Cloud is a new channel of technology enablement that organizations of all sizes can use to leverage business applications with an on-demand, platform, or software-as-a-service (SaaS) model. Cloud is designed to help organizations move from a capital-expenditure (CAPEX) model to an operating-expense (OPEX) model while providing different payment options, such as pay-as-you-go or pay-per-project. Because Cloud-based applications are delivered in a “one-to-many” model, users of these applications generally do not have the option of customizing the applications to their environments and instead must adopt a level of industry standardization.
The Cloud approach can be an attractive option for organizations challenged by upfront
investment costs, as well as for companies in small-and medium-size segments that want to adopt best-in class practices but do not have the budget or resources for on-premise applications. Companies may also consider a Cloud approach as an attractive option when they are facing the costs of system upgrades or software licensing renewals for their existing applications.
Cloud-enabled business process outsourcing (BPO) combines managed services with
Cloud-based applications as a hybrid offering. This approach allows companies to leverage on-demand resources from providers, utilizing the flexibility of Cloud resources to dynamically meet peak systems demand without investing in local IT resources, and to have the same provider manage the business services on that technology, thereby optimizing the business process and technology environments to each other. When deployed in a global delivery model, Cloud enables companies to outsource the technology (infrastructure, selection, ordering, deployment, and management) and associated business process activities (transaction processing, analytics, and reporting) to locations that offer combined advantages for labor costs and available skills. Cloud-enabled BPO may utilize any of these forms in conjunction with managed services.
Many BPO service providers believe that the evolution of Cloud offerings will be a game changer in next-generation application delivery, and they are investing heavily in this approach. However, as this ISG white paper discusses, the success of this approach will require a combined effort from software vendors, service providers and customers.