Changing Face of Managed services: A Threat to Likes of HP, IBM

For long the enterprises were outsourcing their IT to become efficient and profitable. Outsourcing IT was making an enterprise more productive and cut costs. The traditional Outsourcing model includes

·         Multi-year contracts  and Time bound charging

·         Developing and maintaining custom code for the applications

·         Teams Of Programmers  and onsite system Integrators

·         Cost advantage end-to-end service providers

The arrival of Cloud computing is changing everything. The Big IT vendors like HP and IBM are taking a hit and they better watch out. If they don’t change fast enough, they will get extinct like Dinosaurs.

The benefits of Cloud Computing are:

·         Everything is as a service solution

·         No Onsite Code to install, maintain or develop. No onsite Teams Of Programmers and system Integrator

·         IT Now Part of working capital Short term contracts Volume based charging

·         Cost advantage and Flexibility to choose best of breed applications

·         standardized Services outsourcing entire process .Ease of set up and cost benefits

It’s the beginning of the end of IT infrastructure outsourcing as we know it.  To compete, established ITO vendors will likely need to find ways to efficiently transition their operations to the cloud, protecting market share in the process with tactics such as reconfiguring their legacy IT assets to deliver cloud-like performance at cloud-like prices. The IT vendors would need to innovate and develop competence for product development, risk handling. Today an application development population explosion is taking place. The advent of platform-as-a-service (PaaS), in which users buy access to cloud-hosted development platforms and tools on a subscription basis, has almost completely broken down the barrier to entry to the application development business. By reducing the need for large up-front investments in servers, data centers, and platforms, PaaS makes it possible for anyone with an Internet connection and a credit card to set up an application development shop.

The virtual vendor. With the cloud opening the door to outsourcing practically anything that can be done or delivered on the Internet, business models such as “vendor as broker” and “vendor as retailer” has become economically feasible.

 Enterprises like Sapient  are now deploying  enterprise grade applications on Microsoft Azure and Amazon Public cloud. Lets take the example of Sapient.

Sapient is deploying mission critical enterprise application on public cloud like Microsoft Azure and amazon. It’s offering these applications as SAAS model. For security purposes, it creates a site to site VPN with the enterprises and it has various layers of security and authentication.  Some of the sapient application are below:

·         Compliance Management Reporting System (CMRS): An end-to-end enterprise platform for more efficiently and effectively meeting various regulatory reporting commitments

·         Client Connect Solution: A managed platform that helps asset managers, investment managers and fund service providers enhance the quality of their client servicing

·         Close of Business Services (CoBS): A fully outsourced shared services solution for managing time-sensitive close of business processing and reporting

·         Trading Operations as a Managed Service: A hosted solution that combines access and support of top-notch trading and risk management applications

·         ICEx: A tailored solution that consolidates and improves access to a vast universe of research content

·         CCS, CCSi and CCSv: A margin statement connectivity platform that makes clearing and communications more concise and efficient

·         Energy Data Hub (EDH): A new commodity market utility that allows firms to perform benchmarking and use new metrics

·         European DataWarehouse: A combination of services that help companies meet requirements for communicating loan-level performance data under the ECB’s ABS loan-level data initiative

·         Structured Finance Risk Manager: An automated, enterprise-level system that helps firms value, monitor and manage the risk of structured assets

·         Client Clearing Portal: An HTML5-based, configurable portal solution for the provision of client clearing and collateral management services

Sapient will be responsible for Operating system and Database support.

So it begs the question, if the application vendor starts providing support for OS and DB, then what’s its impact on IT service providers like HP and IBM?

Market is changing with cloud computing. All IT services providers have to change their offering radically. They now have to focus on more building applications, transitioning and modernizing existing applications for cloud environment. The dollars are only in SAAS model.

HP as a company has an advantage, its own public cloud offerings hpcloud. It has a very good strategy for application modernization and transformation.

The cloud computing will in the give  a big blow to employment of IT professionals, specifically who works in Operations.

Here comes the next big churn