Reader Feedback On Thinking Strategically About IT As A Service
March 5, 2012 Timothy Prickett Morgan
There’s too much talk about the dollars and cents equation. If all of IT is reduced to the budget equation, as CFOs can and often do, then the ability to use IT as a resource to gain and keep a competitive edge is lost.
Outsourcing, SaaS, cloud, GUI, web, and so on are all used as market buzz by vendors looking to sell. I especially tire of rags constantly quoting vendor staff when it’s obvious where the spin lies. Not all of IT can be reduced to an enterprise application solution or even a web-enabling green screen tool. In fact most applications fall outside of that model and they are the real value add.
Having finance be in charge of the IT purchasing decisions is the proverbial power struggle between accounting and IT (back in the day), which IT won. Maybe the pendulum is swinging back but not in a good way. This drive (at least in the market driving perception and value added IT services) will only give a modest improvement in the areas of operations and short-term costs. However, that will be offset by the total loss of using IT as a competitive edge as everything and everyone uses the same plain vanilla offerings of a shortlist of vendors. All vendors steal from one another, so eventually they all look and cost the same.
Where’s the savings and competitive edge then?
If your services depend too heavily on commoditized IT services, then your prices will be forced to fall as you may no longer be able to differentiate your offerings and thus so, too, are gone all the savings you thought you made in that crafty finance decision to outsource.
Having vendors wrest control of this highly important corporate asset is a sure way to lose one of the most important strategic weapons most companies have. Our company does just the opposite and if we were to replace our offering with a packaged solution we would no longer differentiate in the market and would lose substantial business, growth, and jobs.
You make many good points, which is exactly why hosted (managed, outsourced, cloud-based, etc) services has only a small portion of the licensed product business. And that is completely separate from companies that choose to design and develop their own applications or highly customize the packaged applications they license.
BTW, I agree there of course is a place for them, but also am very weary of the motives of these vendors for two fundamental reasons.
One, while there is some value in an invention, the over-hype (think cloud) really makes one skeptical. Two, historically companies that can monopolize a certain area can also use their considerable influence to start to monopolize another (think Google). Today it’s hosting “your” software tomorrow it’s “owning” your software. I know it seems a bit of a stretch but in certain areas of IT, it certainly is coming true. For example, now Google and Wal-mart want to be your electronic payment vendors. Really? What happened to selling cheap products from China or searching for stuff? Too much money to be spent to not start to encroach on other peoples success, eh?
Have a great day.