S’pore companies to outsource majority of IT infrastructure by 2021

September 18th, 2011 | by Aaron Tan

A new outsourcing wave is expected to emerge in a decade, a new survey has found.

By 2021, three-quarters of Singapore companies say they will outsource the majority of their IT infrastructure, of which half will move their infrastructure to the cloud. The top three cost savings, they say, will come from reducing IT infrastructure costs, implementing a cloud and virtualisation strategy as well as standardising their IT infrastructure.

Conducted by Vanson Bourne, a research firm, the survey polled 480 IT decision makers in Singapore, Germany, France, United States and United Kingdom. The study was commissioned by Savvis, a cloud infrastructure and hosted IT provider.

Singapore companies are already leading their global counterparts in IT outsourcing. Only 43 percent of respondents host their IT infrastructure in-house, compared with 59 percent worldwide. And among Singapore firms, 44 percent say dedicating resources to develop and manage business critical applications will be their top priority.

“The adoption of outsourced IT infrastructure, in particular managed hosting and cloud computing, is a trend that Savvis has witnessed amongst our client base,” said Bill Fathers, president of Savvis, in a media statement last week.

“Singapore IT leaders are at the forefront of outsourcing adoption and we expect to see the propensity to outsource increase further over the next five years as more enterprises experience the benefits it brings,” he added.

The survey also revealed that over half of Singapore companies are paying for excess capacity to meet peak demands, with seven out of 10 saying they have IT equipment that they regret purchasing, compared with 43 percent globally.

Also, half of Singapore businesses reportedly utilised 55 percent or less of their total capacity. This is notable because it means companies here are doing a better job at maximising their use of IT resources, given that utilisation rates in most organisations hover around 15 to 20 percent.

So what’s stopping companies from outsourcing? The study found that contractual obligations and company culture are the top culprits, though these reasons should surprise no one, especially when jobs are expected to be threatened in any outsourcing deal.

Interestingly, security and risk management issues in IT outsourcing and cloud computing were not mentioned. Despite assurances from IT vendors, there is still significant trepidation over security, governance and risk management.

In fact, almost all companies that have moved to the cloud in the Asia-Pacific region have experienced some form of downtime from their cloud computing services, according to a separate study by CA. Failures in IT systems affected nearly three-quarters of surveyed organisations in the region.

CA said the “high level of data loss” indicates a lack of readiness for these failures among businesses. Just a quarter say they have comprehensive disaster recovery plans and 38 percent say they have not achieved their disaster recovery objectives despite testing their disaster recovery plans at least once a year.

So while IT outsourcing and cloud computing will allow companies to focus on innovation and business critical applications without investing on resources just to “keep the lights on”, jumping on the bandwagon without addressing security, governance and risk is foolhardy.

Image credit: D’Press, by Kishore Budha, used under a Creative Commons Attribution-ShareAlike license: http://creativecommons.org/licenses/by-sa/3.0

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