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Outsourcing IT: Cloud Computing and Virtualisation explained

Businesses are drowning in a sea of information over how to best manage their IT infrastructure. Outsourcing can be a great option, and cloud computing has been touted as an attractive investment. But what is it all about?

This is never more evident than when it comes to off shoring; case in point, the recent Satyam scandal. This has certainly raised a few eyebrows. So… what do businesses need to consider today when they look to best manage their IT infrastructure efficiently? Certainly cloud computing looks an attractive option, but what does this mean in reality? And what shift in thinking is needed for organisations in order to truly embrace this new phenomenon?

In January this year, one of India’s largest software companies, Satyam Computer Services, admitted to corporate fraud on a massive scale. This threw the country’s already floundering stock market into further turmoil and cast a corruption shadow over the IT and outsourcing sector. It is no wonder that businesses, particularly small and medium sized companies, are wary of outsourcing IT infrastructure.

What does it all mean?
The function and approach of outsourced IT management can vary but the best accepted description is that outsourcing provides services that deliver operational support to businesses, from day-to-day administration to management of an entire environment. With this, business can ensure service-level requirements and optimise their IT environment, while at the same time reducing risk, lowering costs, and improving speed of time-to-business value.

The classic outsourcing argument is generally tied to the opportunity for cost savings as IT Managers continue to look for smarter ways to manage their IT infrastructure efficiently. This allows businesses, particularly in the SMB space, to concentrate on serving customers, without having to invest in becoming experts in the IT arena.

Today, a phenomenon known as cloud computing is providing an excellent platform to meet exactly this need. Cloud computing is a technology paradigm whereby software and IT infrastructure are delivered as services via the Internet. This network of services is collectively known as “the cloud”. It makes it possible to use a thin client, smartphone or laptop to reach into the cloud for resources as and when they need them, which in turn can lead to a reduced cost per user and greater leverage of resources.

In the past, most small to medium business viewed outsourcing as the exclusive domain of the corporate sector and therefore outside their financial and management capabilities. However, as a consequence of the current economic climate, organisations are under increasing pressure to support growing demand on their IT infrastructure with shrinking resources. Businesses must do everything possible to operate more efficiently and companies must look at alternatives to ensure resources are used effectively without sacrificing service. This is causing a re-think about the appropriateness of outsourcing at all levels of the economy. And with the explosion of virtualisation, which enable clouds to function effectively there is now a viable option for businesses of all sizes to consider.

As the affects of the global economic crisis take hold, those businesses which have taken measures to streamline business processes will be most likely to survive the downturn. We are already seeing signs of this emerging in the retail, consumer goods and the banking and finance sectors where those companies which have taken the time to strategically restructure at all levels, including IT, are showing market resilience.

More and more, businesses will look to innovative IT environments that provide a more cost-efficient, flexible and agile solution to IT infrastructure. They also need to act fast. Fundamental changes must take place if an organisation wants to thrive tomorrow. Many companies of all sizes are considering the advantages provided by outsourcing IT, from virtualisation through to cloud computing.

Virtually outsourcing

Virtualising IT infrastructure is an advantageous way to outsource IT management and achieve several business benefits. This technology makes sense for business as most modern computers are vastly underutilised. Virtualisation allows you to run multiple virtual machines on a single physical machine, sharing the resources of that single computer across multiple environments. Different virtual machines can run different operating systems and multiple applications on the same physical computer.
Virtualising IT infrastructure means reducing IT costs while increasing the efficiency and flexibility of existing assets. For example, thousands of organisations worldwide, including all of the Fortune 100, employ VMware virtualisation solutions. However, virtualisation is not only for large enterprise; companies of every size can reap the benefits of virtualisation.
John Brand, Research Director at Hydrasight, believes that virtualisation will experience continued growth in Australia driven largely by the need to satisfy greater variability in demand. Brand says, “We expect Australian businesses to adopt this technology more and more in the future because of its ability to be able to scale both up and down and to enhance the stability of the IT environment.”

Step up into the Cloud

While virtualisation began in the datacentre consolidating servers, the next evolution is surely in the cloud with application delivery and storage. In order to successfully make the transition from physical storage to cloud storage, for example, a significant change in perception within businesses must take place. This mind shift is made more difficult for a number of reasons.

Firstly, companies are being asked to invest heavily in new technology, such as VMware and associated infrastructure, as well as new process, including provisioning and management. The idea of relinquishing such responsibility and management to another entity can be daunting, particularly considering the sensitivity of company data.

SMEs, in particular, are reluctant to use this technology according to analyst Brand, because they traditionally resist adoption of ‘bleeding-edge’ technologies unless they provide a specific competitive advantage. “Virtualisation as a ‘generalised platform’ can be overlooked because it does not add additional or specialist functionality that is visible to SMEs in providing a significant competitive advantage,” Brand states.

However, the benefits of virtualisation are too great to ignore, particularly in such challenging economic times. Virtualisation dramatically improves cost efficiency and the availability of resources and applications in business. This technology also lets business respond faster and more efficiently to changes in storage requirements. A virtualised platform also provides for greater and more flexible capacity.
Maximising cost efficiency

There is significant benefit in moving towards a virtual solution, rather than being tied to a physical server. Particularly in this economic climate, businesses must seek opportunities to drive down costs and maximise efficiency. The cloud offers this—and more. In fact, moving towards a virtualised IT environment can deliver business the same service at just one third of the cost of a static server environment. For example, VMware customers typically save 50 to 70 percent on overall IT costs by consolidating their physical servers and delivering highly available virtual machines with VMware infrastructure.
Rapid reaction and agility

In today’s fast-paced business setting, speed is key to providing a valuable service. One of the most important benefits of a virtualised environment is the ability to react swiftly (and cost effectively) to the immediate demands of the client. Whereas a business can wait days, even weeks, for the delivery of a physical server or changes to server capacity, a virtualised environment can be upgraded or altered much more quickly. This ability to be able to react to new requirements from customers rapidly is of immense benefit to businesses seeking to be cost and time efficient.

Elastic capacity at your fingertips
The capacity and flexibility afforded by virtualisation, and mirrored by cloud, affords businesses many benefits, particularly in the SME sector. Simply though, businesses only need to use the capacity they require at that time, so they are not paying for unnecessary extra capacity. However, capacity can be quickly added in line with business growth when required. This frees up resources and time.

A great example of this in action is EMC’s Mozy service, which shifts the burden of having to back-up. This application protects and backs up information automatically, removing the need for businesses to manually back up data. The online back-up service is currently used by more than 900,000 consumer users and more than 25,000 business customers.

But is it secure?

As virtualisation provides a much more dynamic infrastructure than static infrastructure, the information processed and stored in this environment also becomes more fluid. As has been explored earlier in this article, this technology offers great opportunity for business, however it is also important to acknowledge that it can also introduce new sources of risk.
It is vital that organizations address this risk in order to fully enjoy the benefits of virtualisation. RSA, the security division of EMC, sees information risk management in virtualised environments as a key issue defining the uptake of this technology within growing business. To address this need, RSA has developed a wide range of solutions from identity assurance and access management to data security, to security information and event management. RSA has also partnered with VMware to ensure the security of VMware environments.

Is it really pie in the sky?

It is clear that a shift in mentality is necessary to encourage business to move from needing a server that is owned by the business to having faith in an outside source to provide this service and infrastructure. Confidence in this provider is imperative; there are many well-known brands offering this service that will give uncertain businesses a degree of comfort when taking this step forward. Furthermore, consider that individuals and companies place personal and private information into the cloud already. Social media, such as Gmail or Facebook, are examples of the cloud operating in our everyday lives.

Brand suggests that virtualisation within the SME space will increase through 2012 whether delivered on or off premise. According to Brand, “a significant portion of SMEs may not even know that they have adopted virtualisation because the technology will have been implemented by their service providers or by an increased use of hosted applications and software delivered as a service.”

Furthermore, as an SME’s IT environment becomes more complex, virtualisation can become a more attractive way of reducing the fragility of systems. “As many IT systems can be delivered by multiple specialist service providers, separate physical servers become cost prohibitive and the dependency between application environments can lead to finger-pointing when trying to resolve technical support issues,” Brand continues. “Suppliers to SMEs will find virtualisation particularly attractive as it provides greater ‘application density’ without sacrificing reliability or adding significant hardware costs.”

Leaping into the future
In an increasingly competitive environment, businesses must not be tied to infrastructure and processes simply as a matter of course. Virtualised environments provide an alternative for business that is cost-efficient, flexible and agile with elastic capacity that provides the same standard of service as the standard IT-in-a-box. Leveraging the benefits of virtualisation, cloud computing offers “outsourcing for the masses”—the management and delivery of IT services for all sizes of business—from EMC Mozy-type services for small business through to complex infrastructure and applications delivered as a service for large corporate organisations, through to the combination of the likes of EMC, VMware and Cisco. Success in these challenging times surely will be defined by businesses willing to take a leap of faith to improve efficiency and enhance their IT infrastructure by putting their head in the clouds.

—Darren McCullum is VMware Business Manager, EMC (www.emc.com.au) ANZ.

Cloud computing—the benefits

  • Reduced cost; due to economies of scale, greater leverage and incremental payment
  • Improved leverage of resources i.e. storage, because of a global infrastructure
  • Automation; IT staff don’t need to worry about keeping software up-to-date
  • Flexibility; scale up or down depending on requirements at the time
  • Greater mobility; access information anywhere, any time
  • Freedom; for IT staff to be proactive, adding value, as opposed to being reactive.

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Darren McCullum

Darren McCullum

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