CSC is one of the world’s largest solutions providers serving the enterprise. These days it works with customers that are affected by massive data influx, app backlogs and the challenge in being fast and agile while also managing a legacy infrastructure.
To best serve these customers, this 50-year-old consulting giant is going through some changes of its own. These days it is acting in some ways like Amazon Web Services(AWS) and less like its counterparts in the consulting world.
“We like to think of ourselves as the Merlot of cloud,” said Pam Casale, director of global cloud marketing for CSC.
She means that CSC is still a solutions company but it is increasingly a cloud company, too. Like a Merlot, CSC has a singular cloud solution but is also a blend of both.
Growth in the outsourced solutions business is generally declining across the market. Customers are consolidating and taking control of the business. Customers still want outsourcing but they want it to be cheaper.
This does pose a challenge for CSC. It is adapting to change but there is a risk in moving to a services oriented model. It’s a different approach compared to Accenture, which is focusing on building and managing enterprise applications and private cloud infrastructures. But that’s not necessarily a guaranteed approach, either. A services oriented model is considered more in tune with the demand for speed and agility. Companies are starting to recognize this. That’s the bet CSC is making.
In the background is a fast changing services market, which Dave Vellante detailed in his post this week that looked at how cloud computing, the rise of India and the consumerization of IT are changing the IT services business.
The worldwide IT services market is huge, estimated by Gartner at $821B in 2010. This compares with spending on worldwide hardware ($353B) and worldwide software ($232B). Growth is comparable to the technology markets (~5% YoY 2009-10) although historically a bit slower due to its large size.
Importantly, the marginal economics of the services business is challenging. Specifically, as volume increases, marginal costs increase. Unlike software, which is a 90% gross margin business, many services businesses have diseconomies at volume of due to complexity at scale.
Casale said CSC is able to replace its traditional solutions business because of its new cloud offerings. In return the company is getting a much richer mix of opportunities.
CSC has built BizCloud, a services infrastructure that it launched in February and is now expanding throughout the European Union and the rest of the world. The service will expand to Australia in August and Eastern Europe later this year. As part of that effort, CSC is expanding its global data center footprint over the next two years. It will have 12 data centers online by the end of the year, each with its own backup infrastructure.
That services business is having its own organic effects. “We are getting a much richer mix of business,” Casale said.
Adopting a cloud infrastructure leads to questions about a customer’s application portfolio, Casale said. She compared it to the early 1990s when companies ported its mainframe applications to a client/server infastructure. Today, companies are refactoring from x86 environments to modern cloud infrastructures.
CSC has done its own refactoring, which has taught it a lot about the new services businesses. For example, CSC uses SAP HR. The company moved SAP HR to the cloud for a 60% improvement in resource consumption.
CSC is SAP’s third largest integrator. It can take that skill set and experience and help SAP customers do the same thing.
CSC is also using its own internal assets to create new services. CSC divides its business according to verticals. Each vertical has its own intellectual property. In pharmaceuticals, the IP is more than 70%. In other verticals, it is lower. CSC is repackaging its IP to provide specialized cloud infrastructures for each vertical market.
With BizCloud, customers pay according to a services level agreement at bronze, silver, gold or platinum levels. It’s an enterprise grade service, differentiated by a higher degree of managed care. With the service, CSC is now offering SaaS, PaaS and infrastructure services through its cloud-based infrastructure. Companies may deploy through CSC data centers or on-premise.
BizCloud features CSC CloudCompute which is built on VMware Vblock technology, the integrated technology that combines VMware virtualization, Cisco networking and EMC storage. Security is a focal aspect of the service with controls for the data center at the infrastructure level; the virtualization layer; the data layer and access environments. For example, at the virtual layer, CSC offers hypervisor isolation from network adapters, client data isolation and network intrusion detection.
Casale said in a briefing this week that the payoff is at the platform level. The platform provides a way for the applications to work without a zip code, meaning the app may move across multiple environments without delivery problems. The platform allows the apps to be agnostic. It is flexible and can be used to build apps that have sustainability over time. CSC supports the Force platform, Spring and Windows Azure.
Sika Giunta is vice president of cloud computing for CSC. She spoke with Dave Vellante and John Furrier this past spring at SAP SapphireNow about what customers want from the cloud. It again comes back to platforms.
Demand is also increasing for platforms as a way to decrease app backlog, which in some cases is three to five years, Casale said. The companies adopting platforms have about 40 to 60% of its infrastructures virtualized. The platform gives room for the enterprise to speed up its test and development. Virtualization is the first step toward providing that capability. Once virtualized, an infrastructure can be integrated with the cloud. It also frees up resources that can be easily moved around.
CSC is similar but quite different compared to AWS. It has built its business on serving developers. It is primarily a self-service environment. It has a platinum offering but the costs is $15,000 per month. That means a consulting company is sitting in the middle, acting as an expensive buffer.
CSC is building its own enterprise grade cloud infrastructure. It provides enterprise class SLAs that the public cloud services do not provide. That is a model for the future and how traditional solutions providers can smoothly blends solutions and services – just like a good Merlot.