The year 2010 has been one of slow recovery and rebuilding following the economic meltdown, a year in which investment into infrastructure and upgrades was slow and many companies focused on weathering the storm and tightening budgets to reduce excess spending.
However, the year has ended on a positive note as companies have reached the bottom of the curve and are beginning to take a definite upturn in terms of both business and infrastructure spend.
During the downturn, outsourcing became a particularly attractive option for many businesses as it enabled access to specialised skills and expertise at a fraction of the cost of keeping these resources in-house. As we move into a more stable economy, this trend will not change, however, as organisations are still wary of hiring internal resources, due to ongoing financial constraints.
The ongoing skills shortage in many specialised IT areas also affects this, as finding and hiring some of the scarce resources needed can be a costly process, not to mention the difficulty in removing these resources should they not fit company culture or should they become unaffordable. As a result, even though the economy is recovering, outsourcing will remain a growing field in 2011 and organisations will continue to outsource certain functions and skills.
However, the outsource market will not remain static by any means, as the growing popularity of cloud computing and software as a service (SaaS) can be expected to influence this market as well. For the outsource provider, as a result of cloud computing, the client base will no longer be a bank of individual clients but rather a service provider who then has all of the clients on board.
Cloud computing ultimately will enable offices to become virtual, as service providers will host applications and services for the clients. While this vision is still some years or even a decade or more off, the first steps towards a truly virtual office will be taken in the next year or two. A word of caution, however: precedent has shown that with any new technology that enters the market there will be a flood of new service providers, who inevitably fall away or are acquired by others, leaving the market with only a few players and the potential for this market to become a monopoly if one player emerges as the strongest.
Driven by the increase in cloud-based technology comes a need to be more proactive when it comes to monitoring. A proactive monitoring solution in the cloud can help service providers to fix issues before they become problems, before the client even finds out there was anything wrong. This is particularly valuable in high availability environments, as high levels of uptime can be assured by identifying and fixing problems before they do damage or cause downtime.
One of the other trends that will see an increasing interest in the next year or so is that of open source software. Driven by the persistent need to maintain tight IT budgets while at the same time increasing levels of flexibility, scalability and customisability – there is an increase in the number of businesses looking at migrating to open source solutions, a trend which will continue and grow in 2011 and beyond.
From an outsourcing perspective, outsource providers will begin offering a greater selection of open source solutions that work with proprietary licensed products to offer customers a far greater range of options than ever before. The perception that open source is inferior to licensed products has begun to break down and hopefully this will continue in the future.
As stated previously, outsourcing is a developing model and use of this type of service has started to grow in various industries across South Africa, something which we can expect to continue in the next few years. The telecoms industry is one which will see growth in the outsource area as the need to provide more and more services and applications through cellphones will necessitate greater databases and storage capability, which will in turn spur growth for outsourced providers of these.
Mining too will see an increase in the use of outsourced IT as there is a major drive within this industry to standardise on platforms to enable faster decision-making from a centralised data repository. This is one scenario where the cloud model will fit perfectly, as all data can be stored centrally in a virtual or cloud database for access by disparate and geographically distributed mines. The investment in technology in this industry is being driven very strongly by the need for cost savings as well as intelligence from data to make smarter decisions.
The last few years have been characterised by a lack of growth and investment into IT infrastructure, and while 2010 was the beginning of the end of the recession, spending remained slow. The global economic climate has, however, begun to recover, albeit slowly, and 2011 will see the beginning of the upswing once more, with new technologies coming to the fore.
The lessons of the downturn will not be forgotten and budgets will remain tight, as IT managers look to invest in smarter technology and tools that use open source software to reduce costs and improve service and support.