Capita IT Services recently briefed NelsonHall about its newly unveiled horizontal cloud services. Capita Private Cloud is built on VCE Vblock Systems’ converged infrastructure with data storage provided in Capita’s two data centers in the U.K. Services include the usual utility computing, multi-tenanted, with virtual servers dedicated to clients. Capita will migrate its existing operations to its cloud as well as offer it to clients. Capita will also offer cloud aggregation services in hybrid environments, and service integration including aggregated billing across different cloud suppliers.

Capita is offering the cloud service at a cost that is 30% less than its existing prices and, according to Capita, cheaper than an Amazon virtual instance when buying multiple instances. Through the VCE partnership Capita is looking to provide clients access to pre-tested approaches to migrating applications to its cloud environment.

The initial infrastructure as a service offering will be extended in the next 12-18 months to include PaaS for CRM and ERP deployments, as well as SaaS, when Capita will offer more and more of its own software on a SaaS basis on its own private cloud. These will feature the next-generation of its software portfolio.

The move to cloud by Capita was necessary for it to keep up with the market trend to cut infrastructure costs through shared capabilities and utility computing. It also enhances Capita's ability to offer ongoing cost savings in its contracts as well as improving its terms in a highly competitive market. Cloud was the right lever for Capita to pull, given increasing competition from Indian-centric vendors such as TCS in its main public sector market. When it comes to offshoring, Capita's delivery capability is still relatively small, <10% of Capita IT Services workforce compared with >80% of some of its competition.

If Capita had any doubts about the suitability of the cloud model in its key public sector market, this would have been completely dispelled when the U.K. central government adopted a cloud first procurement policy earlier this year. The policy extends to health and defence and indirectly to local government, Capita’s biggest client base.

Overall, this is a positive step by Capita. Likely benefits to the business include:

• Ability to support its BPO offerings on its own cloud
• Help with year-on-year cost efficiencies in existing contracts, not only in the public sector but in all its markets including financial services, retail and utilities
• Provides Capita the opportunity to leverage its well-known brand and existing contract base in the U.K. to cross-sell cloud services and related consultancy
• Overcome any lingering market perceptions that it is mostly a BPO and not an ITO provider
• Compete better with major ITO suppliers, such as HP,Atos and Capgemini, which have made huge investments in their data centers and cloud capabilities and which are also targeting the cloud service brokerage, integration and orchestration services.

Capita's own recent investments in its infrastructure include:

• Two Capita Command and Control Centers (C4), one in Pune, India, and a mirror site in the U.K.
• A co-located  continuity site for its main two data centers in the U.K.
• The acquisition of Northgate Managed Services, which was a key enabler of this move. NMS already operated a cloud service for schools with a large presence in Northern Ireland, including a delivery center in Belfast.