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January 14, 2008The new wave of IT solutions raises as many problems as it solves
This is the second in a series of 3 predictions, of ideas that I believe will be publicly accepted by the end of 2008. Last time I discussed how "The new wave of IT solutions is far too complex for most people". This time I'll go into some more detail.
In particular, my second prediction - that people will come to see how "The new wave of IT solutions raises as many problems as it solves" - is based on a phrase that 10 years ago one used to see a lot more than nowadays, namely Total Cost of Ownership (TCO).
The term TCO came into widespread popular usage for IT purposes around the mid-1990s, when Oracle Corporation and Sun Microsystems in particular started propounding the advantages of the "Network Computer" - a true thin client that possessed no hard disk, only an Internet connection. However, it took a long time for the advance of the Web to bring with it software that can support thin client solutions without reducing the user experience unacceptably - AJAX-based applications, for example. Even now, nearly all computing devices still possess a hard disk, and in my view will probably do so for the forseeable future.
So vendors no longer bandy about TCO as much as they did, since they see less mileage to be gained by doing so. Instead, IT customers are starting to take on these concerns. Faced with proposals from vendors, and analysis on sites such as ebizQ, that suggest the modern enterprise needs not just BPM, but BPM+SOA+BRM+CEP+BAM+BI+Mashup+add_your_new_type_of_product_here, organizations are starting to worry very seriously about administrative overheads. Which is not surprising, since:
- These products are new.
- They are complex.
- There are a lot of them.
- Hardly anyone understands how to use them properly.
I hear the same thing from consultancy clients in all sectors - they see the potential business advantages of process-orientation, but for now wish to focus on it as a management approach rather than a set of technologies. This is what experts in the fiield have been saying for years, of course. However, vendors (of course) have focused on the advantages of new technology investment, so the message has been a confusing one for customers.
TAKE AWAY
Part of the reason that corporate decision-makers are deciding to focus on the management aspects of process-orientation (rather than the technology aspects) is due to the rise of Business Process Outsourcing (BPO). Why implement what you may not end up owning?
The outsourcing industry has matured enormously in recent years. Talking to outsourcing vendors while in India recently, I was deeply impressed by their realistic grasp of what works and what doesn't in outsourcing, and how customers can get the best from low-cost commodity labour.
Further, the outsourcing model has spread to the point where it is no longer simply a matter of cost reduction (if it ever was). The rise of "homeshoring" attests to this.
However, the increased interest in outsourcing raises questions of its own. Next time I will address my third prediction - that people will recognize during 2008 how "There are fundamental business problems that need help from IT but that are not addressed at all by the new wave of IT solutions" - and discuss where the market will turn for answers to these questions.
Posted by keithhb in
Business Process Management
• Service-Orientated Architecture
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Keith, I absolutely agree with you.
It is interesting that you mention TCO is no longer a differentiator used by vendors while mentioning that customers are concerned with administration overhead and the management part of the IT process. This means you find no vendor addresses this issue properly.
In fact, the term TCO has been overused to a point where vendors who actually address the whole application lifecycle management, from build to maintenance, operation, users feedback, and (re)build, have problems communicating to customers the value of that manageability by using the TCO term.
After development tools of all kinds becoming commodities, the IT TCO is definitely in the management part of IT and there are platforms that address this never mentioned and always forgotten issue. Though it may seem that all vendors live for the present, some are actually concerned with the future. They impregnate that concern in the technology and thus offer a mid to long term advantage that is reflected mathematically in time under the TCO concept.
I'm very pleased to know that your feedback from consultancy clients stresses this management need. What is the size and maturity of the IT those consultancy clients handle? I'm asking this because I only find this vision of the whole process in large ITs and mature CIOs. The percentage of prospects that understands the value proposition of an offer that tackles this manageability and supports the whole application life-cycle, including version control, seamless staging from development to production, access control, monitoring and others, is very low.
Regarding the outsourcing part, your point for the BPM case is really enlightening. It is true that corporations are at first only concerned with the management aspects of process-orientation, but what about the future? If corporations get locked to outsourcers because technological barriers are too high for an outsourcer switch, then outsourcing loses its sustainability benefits and corporations will in fact drift to an off-site internal IT, no?
My point here is that knowledge transfer, despite the fact that it was already important before outsource, is now a must to assure corporations they actually own their applications and can switch outsourcers as they please. I'm assuming, as addressed before, that applications must keep evolving and not just running. This knowledge transfer need is the new never mentioned and always forgotten issue regarding outsource.
Waiting for your next direction :)
Rodrigo Castelo
Product Management of the OutSystems Platform
rodrigo.castelo@outsystems.com
Posted by: Rodrigo Castelo at January 17, 2008 03:16 PM
Thanks for this, Rodrigo. You raise a lot of interesting issues - too many for me to make a full response here! I'll try and address some of your concerns in future posts.
For now, you ask about the size and maturity of the IT that my consultancy clients handle. I speak to people from organizations of all sizes -from tens of staff to tens of thousands of staff - and the same issues are raised. People are not convinced that spending time and money on a complex sea of new technologies is going to improve their business operations - or improve it any more than spending the same time and money on other initiatives such as process architecture (which is not the same as process mapping or modelling, but a higher-level, strategic activity).
If there is a single point underlying this whole post, it is that system TCO is not just a technical issue. TCO is about a lot more than managing application lifecycle! It is about the knock-on effects in a wider business context of implementing and maintaining IT systems.
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All the best
Keith
Posted by: Keith Harrison-Broninski at January 18, 2008 03:47 AM
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