Rens Troost

Rens is a guy you need to meet. His vision and ability to translate your needs into reality astounds our clients and teams alike. He is fast, detailed and nimble. To him the next challenge is a joy not a burden.

He’s got a solid background, too. Across more than two decades as a senior IT executive at leading financial services firms, Rens has earned his reputation for bringing together stakeholders, and aligning IT capabilities with business needs.

Rens came to Virtual Clarity from UBS, where as Executive Director he led architecture and design for the company’s global infrastructure organisation, and oversaw initiatives ranging from the introduction of Linux and virtualization to post 9/11 IT business continuity. His first-hand experience as an IT leader in the banking sector means he is in high demand amongst Virtual Clarity’s clients.

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The Existential Crisis facing Outsourcing

Following the release of the IT Outsourcing Market Research Report 2019, the changing landscape is a hot topic. Let’s look at how we have reached the current existential crisis facing the industry and how your enterprise can stay ahead of the curve…

A short history lesson

IT outsourcing has had an amazing run taking the non-core IT management skills (which are, at their heart, data center and hardware management) from the customer, allowing them to focus on strategy and differentiation. For outsourcers, this has the advantage of being a very sticky revenue stream, surviving technology transitions from client-server, distributed, web, etc. The fundamentals of this business have been about capital-light economics, the benefits of scale in the technology workforce, and, of course, labor market arbitrage.

But, the arrival of the cloud has changed everything….

In a very real sense, as this change takes hold, the hardware and data center will now 'run themselves' so the natural and eventual home for all the infrastructure management teams is with the cloud providers themselves, providing services and offerings that go further and further 'up the stack'. In this world, it is hard to see the long-term sticky 'infrastructure operate' service offering for the outsourcing providers to build a long-term business around. A good parallel to this is how mainframe services developed; once, there was a lively multi-player market which has long since consolidated around IBM, the sole remaining provider of integrated hardware, software and services. Yes - there are exceptions to prove the rule, but not with appealing scale.

Short term vs long term

The irony is that the Cloud Solution Providers (CSPs) themselves are engaged in a campaign to promote their partners to bulk up with as many {AWS, Azure, GCP}-specific skills and certifications as possible. This presents a strong short-term opportunity, but isn't transformation; over time, lots of this work will migrate in to the providers.

There is nevertheless a robust long-term business to be had between the hyper-scale cloud service providers and the enterprise. The benefits of scale and capital-light economics which the outsourcing market has long provided for enterprise customers are being taken on by the cloud providers. However, in this transition, delivering speed and agility is now the key differentiator. Why? The CSPs make scale and economic benefits available to new entrants threatening the enterprise, leaving established companies in the painful position of needing to reinvent themselves to achieve comparable speed. Adding to this pain is a significant legacy which needs to be modernized so that it doesn't become the dead weight that makes reinvention impossible.

How we can help

At Virtual Clarity, we find that, while it’s important to have people who know the rapidly changing CSP offerings, and have the relevant CSP certifications, it’s much more important to have deeply experienced and multi-skilled generalists with skills in architecture, integration, operations, governance and enterprise change. This is the only way to transform and modernize the core IT services. Digital initiatives often fail when they hit a non-transformed IT core; we call this 'lipstick on the pig'.

After all, while technology has moved from being a necessary evil for enterprises to being the key aspect of everyone's go-to-market in just three decades, with some notable exceptions, technology execution is still a peripheral activity and a tiny part of most enterprises’ overall budgets, and hence will be a good candidate for managed services for years to come! The future of those services is speed and agility.

The dynamics of this crisis are important to understand and far too big a topic to cover in one blog, so keep your eyes peeled for further installments on how different links in the chain, including outsourcers, buyers, regulators and investors, are evolving in order to survive and prosper; and what you can do to take advantage of the situation.