There are lots of risks and lots of challenges, especially for our clients, which are large, which are risk averse, and which typically have very complex portfolios of software with many thousands of software applications.
The first thing is they’re considering hosting some of their software offshore, so we’re crossing international boundaries. Not just with their software, but with their customer information and their data. And so there are international considerations, there are regulations that need to be considered there. Financial regulations, regulations that apply to every government agency in Australia as to where citizen data can be located, and so forth.
So there is quite a complex minefield as to what’s appropriate and what matches the risk profile of a company. And other elements of that is if you’re running your computing over networks, you’re much more dependant on the networks themselves to be up and running and reliable. And so we’ve got work to do with out customers around those sorts of risks and challenges.
Another area which is very challenging is that this is in effect outsourcing on steroids. A company could very easily double then quadruple and then multiply even further the number of partner relationships they have just for their computing and their applications. And they’ve got to manage those relationships and the service levels that are being delivered to them. They’ve got to manage the contracts and assurances around that.
So there’s this incredibly complex set of questions to be answered around how we do sourcing differently, or how our customers do sourcing differently going forward when it comes to information technology and how they negotiate there way through all of those new relationships.
A third challenging area is in the business case. Intuitively a lot of organisations have cottoned on to the fact that this is quite an exciting area, offers a lot of potential benefits to them. But we’re making apples to oranges comparisons. They’ve got to actually sit down and compare the traditional way of costing IT to one which is based on annuity payments or monthly payments which has new variables including network costs and traffic associated with how they access their computing services.
Where the services are evolving very rapidly, the pricing is evolving very rapidly. That sort of complex business case is hard, it’s the sort of thing that the respondents in our study constantly complained about, ‘how do we measure this, and how do we continually measure it and benchmark, and what’s best practice? And, are we getting a good deal going forward?’ And once again, it seems to be an area where we should be helping our clients.
The cross border issues actually bring up challenges and opportunities when it comes to the strategic questions. ‘If we can do computing anywhere, we can think about placing different parts of our organisation in different geographic locations. We have a lot more flexibility’.
So our clients have a lot more flexibility to cross international boundaries with different parts of their operations. That of course has not only HR implications and organisation implications, but even taxation implications and there are optimisation questions around that which need to be answered as well.