Nexus Technologies – IT Company providing Virtualisation Solutions, IT managed Services and IT Consultancy

More investment will be put into private cloud services than external cloud providers, Gartner claimed today.

In a report, the analyst firm said that although it sees a future for the external cloud, private cloud offerings will work as the main stepping stone and encourage the most investment till 2012.

Phil Dawson, research vice president at Gartner, said in a statement: “For now, private cloud computing will not just be a viable term, it will be a significant strategic investment for most large organisations.”

He added: “We predict that through 2012, more than 75 per cent of organisation’s use of cloud computing will be devoted to very large data queries, short-term massively parallel workloads, or IT use by start-ups with little to no IT infrastructure.”

Looking further into the future, Dawson predicts that organisations will work with a combination of both rather than one or the other.

“Larger organisations will continue to have an IT organisation that manages and deploys IT resources internally. Some of these will be “private clouds”, but not all,” he continued.

“IT departments will also take on IT service sourcing responsibility – determining when to leverage external providers, when to deploy internally, and when to leverage both for specific services,” Dawson added.

Two factors must be examined before investing in private cloud rather than public, according to the report.

Firstly, private services are deployed for approved members only, making access for the general public or businesses difficult. Secondly, they can be built on top of a public cloud infrastructure or in a hybrid model.

The report concluded that “although some IT services are destined for the cloud computing delivery, others are destined for more integration and intimacy with the business.”

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There was more bad news for the server market today, after Gartner added to IDC’s gloomy analysis by announcing that worldwide server shipments dropped 28 per cent year on year in the past quarter.

Gartner’s latest figures show worldwide server revenues falling 29.4 per cent year on year in the second quarter of 2009. EMEA was the worst hit region with a 31.9 per cent decline in shipments and a 35.8 per cent drop in vendor revenues.

IBM continued to lead the worldwide server market based on revenue, posting just over $3bn (£1.83bn) and cornering 32.5 per cent of the market. HP was second with 29.2 per cent, despite a year-on-year decline of 30 per cent, while Dell took the third spot, beating Sun Microsystems by a few percentage points.

“The server market remains constrained on a worldwide level,” said Jeffrey Hewitt, a research vice president at Gartner. “Server sales have felt the impact of reduced budgets since the last half of 2008, and the second quarter of this year remained in the negative.”

Hewitt added that no server segment had managed to buck the recession. X86-based server shipments fell 27.4 per cent over the quarter, and RISC/Itanium Unix servers were heavily affected with a fall in shipments of 40.6 per cent.

Gartner warned that growth in the overall server market is unlikely before next year.

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Many organisations are failing effectively to manage outsourcing contracts owing to a lack of planning and foresight, according to Gartner.

The analyst firm said that the situation has not been helped by the economic meltdown and the subsequent cost reduction programmes, which it predicts will have disrupted 30 per cent of outsourcing deals by 2012.

A Gartner survey of businesses worldwide across different industries in December 2008 found that 55 per cent focus too much on the operational level of outsourcing, and not enough on the strategic management of contracts.

“Many organisations struggle to develop an effective and efficient sourcing environment, which is necessary to achieve positive sourcing outcomes,” said Gartner research director Frank Ridder.

Organisations have difficulty managing outsourcing relationships because they do not estimate the end-to-end effort required, according to Ridder, and because suppliers often promise more than they can deliver.

The highly dynamic nature of the service provider landscape also makes it is difficult to find the right supplier with which to build a long-lasting relationship.

Ridder suggested that, to overcome such pitfalls, organisations need to align sourcing actions with business goals, and formulate financial targets in order to establish a clear guideline for all sourcing activities. The analyst gave the example of a target to reduce the total cost of sourcing by 15 per cent in two years.

Other problems arise when outsourcing deals are not structured to provide the flexibility needed to enable the deal to adapt quickly to the market and the organisation, Ridder explained.

An effective demand management strategy will allow project teams to prioritise IT services based on demand to ensure that the right resources and skills are in place across all sourcing activities.

“Organisations that excel in sourcing have seamlessly integrated all pro viders, aligned all parties behind one goal, developed an agile sourcing environment and achieved business impact through targeted IT spending,” Ridder said.

“Others who lack the right competencies are more likely to experience sourcing inefficiencies caused by misalignment, idle resources, unnecessary processes, overloaded operations, a heavy inventory or a lack of focus.”

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Analyst Gartner has advised that IT products and services will be regulated by 2015, due to factors such as the growth and scale of criminal hacking networks, and the impact of social networks on personal privacy.

Gartner has advised businesses to prepare now for the effect the regulation will have on their processes and procedures.

“Three years ago Gartner published research predicting that either catastrophe from IT failure, or a continuing history of lower-level failures would provoke either a governmental regulation or industry self-regulation of IT products and services in the US by 2015 and in the European Union by 2015 to 2018,” said Richard Hunter, vice president and distinguished analyst at Gartner.

“Although the exact date of arrival for regulation is difficult to predict, we believe that, in recent months, the tempo and intensity of the indications of such an event have increased.”

Hunter said software vendors need to be aware that the increased liability they will face from the new regulation will drive generic software out of the market. Hunter advised vendors to be more transparent in the price differentiation based on quality and fitness for purpose.

Meanwhile he said IT service providers should do the same and mitigate risks by incorporating strong documentation, audit right provisions and legal compliance terminology into outsourcing deals.

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