Optimizing Outsourcing with Cloudsourcing
The key to successful “Cloud Sourcing” is to first realize that the type and scope of services, used for classic outsourcing vs service required for adoption and use of public cloud services, are different. Changing the type and scope of outsourcing services has an impact on the type of relationship between customer and outsourcer and on how value, scope and risk are perceived.
Outsourcing “avant la lettre”
Traditionally, many IT (infrastructure) outsourcers first assess current state (due diligence), agree upon customer’s desired state, and then define transformation and transition plan to deliver the desired state using standardized IT services. Centrally controlled IT functions such as project, program and service management are applied throughout execution of the outsourcing contract to assure that projects stay within agreed budget, scope and risk. A classical Business/IT demand supply chain and scope of IT outsourcing is depicted in Diagram 1 below. 
Diagram 1. Typical cumbersome business/IT demand supply chain with numerous hand offs and classic scope of IT outsourcing
With this approach, many organizations have experienced slow and poor service delivery and service operations, resulting in a deteriorated relationship between business and IT. This disconnect and poor outcomes result in business units (particularly of larger enterprises) establishing their own IT environments, without explicit approval of the established IT governance (a.k.a shadow IT), since desired innovations are not reaching the business quick enough, if at all.
“Cloud Sourcing” opportunity
Services available from public cloud providers facilitate rapid response to changing business needs. Business units love value delivered by solutions delivered from innovative public cloud services. It’s this value and outcome-based development that should drive and define the use of public cloud services. To achieve this, solutioning must be aligned closely with the business. Visibility and transparency into what’s being solutioned is essential to make sure the value and outcome serves their needs (as depicted in Diagram 2 below). Organizations seeking to be successful in exploiting innovative public cloud services, need to shift operational responsibilities and IT delivery capabilities. Functions must be moved from the IT organization to autonomous agile development teams.
“Cloud Sourcing” should facilitate autonomous iterative outcome based solutioning to facilitate rapid response to changing business needs. “Cloud Sourcing” should focus on delivering the capabilities (people, process and technology) that make this autonomous use of public cloud services possible.
Some examples of IT delivery capabilities that support autonomous, or ‘Cloud Native’ solutioning are automated policy enforcement and zero touch deployment using pre-packaged / certified (by the organization, execute only) deployment code (infrastructure as code), which is published in a product marketplace for re-use by DevOps teams in release pipelines. 
Diagram 2. Typical business/IT aligned outcome based solutioning (BizDevOps) and the shift of the outsourcing scope (“Cloud Sourcing”)
Impact on outsourcing and outsourcers
Shifting operational responsibilities and IT delivery capabilities is not an easy task, it requires a different approach for outsourcing partners to fulfill customer requirements. To survive in the “Cloud Sourcing” world, traditional outsourcing partners need to start providing services that focus on business outcomes. Services that help customers build, operate and maintain solutions autonomously in an agile way while infusing risk, security, compliance and service management policies.
Customers often struggle to find outsourcers that facilitate autonomous, iterative, outcome based solutioning that focuses on delivering the capabilities (people, process and technology) supporting autonomous use of public cloud services. “Cloud Sourcing” makes the (lack of) real value that outsourcers deliver far more visible and tangible. In the traditional world, the lack of value delivered can be obscured by the complex processes and interactions that have been created to deliver their services. It seems as if outsourcers aren’t eager to leave their current, profitable, business model (which sounds like the old story of “Who Moved My Cheese”). It’s just a matter of time before these outsourcers realize that this is moving their cheese rapidly, and when they do it will be too late.
Conclusion
Outsourcing is not over. Now more than ever, customers need the right expertise onboard to get true value from the Public Cloud in the modern IT world. Outsourcing should shift towards enabling customer value and focus on outcome-based development with full transparency and visibility into what’s being worked on. This implies that outsourcers will have to move up the stack from building, running and maintaining IT infrastructure towards creating a platform, products and services that support ‘Agile’ or ‘Cloud Native’ development by various business teams. The relationship between customers and outsourcers will have to evolve from customer/supplier to a partnership that’s built on trust (intent, integrity, capability and results) and collaboration.
Microsoft is helping both customers and partners to move to this modern IT world, by providing customers and outsourcers with these cloud native capabilities while driving the organizational and cultural change that’s required to make use of autonomous solutioning.
Feel free to reach out to a Microsoft Account Executive or Technical Account Manager if you think your cheese is moving…and only if you really want to change TODAY and invest in it!
Authors Note: I’d like to say a big thank you to Pascal Platteel (ABN AMRO IT Services, Product Engineering Strategy) for being a co-writer of this blog!