Application outsourcing based in the cloud is the latest trend in the IT outsourcing space, according to director of advisory at PricewaterhouseCoopers, Richard Halton.
He says this year will see the majority of software vendors offering software-as-a-service (SaaS), as opposed to the traditional outright purchasing of applications.
“As more vendors start structuring their product sales based on perpetual licensing, we will be seeing more service providers providing these applications in a cloud-based scenario,” he points out. This is the fundamental strategic view of Microsoft, which is being taken up by most of its resellers, Halton adds.
This approach to outsourcing offers several benefits to most organisations, including cost saving, skills alleviation, and data consolidation and collaboration, he says. “The software packages that are available all come with the same functionality; therefore cost, stability, and the service one receives will be the main factors when selecting a provider of choice.”
According to Halton, companies will find themselves faced with a number of smaller and new IT service providers offering these services at perceived cheaper rates than the older, more experienced providers. Considering their budget constraints, companies will feel pressure to decide on the right solution, versus the most affordable one, he adds.
Local growth
“Nationally, the big drive by service providers to offer SaaS to the market is boosting outsourcing as well.” He notes that, traditionally, this has been initiated by the major telcos, but lately there has been a large uptake by value-added resellers to offer products in the cloud.
According to Halton, SA should expect an increase in the availability of enterprise business application suites. “Each of these will be bundled with application packages that will suit any organisation, from SMEs through to large organisations.”
With bandwidth supply getting cheaper and faster in SA, says Halton, the demand for centralised cloud computing is growing and will continue to do so.
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