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How AI fundamentally Changes Cloud Outsourcing

In the landscape of 2023, organizations are poised to bank heavily on cloud technologies and business models, with a clear aim of fueling innovation and delivering premium value to their stakeholders.

The cloud has revolutionized the way businesses manage their IT infrastructure and data. It offers flexibility, scalability, and cost-efficiency like never before.

Cloud Outsourcing

Alongside the cloud, artificial intelligence (AI) has emerged as a transformative force, reshaping industries across the board. One area where the synergy between AI and cloud technology is particularly evident is in outsourcing.

Traditional cloud outsourcing has long been an attractive option for organizations looking to offload IT management and reduce costs. However, the introduction of AI has taken cloud outsourcing to new heights, fundamentally altering the landscape.

Rapid transformations in technology, largely influenced by cloud computing, are equipping businesses with robust tools like artificial intelligence, data analytics, and robotic process automation (RPA).

An example of AI technology leveraging cloud computing is OpenAI’s ChatGPT, which exemplifies the potential of AI in various business contexts, from customer support to content creation.

As an Outsourcing Advisor, we believe organizations need to be ready for these five game-changing trends in cloud technology:

1. Advancement from multi-cloud to poly- and hybrid-cloud strategies

In 2023, we predict a strategic shift in how businesses deploy their workloads as major cloud service providers like AWS, Azure, and GCP diversify their offerings.

Poly cloud, also called “multi-cloud,” involves using multiple cloud service providers simultaneously to fulfil different organizational requirements. This approach allows businesses to avoid vendor lock-in, optimize costs, and leverage the unique strengths of various cloud platforms.

The poly-cloud strategy enables applications to select the best-suited services for their needs, whether it’s a specialized database, an AI/ML service, or an industry-specific cloud solution.

Recognizing that not every workload is fit for the public cloud, firms are now incorporating their on-premises and private cloud infrastructures into their outsourcing strategy.

2. Rising prominence of cost reduction and cloud FinOps

Potential economic downturn has shifted the focus in 2023 towards cost reduction and efficiency enhancement. With the extensive growth of public cloud adoption over the previous two years, cloud expenses have surfaced as a primary area for cost savings.

Cloud FinOps, a portmanteau of “Financial” and “Operations,” has emerged as a systematic approach to efficiently manage cloud costs. It combines people, processes, and technology to control and optimize cloud spending.

As part of their Outsourcing Strategy, IT, Finance, and FinOps teams aim to get a complete picture of their total cost of ownership (TCO) across their entire hybrid cloud setup to find opportunities for optimization and profit from their cloud transitions.

3. Growth of Edge computing

Edge computing brings computing resources closer to the data source or end-user, reducing the distance data must travel. This proximity minimizes latency, improves data processing speed, and enhances overall performance.

As the Internet of Things (IoT) continues to expand, the need for quick processing of vast amounts of data has become imperative. Key drivers of edge computing include low latency demands, data privacy and compliance, bandwidth optimization and scalability.

Edge computing will aid companies in meeting these demands, resulting in faster response times and reduced bandwidth use. Prominent areas where edge computing is used include content delivery networks (CDNs), IoT, autonomous vehicles, retail and healthcare.

4. The XaaS or ‘Everything as a Service’ model

Traditionally, cloud outsourcing mainly involved ‘Software as a Service’ (SaaS), ‘Infrastructure as a Service’ (IaaS), and ‘Platform as a Service’ (PaaS).

However, as technology advances and customer demands evolve, the ‘XaaS’ model has emerged as another major trend that will shape the cloud industry in 2023.

Offering greater flexibility, this model allows businesses to select and pay for services on a subscription basis, and it is an essential aspect of a forward-looking Outsourcing Strategy.

XaaS encompasses not only SaaS, IaaS and PaaS, but also:

  • Function as a Service (FaaS),
  • Security as a Service (SECaaS)
  • Data as a Service (DaaS)
  • Communication as a Service (CaaS)
  • Storage as a Service (STaaS)
  • Artificial Intelligence as a Service (AIaaS)

This approach makes advanced technologies more accessible to businesses without the need for considerable upfront investments.

While XaaS offers substantial benefits, businesses must consider security, data privacy, and vendor lock-in when adopting these services. Additionally, managing a diverse range of services can be complex, requiring robust governance and management strategies.

5. Use of the cloud as a launchpad for new tech trends

Despite the hype, tech trends like Web3, Blockchain, AR/VR, and generative AI faced criticism for lack of developed applications.

However, major cloud providers are developing services around these trends. 2023 will likely witness an expansion in these specialized services and a rise in startups building on these technologies.

Cloud Outsourcing: The Road Ahead

Cloud technology continues to be the key platform for leveraging and managing both existing and future technologies to stimulate innovation and value.

In this new digital landscape, utilizing AI in cloud outsourcing is not just an option; it’s a requirement for organizations seeking to stay competitive and agile. As AI continues to advance, businesses that leverage its capabilities will find themselves better equipped to navigate the complexities of the modern IT landscape and thrive in an era of unprecedented technological transformation.

Outsourcing Consulting can help businesses understand how to leverage these trends, including the use of AI technologies like OpenAI’s ChatGPT. While cloud computing isn’t a universal solution for all IT issues, it can solve a multitude of IT and business challenges, which is why businesses should consider Outsourcing Consulting to navigate this complex landscape better.

Ben Trowbridge, as your trusted Outsourcing Advisor, is committed to helping you anticipate future IT complexities. Contact us to find out how we can assist you in future-proofing your business with an effective Outsourcing Strategy.

About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].

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