Q&A: Craig Wilson, VP, HP Enterprise Services
Craig Wilson is MD and VP UK & Ireland for HP Enterprise Services (formerly EDS). Following the recent Gartner Outsourcing & IT Services Summit 2010 in London, at which cloud computing was right at the top of many attendees’ agendas, Outsource spoke with Craig about his – and HP’s – perspective on the cloud revolution and its implications for the outsourcing space…
Outsource: What are the repercussions of the advent of the cloud model for the outsourcing industry in general?
Craig Wilson: We are in an unprecedented period in the evolution of IT; for once the destination is clear, we are not waiting for new technology or even infrastructure. CIOs are preoccupied with the question “how do I position my applications and data strategies to embrace the new cloud model?”. And this question is not just a technical one: it links to business strategy, business policy and business case (how do I make such a big change self-funding at each step?).
Cloud has fundamentally changed the way businesses expect to procure IT services and the price they are expecting to pay for these services. As an industry we have talked for a while about IT outsourcing contracts moving more and more to a utility services model – where people pay for what they use or are paid for a specific business outcome – and in HP we now have lots of examples of contracts where we already do this.
The cloud model has accelerated the shift towards this type of model and businesses all want the benefits of improved speed, agility, and lower costs – but still often want environments that offer the enterprise-level security and the necessary levels of integration.
The portfolio of cloud services is increasing but still lags behind what consumers and business customers are looking for. Companies are starting to stop and think before they invest in their own IT capability and will look at the services available from the external market. In the longer term outsourcing may be replaced by external service provision and as service providers invest in their standard offerings, companies will procure technology services from these service providers rather than starting by investing in their own capability. Maybe even the term outsourcing will disappear from use: people will just talk about buying IT ‘as a service’.
O: Going a bit deeper, how are big providers like HP gearing up to ensure they can remain competitive while shifting from existing pre-cloud business models?
CW: HP’s acquisition of EDS was built on a strategy that had already anticipated this move, that things were moving to ‘everything as a service’ where what is important to customers is the service, the quality of the service, and the business outcome. In addition HP’s efforts to drive standards are well-aligned because the key to all of this is standardisation (just as in any utility). HP is driving increased standardisation, integration and consolidation in many aspects – in the infrastructure, with its Converged Infrastructure strategy, as well as in its service business with its investments in data centres, in standardised processes and tools, and increased consolidation – with a view to being able to offer standardised, differentiated services.
And standardisation allows for automation. And automation massively improves consistency and quality whilst driving down cost. For the outsourcers this is a much bigger deal than offshoring. Also in terms of what we are doing to gear up for this market is investment in automation as this relies on software and HP’s IP investment in software. Global scale also strategically important. The really niche players will always do well too.
In a broader sense – outside of the traditional outsourcing market – cloud covers so many other things; cloud incorporates everything from the application to the device, from the individual to the multi-national corporation, from the supplier to the consumer. HP’s strategy to build a portfolio that spans from the hand-held device to the data centre and incorporates the consumer and the enterprise customer is ideally suited. Services are already in production e.g. Snapfish, Magcloud, GS1 product recall service.
O: How are providers working to overcome concerns among buy-side organisations over data security and loss of control?
CW: Today there is currently still a massive gulf between what customers really want in terms of the range and complexity of their IT requirements and what is commonly available from pure-play cloud providers. So although it is inevitable that clients will move to cloud services the difficulty of getting there cannot be underestimated; therefore the best people to help in this migration are the big infrastructure outsourcing players who are equipped to deal with the complexity and are experienced in managing and simplifying the operations. We are going to see the emergence of “dual-tower” ITO deals where the pricing and solution contains both “cloud” and traditional outsourcing variants. The client then can control the rate at which the transformation happens as their applications are re-engineered or replaced so they can work in a utility environment and ensure that concerns related to data security and loss of control are managed.
Standard services also provide some kind of reassurance to customers as to what they are buying as they can see the end-point which is sometimes better than going into a complex transformation. HP also has extensive capabililities around security services and solutions to address concerns around increased risks, privacy concerns and security.
O: What are the ramifications of the rise of the cloud model for the European labour market?
CW: Cloud will make European business more competitive and enable business to focus on doing what their customers need. For example, cloud will allow more businesses to flourish by breaking down the barriers to entry that SMEs have traditionally been faced with when they invest in IT infrastructure. Instead of having a large capital outlay, they need their laptop, an internet connection and can purchase their business management software over the web. At the same time, European businesses need to change how they plan their own investments in IT – [they] can’t expect service providers to solve their own labour issues.
The cloud/utilities services market will also create a whole host of new opportunities and companies.
O: What about the ramifications for workforces in established and emerging sourcing delivery locations?
CW: IT services companies need a global strategy for labour and each country needs to work out the types of skills that are required in that country. Offshoring is no longer about labour arbitrage and accessing cheap pools of labour; it’s about accessing knowledge.
O: How will the rise of the cloud model affect the kind of skills sourcing professionals will need in order to thrive going forwards?
CW: As mentioned earlier, cloud provides both access to massively flexible resource pool for of information technology, and a huge marketplace of new services and capabilities that will help business be more innovative and more effective. Companies will need to build an extensive portfolio of services and clearly articulate these to the market. Sourcing professionals will need to effectively navigate this portfolio of services available in the market, and work out what ‘standard services’ will effectively meet their needs and what needs to be customised.
There is potentially a role in the future for the orchestrator of the cloud, companies to help IT organisations select the best from the standard offerings that meet their company’s needs and what needs to be customised. Also a role of integrator – to integrate the different offerings to support the needs from the specific business process.
Skills of IT professionals will need to evolve with that, and particularly important will be the skills to apply services from the cloud to address business processes and needs. But with the greater scope and reach of cloud services comes new responsibilities (such as those around responsible management of personal data as described above). IT professionals developing and building cloud services, and those running and using cloud services as part of their business, will need to know about and operate new and important practices, standards and regulations designed to protect the interests of consumers and service users in the cloud era.
O: If this is the era of “cloud and crowd” what are the ramifications for the global economy?
CW: Cloud really is a sea-change in the business landscape, it really isn’t just about cost reduction, and although there are tremendous benefits to be had from cloud in this way, cloud really is about much more than this. In the end, it’s about freeing up enterprise attention so that it can focus on its customers, it’s about bringing a vast array of powerful new services to businesses that will give business new insight into their markets, customers, and supply chain. It’s about new tools and approaches to design – and it’s about linking networks of businesses into supply chain through the internet. It’s about global reach and scale, not just for big enterprise but for micro-business; and it’s about linking business more tightly with their customers. In the end, it’s about the internet – about being connected, about scale, and about “everything as a service” .