of major innovation, especiallytechnological innovation, has frequentlybeen delayed. On past experiences

Business executives...

understandably wanted

the significant benefits that

cloud could bring within much

shorter time horizons.


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As arises with most emerging markets

and new technologies, there are countlessdefinitions of what a new technologyis or may be. Cloud computing is nodifferent, with some vendors providinginnovative new services and othersseeking to re-badge their existingprovision to use the latest buzz words.Instead of worrying about words, wefind it most helpful to consider cloudcomputing as the maturing andconvergence of two distinct

technological streams.

The first stream relates to the maturingof the technological infrastructure.That is, over the past ten years therehave been significant technologicaldevelopments that enable cloudcomputing6. These include far morereliable internet services, with higherthroughput and resilience coupledwith virtualisation techniques that

Cloud as TechnologyWhat Kindof

Transformation?

The nature of this potential transformation

was eloquently stated by one of ourrespondents, Tim Barker, of salesforce.com:Cloud computing in its best formlowers the barrier to actually gettingthe business what they want5,that is,through the use of cloud computingthe IT department ceases to be partof the business prevention unit andinstead delivers tangible businessbenefits. This was supported by oursurvey where over 50 percent of

business respondents believed thatcloud would enable us to focus ontransforming our business and not ourIT. Even amongst IT executives nearly50 percent recognised that cloud couldenable far quicker implementation ofbusiness applications.

enable computing facilities to bereplicated and reproduced easily.One consequence of this move tovirtualisation is that it is no longernecessary to have inhouse computing

infrastructures. Instead, in an echoof the outsourcing movement, it ispossible to shift computing and storagecapabilities into the cloud wherethey offer economies of scaleincluding in terms of IT support,energy consumption and speed.

Microsofts CEO Steve Ballmer recently stated that Microsoftsmove to the cloud reflects a transformation thats goingon in the computing world2. This sense of the potentiallytransformative effect of cloud computing is also reflectedin our own empirical research undertaken in late 2010 andearly 2011 including a survey of more than 1035 businessand IT executives3 and more than thirty-five interviewswith key players in the cloud computing ecosystemincluding cloud providers, system integrators and usersof cloud services4.

Cloud computing in its best form

lowers the barrier to actuallygetting the business what

they want.

Tim Barker, salesforce.com


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In and of itself, however, developmentsin computing infrastructure do notresult in the opportunities that cloudcomputing can provide. For that tohappen, the second stream also needsto have matured. This stream is a serviceperspective on computing7. This focuseson providing computing capability as aservice that is consumed as and whenrequired rather than as a oneoff, onesize mustfitall capability. The resultingchange of management mind-setfor both IT and business directors ismarked, as Jimmy Harris of Accentureobserved:

When you start to understand that

youre going to be buying things that

used to be products, i.e., applications

software, now as a service then you

understand that youre going to be

required to manage those services as

you do outsourcing services today

and youre going to understand thatyou will be required to integrate

those services just as you integrate

services from various outsourced

companies today8.

The unique proposition that is cloudcomputing comes about when bothstreams are relatively mature. Thatis, the service perspective of offeringcomputing resources as and whenthey are needed is coupled with thetechnological capability of using moreor fewer virtualised servers over theinternet. To illustrate this combinationof the two streams we can considerthe case of the media agencyRAPP. They utilise the technologicalcapabilities of cloud computingsuch as virtualisation to address theunknown processing demand associatedwith providing video streaming servicesfor movie launches. If the movie launch

is particularly successful, with manythousands of people wanting to streamthe movie trailer, they are able to scaletheir operations rapidly; if the moviebombs, then the service element ofcloud computing means that they arenot paying for unused infrastructure.That is, because their cloud providerscan offer and manage computingresources as a service, RAPP are ableto purchase as many, or as few, cloudservices as they require.

To date, most discussions of cloud havefocused on the benefits that cloudcan offer in terms of flexibility in thetechnological infrastructure. However,cloud computing is unlikely to result inthe kinds of transformation signaled byBallmer and Barker if it is understood

In and of itself, however,

developments in computinginfrastructure do not result in

the opportunities that cloud

computing can provide.

solely in terms of cost savings arisingfrom data centre consolidation andvirtualisation. Indeed, there is a directparallel here with the earliest stages ofIT outsourcing, which we have studiedfor the past twenty years, and fromwhich many lessons for cloud can

be learned.

The earliest stages of IT outsourcingalso highlighted the potential costsavings that outsourcing could offerand this resulted in many companiesmoving to what can be called contractor supplier managementestablishingperformance terms and then managingto these terms9. With hindsight, however,it is apparent that such an approach isfraught with problems: even managingcontracts in terms of a single variable(for example, cost) is tricky if there isno real in-house capability to managesuch contracts. Moreover, there isgrowing evidence10 that relationshipsbased on cost minimisation are unlikelyto provide sustainable competitiveadvantage and will rarely lead toinnovation. Instead, the most effectiveforms of long-term outsourcing tendto have a perspective that is diametrically

opposed to concerns about costminimisation, focusing instead onrisksharing and collaboration11. Wetherefore approach the question ofcloud computing cognizant of thechallenges and experiences of IToutsourcing and draw our analysisin terms of these insights.


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By considering these dimensions wecan evaluate the four key types of

cloud computing offeringSaaS, PaaS,IaaS and Hosted Services. A summaryis shown in Table 2.

SaaSSoftware as a ServiceThis is the highest level of abstractionin which complexity is hidden at theapplication level. The cloud providerruns all elements of the service withthe user presented with a completeapplicationusually through their

Cloud TechnologiesFour Elements of Desire

In order to understand the technological

direction of cloud computing, andthus to evaluate differing technologyoptions, it is necessary to understandthe distinct dimensions by which thevarious offerings differ from existingsolutions. We therefore define a setof dimensions which enable easycomparison between offeringsandenable the evaluation of new offeringsagainst old. Crucially however ourDesires Framework strips out the

value-added benefits of cloudthestuff of marketing hypeand allowsorganisations to focus on the specificdifferences, and thus make decisionson such differences alongside thepromised benefits. Our frameworkconsists of four desired dimensionsof the different offeringsEquivalence,Abstraction, Automation, and Tailoring(see Table 1).

browser. Equivalence is achieved if theapplication meets users functional

requirementsif the application doeswhat they need it to do. Examplesinclude salesforce.com but alsocomplete desktop applications suchas Google Apps. Automation is highsince the user is not required to considerthe management of the service. Thetailoring of the service to specificneeds is limited by its authorwhoremains in control of the applicationsdevelopment path.

While the idea of providing computing as a service throughnetworks dates back to the 1960s12, and was the drivingforce behind the early development of the Internet13, itwas the dot-com boom, and the associated explosion infibre-optic networking, which allowed internet companiesto provide services which are equivalent to running a LANbased service. This change allowed the much promisedApplication Service Provision and NetSourcing14 to becomecommercial realitiesnow termed cloud computing.

Table 1. Cloud Desires Framework (source: authors)

Equivalence The desire to provide services which are at least equivalent in

quality to that experienced by a locally running service on a PC

or server.

Abstraction The desire to hide unnecessary complexity of the lower levels of the

application stack.

Automation The desire to automatically manage the running of a service.

Tailoring The desire to tailor the provided service for specific enterprise needs.


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Table 2. Four Types of Cloud Computing Offerings (source: authors)

Equivalence Abstraction Automation Tailoring

SaaS Defined by functional

requirements

At the level of the

application

High degree of

automation

Limited by application

PaaS If aligned to existing

development practices

To the level of integrating

components

Core management tasks

automated

Through assembly of

lego components

IaaS Close to that of a server At the hardware level Limited to hardwaremanagement

Complete application stackwithout networking

Hosted Services Equivalent to server

ownership

No abstraction Limited management Complete application stack

PaaSPlatform as a ServiceAbstraction occurs at the development-environment levelwith the underlyingcomputing resource hidden but withdevelopers given the freedom to tailor

components in order to develop specificservices. Described as like Lego15the tailoring is constrained by thebuilding blocks provided by the vendor.Automation is relatively highasall basic management of the underlyinghardware is handled by the platform,but with management of the applicationleft to the user. Examples includeMicrosoft Azure, Google App Engineand Force.com. Such services canachieve high equivalence if they capitaliseon existing software developmentpractices. Microsoft Azure for exampleis closely equivalent to existingMicrosoft development practices.

IaaSInfrastructure asa ServiceHere abstraction occurs at the hardwarelevelwith only a simulation ofunderlying hardware provided to

the user (based on virtualisation16

).Automation is limited to ensuring thevirtual machine runswith users requiredto run the operating system andmanagement services such as backup,monitoring and networking. Equivalenceis close to that of owning a localserver, as is tailoring. Examplesinclude Amazons Elastic ComputeCloud and RackSpace.

In each of the above examples thephysical hardware is abstracted fromthe user. This allows multi-tenancy inwhich a number of users services areconsolidated onto shared hardware.Traditionally most servers run below

capacity as they needed to be provisionedfor peak demand rather than averageusage. Multi-tenancy thus enables vastreductions in the costs of processing,power and cooling. Further statisticalmultiplexing (selecting the tenantsof the server such that their demandfor processing complement each other)ensures high utilisation of the processorsat all times.

Hosted ServicesHosting servers in outsourced datacentres predates the cloud term andis often ignored from cloud debateshowever it should be included in themix when considering some intensivebusiness applications which areinappropriate for virtualisation. Hereno abstraction occursa physicalmachine is hosted in the cloud providersdata centre, and is managed remotely

by the user. Automation is minimal,but equivalence is only limited bynetwork latency, and tailoring is closelyequivalent to a locally hosted server.As there is a direct equivalence ofhardware no benefit in cost reductionis achieved through multi-tenancy orstatistical multiplexing.

Having defined the basic concepts wediscuss the direction cloud computingtechnology is moving in the near future.

Cloud Ecosystems

Once equivalence is achieved betweenthe local data centre and the cloud itis possible to create enterprise servicesby mashing up the services from avariety of cloud providers to createwhat has been termed a cloud ecosystem.This integration allows the tailoringof services to specific business needsusing a mixture of SaaS, PaaS and IaaSthough considerable technical skillis required to integrate such services.Further the resultant ecosystem islimited by the service quality of theweakest component. Such ecosystemshave been termed BPaaSBusinessProcess as a Servicereflecting thefocus on business specific services.

As equivalence is achieved betweenexisting internal data centre computersand cloud-provided services so it ispossible to use a hybrid mix of internalmachines and cloud-provided machines

within a business process. This so-called hybrid cloud allows parts ofthe process to be run internally (e.g.handling sensitive data), when otherparts of the process run at low costexternally. Further cloud bursting canoccur where services are run internallybut burst to the cloud when internalcapacity is insufficient to meet demand.


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For many enterprises who already

operate large-scale data centres theeconomy-of-scale benefits of IaaSand PaaS are limited (particularly ifthey already operate multi-tenantedservers)whereas the risks of outsourcingto the cloud are perceived to be high.In response software vendors havecreated software to operate existingenterprise data centres as though theywere a pay-as-you-go (PAYG) cloudprovider (albeit to one customertheenterprise17). Such private clouds benefit

from the automation and abstractionof service provision from business needsand allow billing of IT service usageto business units. In response someIaaS and PaaS providers are offeringequivalent virtual private clouds18inwhich a cloud-provider dedicates (andseparates) part of their data centrewholly to one enterprise as though itwere their own private cloud accessedby secure virtual networking. In such

cases automation is providedbut witha high degree of resource tailoring.

Another interesting technology

relevant to cloud computing is theContainer Data Centre. Some enter-prises are unable to exploit the publiccloud but demand data centre renewalor expansion. The shipping-container-based modular data centre respondsby providing a complete data centrewithin a shipping container (or someform of modular box). All elements ofa data centre are pre-configured andall that is required is power, water (forcooling) and network connectivity.

Such facilities allow the rapid creationof relatively automated data centreswhich could themselves be used forhosting private or public clouds atrelatively low cost where networkequivalence is not achievable. Examplesinclude financial services (wherelatency is a key issue), military uses(where connectively is generally poor),or where legislation demands hostingin particular locations (e.g. data

protection laws require data to remaininside a country).

Finally, though, it is worth reflecting

on the trajectory of computing ingeneral. Gordon Moores19 famouslaw of microprocessors continuesapace and this will impact upon thecloud providers,20 dynamically changingtheir cost and profit models. Theattraction of moving to the cloudmust thus be compared with the speedby which the service being rentedPAYG becomes cheaper to purchase.Modern multi-core processors aredesigned to support the running of

many virtual machines per server21.In a few years it may be possible topurchase processors capable of runningentire 2010-equivalent data centreson one server. As a result we notethat long-term cost benefit modellingfor cloud computing is immature anddemands much further attention.

Cloud must be seen in the context

of previous so-called revolutions

particularly in technology andin service outsourcing.


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In the third paper, we detail the

meaning of cloud for IT suppliers,IT functions and businesses, and separateout near- and long-term impacts. Wedocument the drivers of near-termdevelopments. We assess the significanceof these and long-term impacts for arange of sectors, the supply industryand customers and users of cloud. Aparticular focus will be on three areasof impact: service performance, cloudas a business service, and radicalchanges in the supply industry. Ourresearch uncovered the initial appealof cloud lying with potentially dramaticcost reduction. At the same timerespondents were clear that thetechnologies provided massive potentialnot just for transformation of thetechnology platforms on which theyoperated, and also the financial andservice relationships with suppliers,but also for major business innovation.

Conclusion:Future Papers

The next papers organise our findings

into a series of four further areas thatemerge from the research as highlysignificant. These are:

Part 2 Challenges

Part 3 Impacts

Part 4 - Innovations

Part 5 - Management

In the next, second paper we lookat the perceived and real challenges

cloud represents for business, IT andsupplier executives. We find differentstakeholders weighting the risks andchallenges differently, and provide adetailed assessment of what are thesignificant challenges, and what canbe done about these. The emergingchallenges include security and legalrisks, defining the relationship, thelock-in dilemma, and managing inthe cloud.

Our fourth paper describes these

potential innovations, including adetailed picture of moves we arealready witnessing towards acloud-enabled agile, ambidextrousorganisational formwhat we call thecloud corporation.

Further research in the series will supportour already rich vein of findings on themanagement issues raised by cloud.Cloud technologies, we are finding,have far-reaching implications forclient and supplier skills sets andcapabilities, and also for the rolesof senior executives and businessmanagers in harnessing the potentialof cloud for future business advantage.In the fifth paper, we conclude ourreport with a detailed assessmentof the management capabilitiesrequired to give meaning to theradical possibilities inherent in furtherdevelopments in cloud technologies.

During 2011 we will be producing four further articles thatelaborate on the very rich findings from our research workon Cloud. A combined report will be updated and producedat the end of 2011.


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was also based on, and contrastedwith, themes from the cloud andoutsourcing literatures22. The processinvolved an iterative reading, coding

and cycling through the codes. Thevalidity of the coding and analysis wasconstantly checked by searching forcounter examples and nuances in thetext and codes.

The resulting codes and associatedquotations were then shared with theremainder of the project team. Thisresulted in further insights and themesto explore.

Finally, a selection of the coded quotationswas selected for presentation in thecurrent report23. The selection processwas guided by the need for a coherentnarrative flow in the paper.

In addition to reviewing the academicliterature and associated industryreports, a distinctive feature of thework reported is the inclusion ofresults from a largescale survey ofIT industry practitioners. The surveywas undertaken by HfS Research24 inconjunction with the LSE OutsourcingUnit. HfS Research is the foremostresearch analyst firm and socialnetworking community that is focusedon helping enterprises make complexdecisions with their global sourcingstrategies. It has 120,000 monthlyvisitors and over 50,000 subscribersand leverages this community ofsourcing professionals to deliver rapid

insights on the global sourcing industry.

The survey ran between October andNovember 2010. Many of the keyresults from the survey are presentedin this Cloud and the Future ofBusiness report. Other views onthe data are available on the HfSsite25. The survey was conducted online

A Note on MethodologyThis paper, and four subsequent papers,draw on four main sourcesan interviewbase, industry and academic reports,the LSE Outsourcing Unit 1,600

organisation database, and a large-scale survey. We undertook thirty-fiveinitial interviews with leading industryplayers across the cloud supply chain.These will be added to during 2011,following the same procedures outlinedbelow and the additional insightswill inform the remaining papers.We interviewed providers of cloudinfrastructures and services, systemintegrators and users of cloud services.

In terms of roles, we spoke to CEOs,CIOs, marketing managers and servicedirectors. Interviews were normallyundertaken by one person and wereheld over the phone. They typicallylasted at least one hour, with somerunning to over two hours.

Each interview was then transcribedand the transcripts shared amongstthe research team. Each interview wasthen coded by one member of the team.

Initially codes were used to simplyclassify each element (quotations)of the interview. For example, someparts of the interviews related tohybrid clouds others to lockinor payasyoudrink models. As theinterviews were being coded, a parallelprocess of consolidation took place.

The first step towards consolidatingcodes into analytically distinct segmentsthat can be examined together

both within and between interviewsinvolved tidying up the initial codes,for example by combining codes thatcovered the same concept but werelabeled slightly differently. For example,codes initially labeled as payasyoudrink and payperdrink modelswere merged. This process of analysis

and disseminated across a broad numberof networks and media to collecta random sample of 1. businessexecutives (non-IT executives),

2. IT executives and 3. technologyvendors, advisors/consultants andservice providers of cloud-basedservices. The survey was sent in anumber of outgoing emails and wasalso available live on a number ofpopular websites and blogs. Threeseparate question sets were developedthat were tailored to these threegroupings. Each question set wascompleted via a 12-minute web-based

questionnaire. IP addresses werecollected to ensure duplicate responseswere deleted. Networks were spreadacross multiple technology blogs andmedia, largely ZDNet blogs, GlobalServices Media, Shared Services &Outsourcing Network and the HfSResearch subscriber-base (accountingfor 75 percent of respondents). 1035responses were collected, 214 from ITexecutives, 414 from business executives407 from technology vendors, advisors/consultants and service providers ofcloud-based services.


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Edgar Whitley is Reader in InformationSystems and member of the InformationSystems and Innovation Group in theDepartment of Management at LSE.He has a particular interest in identityassurance and public sector IT as wellas in outsourcing.

http://personal.lse.ac.uk/whitley

EMC

Salesforce.com

Cable & Wireless

CERN

PA Consulting

Logica

Royal Sun Alliance

RightNow

Fujitsu

About the authors

Contributing organisations

Leslie Willcocks is Professor ofTechnology Work and Globalisationin the Department of Managementat the London School of Economicsand Political Science. He is head ofthe Outsourcing Unit at LSE, and isinternationally recognized for hiswork on strategic sourcing, themanagement of information technologyand innovation.

www.outsourcingunit.org

Will Venters is a member of facultywithin the Information Systemsand Innovation Group, part of theDepartment of Management at theLondon School of Economics. His mainresearch interests include Utility, Cloudand Grid Computing; Distributed WorkPractices; and Knowledge Managementand Communities of Practice.

http://utilitycomputing.wordpress.com

The Cabinet Office, UK

Glasshouse

RAPP

SpiritMedia

VMWare

GridPP

SAP

Microsoft

Accenture


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7 As an illustration only, one earlyexample of the service perspectiveis in the management of elevatorsinstead of annual contracts where they

inspect an elevator, say, every January,they provide a constant monitoringservice and send in the engineerwhenever a problem is noted.

8 Interview with Jimmy Harris ofAccenture.

9 See the following reviews whichcover the major research studies ofoutsourcing 1992-2010, and show

strongly these results: Lacity, M., Khan,J. and Willcocks, L. (2009) A Review ofthe IT Outsourcing Literature: InsightsFor Practice. Journal of StrategicInformation Systems, 18, 130-146;Lacity, M. et al. (2010). A Review ofthe Empirical IT Outsourcing Literatureand Future Research Directions.Journal of Information Technology,25, 4, 395-433.

10 See Willcocks, L. and Craig, A.(2010) Step-Change in Outsourcing.LSE Outsourcing Unit Working Paper,LSE, London.

11 See Willcocks, L., Cullen, S. AndCraig, A. (2011) The OutsourcingEnterprise: From Cost Management

To Collaborative Innovation. Palgrave,London.

12 In 1969 Leonard Kleinrock from

ARPANET said As [computer networks]grow up and become sophisticated,we will probably see the spread ofcomputing utilities which, like presentelectric and telephone utilities, willservice individual homes and officesacross the country Kleinrock, L. (2005)A Vision for the Internet, ST Journalof Research, (2:1) pp 4-5.

Endnotes1 SNA is IBMs proprietary networkingarchitecture. Created in 1974 itis a complete protocol stack forinterconnecting computers and their

resources. SNA describes the protocoland is, in itself, not actually a program.The implementation of SNA takes theform of various communications packages,most notably Virtual telecommunicationsaccess method (VTAM) which isthe mainframe package for SNAcommunications. SNA is still usedextensively in banks and other financialtransaction networks, as well as inmany government agencies.

2 Microsoft CEO, Steve Ballmer, gavethis speech at London School ofEconomics and Political Scienceon 5th October 2010Seizing theOpportunity of The Cloud: The Next

Wave of Business Growth. Onwww.lse.ac.uksee media and events.

3 This survey was conducted inconjunction with HfS Research. SeeNote on Methodology.

4 Details of the interviews conductedand how they were analyzed are givenin the Note on Methodology.

5 Telephone interview with Tim Barker22 September 2010.

6 Early versions of these technologicalcapabilities include Application ServiceProvision (ASP) and Netsourcing. For a

detailed study see Kern, T., Lacity, M.and Willcocks, L. (2002) Netsourcing;Renting applications, services and

infrastructure over networks. PrenticeHall, New York. See also Killalea, T.(2008). Meet the Virts: Virtualisationtechnology isnt new, but it hasmatured a lot over the past 30 years.ACM Queue6(1): 14-18.

13 Berman, F. and T. Hey (2004).The Scientific Imperative. The Grid 2.I. Foster and C. Kesselman. San Francisco,Morgan Kaufmann.

14 Kern, Lacity and Willcocks (2002),Netsourcing Business Applications:

Renting Business Applications and

Services Over a Network. London,Financial Times/Prentice Hall.

15 Knorr, E. and G. Gruman. (2010).What cloud computing really means.Retrieved 20th December, 2010, fromwww.infoworld.com/d/cloud-computing/

what-cloud-computing-really-means-031?page=0,1.

16 Virtualisation is providing asoftware simulation of computinghardware. Each simulation thus looksand acts like a physical machine andmust run an operating system (e.g.Windows or Linux). Virtualisationallows a decoupling of hardware fromthe virtualised machinesfor example,running multiple virtual machines onone physical machine, moving virtualmachines between physical machinesand even saving virtual machines todisk or tape. Virtual Machines aremanaged by virtualisation software(often called the hypervisor), of which

VMWare is an example.

17 E.g. VMWares V-Cloud directorwww.vmware.com/products/vcloud-director

18 E.g. http://aws.amazon.com/vpc/ orGoogles secure data connection to itsApp Engine.

19 Moore, G. E. (1965). Crammingmore components onto integratedcircuits. Electronics, 38(8).


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20 As stated in a recent articleconcerning Cloud Computing:Brynjolfsson, E., P. Hofmann, etal. (2010). Economic and Business

Dimensions Cloud Computing andElectricity: Beyond the Utility Model.Communications of the ACM 53(5):32-34.

21 Underdahl, B., M. Lewis, et al.(2010). Cloud Computing Clustersfor DummiesAMD Special Edition.Hobeken, NJ, Wiley Publishing Inc.

22 Eisenhardt KM (1989) Building

theories from case study research.Academy of Management Review,14(4), 532-550.

23 Golden-Biddle K and Locke K (1993)Appealing work: An investigation ofhow ethnographic texts convince.Organization Science, 4(4), 595-616.

24 www.horsesforsources.com/research-services

25 Link to HfS blog iswww.horsesforsources.com/


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Copyright 2011 Accenture

All rights reserved.

Accenture, its logo, andHigh Performance Deliveredare trademarks of Accenture.

About AccentureAccenture is a global managementconsulting, technology servicesand outsourcing company, withapproximately 211,000 people servingclients in more than 120 countries.Combining unparalleled experience,comprehensive capabilities across allindustries and business functions,and extensive research on the worldsmost successful companies, Accenturecollaborates with clients to help them

become high-performance businessesand governments. The companygenerated net revenues of US$21.6billion for the fiscal year endedAug. 31, 2010. Its home page iswww.accenture.com.

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