the other hand, energy consumption is high due to performance degradation and longer execution time.”
Termination
Compliance requirements
Customer responsibilities
Performance tracking
Problem resolution
Termination
Lead time for implementation
Regulatory issues—A contract between a cloud provider and customer should require the provider to adhere to the legal requirements of public privacy laws, including the following:
The Health Insurance Portability and Accountability Act (HIPAA)
The Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003
The Gramm-Leach-Bliley Act of 1999
The Payment Card Industry Data Security Standards
Customer privacy—Customer information resident on a cloud provider’s platforms can be subject to aggregation and data mining. Vendors must provide guarantees that personally identifi able information will be pro- tected and not used for monetary gain, such as selling the information to advertisers. In addition, it is important to establish how long the vendor will maintain the customer’s records and how those records will be deleted.
There should be stipulations in any contract that the customer’s data will be destroyed on an agreed upon date.
Termination—The provisions for the customer or cloud provider to ter- minate the contractual agreement or temporarily halt usage should be specifi ed, along with any required notifi cation lead times.
Identity protection—The cloud service customer should require the vendor to provide mutually agreed upon guarantees that the vendor will protect personally identifi able information from compromises that might result in the theft of an individual’s identity for the purposes of credit fraud.
Patent issues—The cloud vendor should warrant that they are the right- ful and legal owners of the technologies they are providing and that they will indemnify the customer against any patent infringement situations that may arise.
Selection of jurisdiction—The customer of the cloud provider usually specifi es that the jurisdiction in the contract be that of the customer.
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Export issues—The cloud service provider should ensure that it complies with relevant export control laws that prohibit some types of encryption software to be stored or transmitted outside of a country. This situation might occur if a cloud provider has data centers located outside a nation’s boundaries.
Business Process Outsourcing (BPO) Issues
In business process outsourcing, an organization outsources business activities such as fi nance, benefi ts, customer service, accounting, and payroll functions.
BUSINESS PROCESSING OUTSOURCING DEFINITION
SearchCIO.com (http://searchcio.techtarget.com/sDefinition/0,, sid182_gci928308,00.html) defi nes BPO as “the contracting of a specifi c business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain their position in the marketplace. BPO is often divided into two categories: back offi ce outsourcing, which includes internal business functions such as billing or purchasing, and front offi ce outsourcing, which includes customer-related services such as marketing or tech support.” This type of outsourcing is different from IT outsourcing, which involves applications, storage, and data center activities.
Business processes that are obtained in a user’s country are known as onshore outsourcing, whereas those services that are contracted from a foreign country are described as offshore outsourcing. BPO widely employs vendors in nations such as India, China, and Malaysia.
The following are some typical BPO functions:
Financial services—These services include expense processing, transac- tion processing, decision support, and capital equipment management.
Human resources (HR) functions—HR functions include benefi ts, employee information management, recruiting, payroll, customer-service call centers, and application development.
Supply chain management (SCM)—Management of the organization’s supply chain involves coordinating among customers, partners, and sup- pliers, and includes procuring, managing payments, logistics support, operations management, and developing evaluation metrics.
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An organization that is considering BPO must understand the following:
What Web services are available
Integration of data and services
Possible reuse of existing applications
Use of shared and/or open-source solutions
Roles of IT staff in providing cloud engagement services
Figure 1-4 presents an example of the strategic aspects of embarking on a BPO endeavor.
Figure 1-4: Typical steps in invoking BPO
Step 1 - Origination
Justification Risks Purpose
Step 2 - Time period
Minimum time to be effective Maximum time to permit additional options
Step 3 - Address internal and regulatory requirements
Requirements for customer Requirements for supplier
Step 1 in Figure 1-4 emphasizes processes that involve determining the rea- sons and justifi cations for BPO, evaluating the risks associated with a possible outsourcing engagement, and analyzing the purpose and type of relationship expected with the vendor. Also, the processes to be outsourced and the processes to remain in house should be determined.
Step 2 requires a detailed analysis of the period of time that BPO should span. This step should develop both a lower limit, to allow expected benefi ts to be achieved; and an upper limit, to provide the fl exibility to possibly engage another supplier.
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Step 3 in the BPO strategic process should ensure that internal, legal, and regulatory requirements are met in the outsourced environment. This effort should defi ne the requirements and actions to be performed by the customer and the vendor.
BPO, when implemented properly, can support more effective adherence to purchasing policies, increase productivity, and reduce capital expenditures.
Some additional benefi ts of BPO are as follows:
Market advantage from technology and process improvements
Improved regulatory compliance
Lowered procurement costs
Enhanced integration of acquisitions
Global perspectives
A category related to BPO is knowledge processing outsourcing (KPO). KPO is a mode of outsourcing that requires special knowledge and expertise. KPO includes activities such as R&D and new product development that involves particular skills or abilities.