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Business Ecology Initiative & Service-Oriented Solution

Michael Poulin

ZapThink 2020's Crisis Point: "Collapse of enterprise IT" . Is this our future?

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Thanks to ZapThink's laconic style, I can quote the prediction in full: "Enterprises who aren't in the IT business stop doing their own IT, and furthermore, move their outsourced IT off-premise. Why is it that so many enterprises today handle their own IT, and in particular, write their own software? They use office furniture, but nobody would think of manufacturing their own, except of course if you're in the office furniture manufacturing business. The game-changing nature of this Crisis Point is obvious, but what's surprising will be just how fast enterprises rush to offload their entire IT organizations, once it becomes clear that the first to do so have achieved substantial benefits from this move."

It is not clear what position ZapThink takes with this regard: do they appreciate the collapse of enterprise IT or they talk about it with a portion of sarcasm. I do not find anything surprising in the rush which the enterprises "offload their entire IT organizations" with - the mindset driven by the 'crowd effect' is very strong indeed. The blindness of the executives who do it now (while only "the first to do so have achieved substantial benefits from this move" and this time passed a long ago) is the really astonishing thing, especially when the 'pioneers' are starting to feel the pain and frustration from what they did.

Comparing IT with office furniture is awful and adequately to only those who sit on their heads. This is why I have doubts in the serious tone of ZapThink.

Nevertheless, two sentences that start the prediction - "Enterprises who aren't in the IT business stop doing their own IT, and furthermore, move their outsourced IT off-premise. Why is it that so many enterprises today handle their own IT, and in particular, write their own software?" - carry much more consequences than the collapse of enterprise IT; they carry a high probability risk of the collapse of the enterprise itself.

Here are the reasons for my statement. As (even) Forrester and Gartner point, SW and Information Technology become a significant enabling part of more and more businesses at the level of an enterprise and at the level of industries. The more dynamic external environment is (and the dynamics of crisis and post-crisis market are extremely high), the more flexible and responsive the corporate business must be to survive. One of the conditions of such flexibility is a MERGE between Business and Technology, the technology has to breathe the business air to keep up with the pace of business changes. It is a known fact that adoption of a change in IT takes about 3 times longer than in Business, i.e. separation or 'remoting' of IT from Business cannot make any good for the business. Business enthusiasts who look not further their noses and care about immediate business benefits from IT outsourcing actually shut themselves into the foot because "a business can move only as fast as its technology can move". If the technology is under another authority, supervision and has its own agenda, what's left for the business?

Business that "stop doing their own IT, and furthermore, move their outsourced IT off-premise" make a step back in their competitiveness in the market: 1) they loose a part of their business giving it away to the outsourcing vendors; 2) vendors, obviously, care about their own benefits rather than about the client's benefits; 3) vendors can provide good instruments for the client business but they cannot provide advanced business solutions. Outsourced IT becomes an anchor for the corporate business because business usually needs not exactly what it asks for. To fulfill the gap, takes the time. Only internal Enterprise Architects than may be close enough with the Enterprise Business Architects and Business Management to find what is really needed can express the business tacit needs.

I am not saying that each enterprise has to write its own software; there are professional SW writers - programmers - available from the vendors. I am saying that the enterprise, if it wants to live a long good life, has to keep its IT in house. This IT may include, for example, only Architects, Business/System Analysts and, possibly, Testers but these people should be the drivers for the outsourced programmers. Only in this case the enterprise is able to keep the control over its technology part of the business and compete in the market.



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It seems you are both taking opposite ends of the spectrum and not really conceding that there will be some middle ground ...

A common principle one sees in many EAs is to use COTS software and avoid customisation, E.g. take an ERP system from say Oracle and use the system and processes it embodies straight 'out of the box'. But even if this is achieved their are stiff staff required to watch over the servers and application, there are the usual life-cycle refresh cycles.

So why not just buy this now as a service? Is it not just about the economics in this case? How the monthly service opex compares to the internal opex + depreciating capex.

Who are we kidding anyway, if it was a vanilla implementation the internal Architects & Analysts probably never knew much about how it worked in detail anyway. When a new project came up they probably had to read the manuals.

But of course then there are the areas of strategic differentiation for your business. If these leverage IT then going 'off the shelf" leaves you with no functional differentiation - so of course SaaS may not be the answer here.

... but then there is always PaaS of course ;-)



NJC has a good point but, IMO, it does not contradict my post. COTS software w/o customisation is good in only basic, routine cases; for any level of sophistication the consumer becomes fully dependent on the SW provider, say Oracle.

COTS SW is good in stable and slow pacing market. In dynamic market, business looks for innovations and competitive advantage that cannot be provided by the COTS SW w/o customisation.

There is no problem with using SaaS or PaaS themselves; the problem is in using them instead of internal Architects and Business Analysts. Only they, not external guys or gurus, can protect the interests of the enterprise in the complex world of technology.

Thanks for your comments, Michael!

It's important to note that the five crisis points are not meant to indicate that any organization should or should not endeavor to ensure the crisis point comes to pass. Rather, they represent likely crises in the future that organizations should prepare for, in order to mitigate the risks and hopefully obtain advantage from their approach to the crisis.

There's no arguing that in this case, many enterprises have already made the move to outsource their IT organizations, with decidedly mixed results. We are predicting an acceleration of this trend, for better or worse -- and we would expect that for many organizations, more for the worse.

However, the real power of our ZapThink 2020 vision is that we will be considering each element in the context of all the other trends in IT. Thus, we will place the question as to how best to mitigate the risks of outsourcing IT into the context of other trends, like the Democratization of Technology and the Global Cubicle, two of the Supertrends ZapThink will be considering more in the months to come.

Jason Bloomberg
ZapThink LLC


It would seem to me that if one views IT as hardware / software only, then having the enterprise run their systems in a cloud environment with no ownership or investment in infrstructure themselves, is a viable proposition.

However, the enterprise information held in that cloud (or ASP model, whatever the mechanism) is the critical factor. Governance, privacy, confidentiality, access and control of that information will be a critical component -- and until resolved satisfactorily -- will hinder any such implementation.

In that respect, IT is the organization. The ability of the enterprise to compete in its field will depend largely on how responsive that system is -- however it is deployed or managed. To date, those questions would be a major concern ... as they frustrate current enterprises that have gone to an outsourcing model right now.

Moreover (in line with Bruce, a lot of modern enterprises have technology deeply embedded into their business operations and can move in the market not faster than their technology can (it is not mine, it is the Forrester's opinion). So, placing just HW/SW in cloud is not a concern but placing serious part of your business in somebody's hands must be the major business concerns for the companies so keen to jump into the Cloud.

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In this blog, Michael Poulin writes about business and technology ideas, concepts, methodologies and solutions leading to service-oriented enterprise, the primary instrument for obtaining business objectives in fast-changing environments.

Michael Poulin

Michael Poulin is an enterprise-level solution architect working in the financial industry in the U.K. and the United States.

He specializes in building bridges between business needs and technology capabilities with emphasis on business and technical efficiency, scalability, robustness and manageability. He writes about service orientation, application security and use of modern technologies for solving business problems. He contributes to OASIS SOA standards as an independent member and is listed in the the international "Who's Who of Information Technology" for 2001. View more


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