by Bill Ives
January 14, 2008 at 11:06 am
· Filed under Enterprise 2.0
Nitin Karandikar raises some interesting points about IT outsourcing and the increasing complexity of the outsourcing value chain. He references an Information Week article: The Second Decade Of Offshore Outsourcing: Where We’re Headed that looks at the changing relationship between enterprise customers and offshore IT providers; how the outside providers are evolving into longer-term strategic partners rather than cheap labor body-shops. Nitin goes into much more detail and I recommend looking at his post.
This trend raises some interesting questions. If the outside partners become more strategic, will they become tied to one enterprise so the chain becomes simply an extension of the enterprise for accounting purposes? If not, how can you really be strategic for multiple enterprises, especially if they are in the same market?
The next question is the evolving role of internal IT. With more strategic work done outside will there be anyone left? I hope so because someone has to architect and orchestrate these forces. This orchestrating becomes more complex because the possible increased decentralization of IT development through such enterprise 2.0 tools as mashups. IT could play a great role here orchestrating these business team developers and helping to share the expertise and experience of individual teams across the enterprise. That is what I read that the IBM CTO is doing, see CIO-led Collaborative Innovation through Enterprise 2.0 at IBM: A Useful Model.
Then you add SaaS into the mix with more hosted applications than internal development, internal IT coders might become an endangered species, while internal IT architects will become even more important. Those remaining IT guys are also more likely to be early adopters of new consumer tools on the web so they can become scouts spotting what next to bring inside the enterprise. I think there should always be a role for internal IT. The survivors will be the nimble and the smart.
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NitinKJanuary 15th, 2008 at 10:43 am |
Thanks, Bill! You’ve raised some really interesting questions; as you say, these are logical extensions of this trend of providers becoming strategic partners of the Enterprise.
Although software is quite different from the automobile industry, I wonder if some of the same models could be used in this case - for example, the large OEMs, even while competing with each other, often include assemblies from the same supplier; their differentiation is at a higher level. Also, a very large percentage of any automobile comes from a hierarchical tier of suppliers, and the automakers manage to compete anyway.
In the same way, the IT department could evolve into a small set of generalist architects, who provide competitive advantage by *combining* the underlying software components (which in turn, are made up of even smaller components) into effective information systems and business processes.
This may be fanciful thinking - time will tell!
Commodity level (pipes, plumbing, infrastructure, guts - chose your metaphor) IT is fast evaporating into the outsourcing world (having just left an outsourcing company after 3+ years, it’s actually more interesting than you might think), and most definitely, the smarter outsourcing outfits are looking for longer, relationship/partnership-oriented models, rather than one-off, small projects.
An article at CIO Insight was just sent to me by a colleague earlier today, which would be good reading as well, on this vein: CIOs, Meet Your New Boss - and hints at the “grooming/social software” post as well.
Short story: the boring bits of IT are being driven by commodity pricing and under the finger of the CFO, whereas “innovation” is being driven by a new breed (the evolutionary survivor of business IT) of CIO, that reports into strategy/forward-viewing management. That’s the theory at least, but take a look at the article for the full details.
Dan and Nitin - Thanks for your comments. I will look at Dan’s suggestion. The smart CIOs will include facilitating the enterprise 2.0 bits in their firms as part of forward viewing management. Bill
Dave Snowden was quite clear in his (our) podcast on knowledge work and the impact of w2.0 … more and more the work will be done with platforms and apps from “the cloud” and centralized IT will become more and more an endangered species.
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