Why the cloud is forcing IT service providers to spent money on uncertain returns?

IT service providers have to invest in developing new delivery models such as cloud computing despite customer caution.

Cloud computing is a hype beyond hypes which includes lots of sub hypes within its bubble. Well that’s what an analyst firm might say anyway.

The suppliers are currently putting investments in delivery models such as the cloud, utility computing and as a service even though they realise that take up will not necessarily be fast. In fact they believe that in the next couple of years will very conservative in terms of cloud take up.

Gartner says suppliers believe the average percentage of deals expected to include cloud services and utility services or as a service delivery models will be 18% for data centre deals in 2011 and 24% in 2012.

Gartner believes supplliers basically have no choice but to invest or risk being left behind. I suppose when cloud computing is the norm there will be less in-house IT. I don’t see many enterprises building their own clouds either. Therefore if you are a supplier you have to make sure you are leading the way in terms of cloud developments.

The challenge for businesses is buying into the right cloud.

Here are a couple of examples:

Royal Mail has signed a six-year deal with Capgemini to introduce cloud computing technology to its IT infrastructure and enable it to cut costs through a pay-as-you-go IT model and make it easier to introduce new online services. Through Capgemini’s Infostructure Transformation Services (ITS) the Post Office will have a single point of contact for all cloud services. Costs come down because the Royal Mail will only pay for the raw computing power it uses when delivering a service. It also makes it easy to introduce new services because additional computing resources can be taken on demand without the long and expensive process of buying hardware and booking other IT resources.

Everything Everywhere is outsourcing its IT to T-Systems in a seven-year deal said to be worth £700m. The deal triggered a move into the cloud. “The contract sets out a path for migrating 40% of Everything Everywhere’s IT estate onto T-Systems’ Dynamic platform within three years,” said the T-Systems statement.

Sage has introduced a cloud-based customer relationship management (CRM) system on the Amazon EC2 cloud. The Sage SalesLogix Cloud uses a private cloud service for mid-market organisations, which operates both on the desktop and on mobile devices.

And here are some articles I have written in the past about suppliers and their cloud strategies.

Capgemini talks conceptually about the cloud

Wipro’s bold cloud strategy

What is Infosys doing in the cloud, apart from using buckets?

Fujitsu has a globally standardised cloud platform.

Steria offers businesses access to computing power on demand  with Cisco.

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