Cloud Security

Customers who implement cloud solutions are concerned about the security of their data on the cloud. The top major providers where customers upload the data are Facebook, Youtube, Google drive, Dropbox, Microsoft Skydrive, etc.
The concern is not only about who can access their private data, the concern is also if these service providers sell their personal data to someone else.

Security is a major impediment in a large scale implementation of the cloud, irrespective of the model, SaaS, PaaS, IaaS. Cloud providers are aware of this and in response are working towards strengthening the security of their offerings.
The 4 major areas which Cloud service provders should consider are:
1. Confidentiality
If a customer uploads his/her data on the cloud, the cloud service provider should not be able to see the data. This can be achieved by encrypting the data. Encryption can be done by the customer before uploading the data or can use the encryption services of the service provider.
Encryption is just some assurance that no one except for key holders can have access to the uploaded data.

2. Integrity:
Integrity means maintaining and assuring the accuracy of the uploaded data. The data should not be tampered with and should be preserved in its original form. The service providers should ensure the data communication and data storage are well guarded against attacks. Implementing HTTPS or any other type of robust security measure would help build trust amongst the customers about the service providers.

3. Availability:
The service provider should ensure the data that is uploaded is always available for the customer to use. This can be implemented by having backup servers and ensuring backup is done at a regular frequency. Thus in case of a calamity where 1 online system is down the other can take over and provide the necessary data to the users. The service provider should use robust infrastructure so that any disastorous event does not have any effect on the provided service.

4. Mutual Auditability:
The customer should be able to verify the actions that are carried out on his/her data. The customer should be able to verify that the actions carried out on the data are by him/her only and the service provider has not completed any action on customers’ behalf. Each data revision should be digitally signed by the customer so that the any activity on the data by the service provider will be highlighted.

Ensuring these key areas are implemented, the service provider can imbibe trust in its customers to upload the data. Also, the customers can then be willing to use the services of the cloud service provider.

Things to consider while outsourcing

The major driver for outsourcing has been the availability of low cost resources offshore. Recently, large enterprises are reconsidering their outsourcing strategies.

Here are a few things to consider for the outsourcing contract to yield a win-win situation
1. Quality of the deliverables:
When only looking to cut costs, the customer might settle for the lowest possible cost that can be incurred. This hampers the quality of the project being delivered as the vendor will employ low quality resources which are available cheaply.
Thus the customer has to make a tradeoff between cost and quality. A certain level of quality should be expected and budgets should be allocated accordingly.

2. Communication
A lot of communication is involved between the onshore managers and offshore team. Not only language barriers exist but also there are cultural differences. CIOs must be ready for this and plan out the communication accordingly. Any technical communication should be comprehensively documented in order to avoid future standoffs.

3. Staff morale
Whenever a company decides to outsource some or whole of its operations, the current staff morale takes a hit. The CIOs and managers have to align the staff and appraise them about why a particular operation or project is being outsourced.

4. Human Resource capabilities
Even if there is a plethora of skilled people in IT, there is still a shortage of quality workers. Getting such people on board and retaining them is a big task for human resource managers. Also, if the skill that is required is high on demand on the market, then it becomes more difficult to get and retain such people.

5. Resource management
It is difficult to manage a workforce that is distributed geographically in different time zones. Different time zones act as a barrier to effective project collaboration. IT managers and CIOs should consider this and plan out effective communication strategies.

Outsourcing is a major decision that is taken by any organization. CIOs and IT managers have to take each step in such a way that current operations are not hampered and the cultural integration happens smoothly.
Above mentioned areas should be looked at carefully to ensure that outsourcing is beneficial for the organization in the long run.

Governance in IT Outsourcing

Today companies are revamping / refining their IT strategies to gain maximum advantage from an outsourcing deal. This improvement also includes governance aspect. Ideal governance model consist of three pillars namely Service Level Agreement (SLA), Status Meeting between both client and vendor and Innovation.

Service Level Agreement (SLA): Being a quantifiable feature this pillar plays major part in evaluating vendor client relationship. SLAs are generally agreed upon metric that client wishes to measure. Vendor from his end ensures all defined targets are achieved by generating and sharing regular status reports.

Status Meeting: Frequent meeting among various team members and stakeholder helps track various activities and resolve issues; if any.

Innovation: This aspect of governance is most desired by client. However, there is no set parameter on how this will be achieved (by vendor) or how it will be measured (by client). Generally introducing innovation in an outsourcing relationship poses a small challenge as both vendor and client spend considerable amount of energy and time on service transition. Once steady state is achieved they try to implement SLA terms and monitor everything is working fine via status meeting. By the time they realize that innovation is still pending lot of time has passed.

There is no question that above mentioned is foundation of almost all governance model and does serve its purpose. However, after sometime this model becomes static and if it is not revised as and when needed may causes stagnation. Other issue with traditional model is that it does not cover the finer aspects of vendor and client relationship (Like: Communication by both sides, general outlook of resources towards this partnership etc.)

Senior players know that once cost reduction is achieved by outsourcing relationship they need to focus of other aspects like governance to gain maximum advantage. Governance model needs to be customized as per client’s needs and should be revised / revamped regularly so that stagnation is never reached.

For robust governance it is essential that client:

• Update / introduce new SLA to generate relevant reports. This helps to define action to increase productivity and efficiency
• Open communication between client and vendor
• Know what innovation they can expect from vendor and in what time frame. This helps to set up expectation and mile stones from both sides

Outsourcing contract prices to drop

In the light of the current economic scenario worldwide, the outsourcing contracts are hard to come by. The IT vendors need to come up with innovative ways to grab the contracts in such a cut throat competitive environment.

Price is of the main reason, if not the only one, for outsourcing contracts. Since the global economic slowdown, these companies have learned to compare and started to bargain for a more “reasonable” contract price.

As companies scout for an outsourcing partner, traditional and new offshore providers fiercely compete with the pricing while trying to keep their revenue growth on target. Clients indulge in intense discussion over pricing of the contracts whether it is a new contract or renewal of the existing one.

According to independent studies carried out by Gartner and Alsbridge, the contract prices are seeing a drop.

According to the study, a substantial 84% of the respondents chose to outsource to drive down costs. But Alsbridge data showed prices had dropped by over 25% since most of those contracts were signed. The biggest average drop in prices was in services around storage, where there was an average drop of 56%; in telecoms (43%); servers (23%); and mainframes (20%).

Cost cutting is very high on the agenda of CIOs to continue to rein in budgets marker rates fall, mentions Sheridan, Head of ITO Alsbridge.

 

Gartner warns IT vendors and consumers to be careful not to push each other to the edge. Otherwise, they will end up being bitter on the outsourcer end because they can’t make enough profit on the deal and bitter on the customer side because they might get the least amount of service from the vendor.

 

CIOs must balance their negotiations with the vendors, if cost reduction is the only motive for renegotiation, it rarely results in success. The challenge for IT leaders now is to balance their cost-cutting motives with their company’s long-term business and technology needs. IT leaders must research the market data to understand what’s fair at the level of value they want in return for the price they pay, and have a reasonable discussion with their vendor based on clear objectives.

 

According to Mark Kobayashi-Hillary , a well-known globalization and outsourcing writer, even in these tough times, there is still plenty of opportunity out there for those who are offering high quality of service at a good price. This could be the end for very high margins and hyper growth. Even if this situation is undesirable, it is good for the industry as the genuine value providers will come out victorious.

 

Speaking of offering value to customers, for companies nowadays, looking for an offshore provider is more like shopping for a bargain. They are looking for vendors capable of delivering quality results and break monotony by innovation at a much lower price.

Outsourcing in Uncertain times

Economies of the west are facing a high level of uncertainty. Rising unemployment in the United States, the biggest market for Indian IT vendors, has led the US government to impose sanctions on outsourcing. Also, the businesses are looking for measures to stay afloat in such uncertain economic conditions, cost cutting being the most sought after. And one of the biggest impact of cost-cutting is the reduction in IT spend and thus outsourcing.

But does cutting costs on outsourcing contracts really help the business?

The answer is No.

Lets us take a look at how outsourcing can really help when business is low and companies need to stay lean.

Outsourcing lowers costs

Outsourcing makes fixed costs into variable costs. The concern of the resource count and facilities moves to the vendor. Thus the consumer can now move its costs to investments.

This shift improves the consumer’s corporate balance sheet. In tough times, the switch enables the consumer’s overall financial statement to look much better. In good times, however, the step to variable costs puts the company’s financial picture in better condition, making the company more appealing to its investors.

Outsourcing offers process expertise in non-core areas

Outsourcing enables the pool of experts to supervise the non-core functions. Process expertise is crucial when the business is facing tough conditions or expanding rapidly. In tough conditions the business must invest in their core operations rather than worry about the services offered by information technology. Also, when the business is expanding it has to concentrate more on improving the core competencies. Thus, in such scenarios it is best to outsource the IT functions to the experts.

Outsourcing enables risk sharing

The business risk is shared with the IT vendor through an outsourcing contract. The consumer need not have to invest heavily in hiring and training of human capital only to fire them when things turn bad.

When times are uncertain, companies

• need to adjust their risk profile,
• need to cut their costs,
• restructure their balance sheets and
• should still have flexibility

Outsourcing makes all those things possible.

Consolidation in IT Outsourcing space

Consolidation refers to mergers and acquisitions of many smaller companies into much larger ones.

In the early outsourcing days, large companies outsourced most of the Technology work. Now, even Small & Mid-size companies have started to outsource the work to developing countries.
Also, companies primarily used to outsource large projects, such as basic application development or call-center operations. Now, as outsourcing becomes more widespread, businesses are starting to contract out smaller projects—including complex scientific and R&D projects—to more and more providers.
Because more companies are farming out a greater variety of projects, there has been a proliferation of outsourcing suppliers in recent years to meet the demand. Meanwhile, as outsourcing companies have grown, they have looked for ways to reinvest profits, expand, and acquire new capabilities.
For these reasons, outsourcing is experiencing a number of mergers and acquisitions.
Consolidation is a way for small and mid-size vendors to survive and grow while gaining efficiencies in marketing and operations, and for larger companies to acquire competitors and firms with niche skills.

The $12 billion Indian BPO industry is facing stiff competition from countries like the Philippines and the top 10 players account for about 75 per cent of the total market. As part of their competitive strategies, many domestic BPO players have been looking at broadening their service portfolios. BPO providers are aiming to differentiate services via broadening their service portfolios to provide end-to-end services, such as, source-to-pay, and through investments in technology for point solutions automation and business process utility services.

As the industry matures, there is bound to be some consolidation. The current economic scenario also will contribute to this trend. Economic crisis, loss making contracts, and an inability to adapt to standardized delivery models- many will struggle to survive in their present form.
Though recession has accelerated the consolidation process it is not the main reason for it. Indian BPO market is a volume business with margins going down. So additional value proposition in terms volume and platform-based services to reduce costs are the mantra of the business. To achieve these goals in shorter time, consolidation is imminent.

US-based EPAM Systems became the largest software-engineering-services provider in Central and Eastern Europe by acquiring Vested Development, a Russian software-development-services firm.
India’s Wipro acquired Infocrossing, a US infrastructure-management services provider, for $600 million.
IBM purchased Daksh, Computer Sciences Corp. bought Covansys, and Electronic Data Systems acquired MphasiS. One of the biggest acquisitions was by iGate, which acquired Patni Computers.

Consolidating into one-stop shops will enable the Outsourcing Suppliers to meet the needs of clients who want to deal with just one business or knowledge process outsourcing company for their growing business needs.

More and more IT firms are looking to offer a variety of services under a single umbrella, thus consolidation is the way ahead for IT in India.

Outsourcing Business Outcomes

According to a study by Forrester, over 40% of business executives are looking for suppliers to co-develop and deliver business outcomes. The business executives want more value delivered from IT projects and they want more outcome based contracts as opposed to Time & Materials contract.
Clients don’t want to pay anymore for software licensing, hardware or time & materials staffing. They want the suppliers to share the risks of their businesses and pay based on the value delivered and/or the outcome achieved.

Negotiating such outcome based contracts needs new skill sets on both sides of the table. This is a big challenge and both buyers and suppliers have to come out of their comfort zones for managing risks, controlling the project and sharing revenue in such a model.

Some of the leading Indian IT providers are offering the outcome based contracts and are willing to be paid based solely on the results achieved.
Some of the service providers using this kind of a model are:
Tata Consultancy Services
Infosys Ltd
Wipro Ltd
Cognizant Technology Solutions
HCL technologies
IGate is aggressively positioning itself to be the fore runner in this type of Engagement model

The key principles that need to be addressed by both parties could be:
• Buyers need to change the way they buy:
Buying will have to be a collaborative process where the vendors not only help their organization to save money but to also make money. Buyers also will have to share the rewards of such an engagement.

• Vendors need to change the way they sell:
Vendors will have to do away with the traditional Time and materials billing and come in to discussions with the client with value propositions. Vendors will have to share the risks and rewards of the project. Vendors will have to align themselves with the long term goals of the client

• Both parties need to define new metrics:
Such a sourcing activity will have to be measured in a different way. Cost savings cannot be the sole factor as the delivering results will become the key driver.
This is the key part of the whole engagement as both parties need to define the outcomes on which the payment would be based on.
Some of the outcomes could be more client subscriptions, higher customer satisfaction for customers of the Buyer, etc.

This kind of approach is relatively new and will take some time to become the standard for negotiating the sourcing contracts.

Key Performance Indicators – Service Desk

KPIs help an organization define and measure progress made towards the organizations goals.

Once the goals of the organization are finalized, it needs a way to measure the progress made towards achieving these goals. And Key performance indicators are the measurements.

KPIs are quantifiable measurements, that are agreed beforehand and they reflect the critical success factors for the organization. KPIs differ depending on the organization.

The true potential of KPIs can be harnessed when they are used holistically and not just used to measure performance.

Service desk KPIs should be used to:

• Track and trend performance over time
• Benchmark performance vs. industry peers
• Identify strengths and weaknesses in the Service Desk
• Diagnose and understand the underlying drivers of performance gaps
• Prescribe actions to improve performance
• Establish performance goals for both individuals and the Service Desk overall

Most important service desk metrics can be:

1.       Cost per contact

The goal of every business is to achieve highest quality with lowest possible cost. Thus cost and quality should be measured on an ongoing basis. From Service desk’s perspective, this is the most effective cost metric.

 2.       Customer satisfaction

This is the best indicator of quality. And also one of the foundation metrics in the service desk.

3.       First contact Resolution Rate

This is by far the biggest driver of customer satisfaction.

There is a strong co-relation between customer satisfaction and first contact resolution rate. Thus to improve customer satisfaction, FCR needs to improve.

4.       Agent utilization

This is the biggest measure of labor efficiency. Because labor costs represent the overwhelming majority of Service Desk expenses, if agent utilization is high, the cost per call will inevitably be low. Conversely, when agent utilization is low, labor costs, and

Hence cost per call, will be high.

5.       First level Resolution Rate

This metric is a proxy for Total Cost of Ownership (TCO), and is a critical measure of overall Service Desk efficiency. Without this metric, it is possible for a service desk to achieve a low Cost per Contact, and hence appear to be very efficient, but in fact be driving a very high TCO. Specifically, if the Service Desk is achieving a low Cost per Contact by transferring and escalating contacts to other support levels – Level 2, Level 3, Desktop Support, Vendor Support, etc. – then it is also dramatically increasing the TCO.

6.       Agent satisfaction

This metric, is strongly correlated with many other metrics on the Service Desk. High levels of Agent satisfaction lead to lower turnover, lower absenteeism, lower handle times, and higher First Contact Resolution Rates. These, in turn, result in lower Cost per Contact, and higher Customer Satisfaction.

7.       Aggregate service desk performance

Establishing the overall score for the service desk is critical, and this measure is the balanced score. This is a mechanism that utilizes the key measures tracked in a Service Desk and rolls them into a single, aggregate measure of Service Desk performance.

The value of this metric, when tracked over time, is that it enables Service Desks to determine whether overall performance is improving or declining.

According to a study by Metric Net, these 7 metrics represent the 80/20 rule when it comes to Service desk performance: 80% of the value you receive from performance measurement and management in your Service Desk can be derived from these seven simple metrics.

Most Service Desks commit two major mistakes when it comes to performance measurement:

1. They track too many metrics, and
2. They do not exploit the full potential of their performance metrics as a diagnostic tool.

When it comes to Service Desk measurement and management, less really is more! By tracking just seven KPI’s, and using these KPI’s diagnostically to affect positive change in the Service Desk, the job of guiding your Service Desk towards world-class performance can be greatly simplified.

Outcome based Outsourcing Pricing Model

In this model, the IT vendor is paid on performance rather than solely based on number of people deployed on the job. The billing is proportionate to the actual outcome delivered such as defects fixed, test cases completed, support incidents addressed, impact on sales etc.

Such models become relevant when the objective of the outsourcing relationship goes beyond cost. Such models help in aligning the interests of both the customer and the service provider, thus enabling them to work towards the same goal.

An outcome-based model is appropriate for engagements where the outcome is process-oriented, rather than business-oriented, and when the outcome is based on meeting SLAs, deliveries, and deadlines. The customer should have accurate baselines, well-defined, measurable service levels and performance goals, and be willing to accept the provider’s solution to meet requirements; this would result in a win-win situation for both parties involved. The model is perfect for use in BPOs where payment is based on number of calls successfully converted, and is currently prevalent in BPO deals.

Benefits:

For the Customer:

− Provides assurance that the services firm shares the risk. Thus, a better guarantee of the outcome exists by rewarding the result instead of the effort

− Cost predictability and reduced total cost of investment

 

For the Services firm:

− Provides great motivation and incentive to innovate to complete the work faster, meet or exceed client’s expected results and deliver profit back to the firm

− Emerging Service companies can use this as a powerful differentiator, if they learn to manage risk effectively

The driver of this type of engagement is the services firm, not the customer.

Critical Factors:

− Both partners should ensure that the scope of the engagement and the outcomes are clearly defined.

− Deep appreciation of the customer’s business model, operations and industry nuances.

− Risk-reward strategies should be quantified in a contractual manner.

− Every change must be reflected in a corresponding change in the pricing of project. Both client and provider should be educated about the change management process and be willing to follow it.

− The service provider must know how to factor in the risk involved at all stages.

− The customer and service provider should arrive at a common basis for future value creation.

The most important aspect for a service provider to accept is that in offering an outcome-based model, he needs to be clear as to how much risk he can bear and how well he knows his own processes and business.

Finally for the model to be effective and bring benefits to both participants, a strong and open relationship between the client and the service provider is required so that they can work together to achieve a common outcome.

External economic, technological and outsourcing forces have accelerated the introduction and adoption of outcome-based engagement models. This type of engagement model can be effective and mutually beneficial to the services firm and client with the presence of the right set of conditions. And, most importantly, reaching a common beneficial outcome requires a strong and open relationship between the two parties.

Some of the service providers using this kind of a models are:

Tata Consultancy Services

Infosys Ltd

Wipro Ltd

Cognizant Technology Solutions

HCL technologies

IGate is aggressively positioning itself to be the fore runner in this type of Engagement model.

The IT industry is slowly moving towards an Outcome based model, but it is unlikely to completely replace the Time & Materials model in the near future.

Business Intelligence Trends – 2013

Business intelligence (BI) is the ability of an organization to collect, maintain, and organize knowledge. This produces large amounts of information that can help develop new opportunities. Identifying these opportunities, and implementing an effective strategy, can provide a competitive market advantage and long-term stability.

 

Big data is growing fast as organizations devote technology resources to tapping the terabytes of data flowing into their organizations and externally in social media data and other sources.  Integrating advanced analytics for big data with BI systems is an important step toward gaining full return on investment. Advanced analytics and BI can be highly complementary; advanced analytics can provide the deeper, exploratory perspective on the data, while BI systems provide a more structured user experience.

There would be some emerging trends that the industry will see in the year 2013.

In-Memory Analysis:

To get around the disk I/O performance bottleneck, BI and analytics systems are enabling greater use of expanded main memory. This a cost-effective performance improvement because memory continues to get cheaper; it also can reduce the complexity and potential for errors in pre-processing steps normally necessary to bring thousands of record forward from disk and run analytic processes iteratively against the data.

In-memory computing may not the best option when data volumes are too large (which is why compression technology is critical for in-memory systems) or data must be updated frequently. However, in 2013, in-memory computing will continue to shift the balance for BI and analytics systems.

In-memory technology has continued to take center stage in 2011 -2012, with its ability to provide speed-of-thought analysis on ever-increasing amounts of data.

In the year ahead, large enterprises may gradually adopt high-end appliances, but the majority of customers may continue to embrace more nimble in-memory solutions from vendors such as QlikTech, Microsoft (Power Pivot), and Tableau or software-only solutions, such as the approach MicroStrategy and IBM Cognos uses.

Other appliances in use – SAS visual analytics, SAP’s in-memory appliance. Oracle’s in-memory appliance, Exalytics.

Most appliances combine capabilities from in-memory database with new visual discovery capabilities.

Data Visualization:

As big data volumes grow and organizations of all sizes and experience seek to integrate diverse and complex information, the user’s ability to quickly comprehend data’s significance hinges on data visualization. Data visualization and visual data analysis enable nontechnical users to see data patterns and trends they would have struggled to grasp with tabular reports, spreadsheets, and primitive graphics.

We can expect to see more innovation in 2013 to support exciting and sophisticated graphics for BI and analytics, which will include more animation and intuitive, “gesture-based” data interaction.

Data Integration:

Data distribution, or the challenge of integrating multiple data sources for single views, is organizations’ most intense big data headache. This is not surprising; data integration has always been tough, and now with potentially hundreds of terabytes and unstructured or semi-structured data types in the mix, integration will get even harder.

Organizations will need to implement technologies that improve knowledge of their data, including how elements are related within and across sources. They will also need technologies that can discover metadata in heterogeneous data sources and make it easier to build master data and metadata resources that can be applied to access and analysis.

Big data:

Big data will remain a major focus for BI in 2013. 

Big data market is expected to grow more than two-fold to USD 153.1 million (around Rs 840 crore) by 2014, over the last year, on the back of huge growth in volumes and diversity of data, a survey has said. Now, big data includes human-sourced information (such as that from social media) and machine-generated data (from sensors, log files and so on). These two types of data are essentially ungoverned. The combination of these is driving huge change in the marketplace as the proportion of data coming from these two domains is becoming larger and larger.

Thus Business Intelligence will play a key part in the path forward for organizations.