Archive for the ‘Tech Analysts’ Category

IT as a Service Provider

The IT as a service provider discussion was brought back up by Joe McKendrick of ZDNet in this blog. In it, Joe made reference to a past blog of mine in which I stated my opinion that a customer/supplier relationship between IT and their end users in the business was a bad thing, and I still believe that. Joe’s post brought to light some small nuances on that opinion that need clarification.

In my original post, I stated that IT moving solely to a supplier model to the business is an invitation to be outsourced. If you’re simply an order taker, there’s no reason that someone else can’t take those orders. The value-add that an internal IT department provides is not technology expertise, but technology expertise combined with knowledge of the company. Any SaaS provider or outsourcing agency must provide services to a mass market, or at least a market with more than one customer.

Getting back to Joe’s post, the inference that could be made is that IT shouldn’t be a service provider. This is not the case however. The IT-Business relationship should be a partnership, but you can’t be a partner if you’re not providing good service. Understanding the services that you bring to the table and doing them well is critical to the relationship. The difference is that those services do not define the boundaries of the relationship. Instead, they bring structure and foundation to it, on which partnership can be built. If your foundation is weak, the relationship will crumble. Therefore, adopting principles of service management within IT is a good thing, however, don’t approach it from the standpoint of competing against outside service providers. The decision to use outside providers should be made by the business, which includes IT. IT should be the one driving the discussion to say, “some aspects of our technology are really becoming commoditized and we can achieve some significant cost benefits through an external provider” rather than being told, “you’re a commodity and we’ve outsourced you.” In this sense, IT is no different than other business support organizations. Take HR as a good example. One could certainly argue that HR could be outsourced as it provides commodity services that all companies need. Every large company I’ve been at still has an HR department, though. What is more the norm is to have HR working as part of the business to make good business decisions on what aspects of HR to outsource, and what aspects of HR should remain within the company because there is value add. Only someone within the company can really understand the corporate culture which is critical to attracting and retaining talented individuals.

Be a partner in your business, but ensure that your partnership is on a solid foundation.

ZapThink to be Zapped?

I was very surprised that in ZapThink’s 2008 predictions, they predicted that they will be acquired:

Our prediction for 2008 is that one of these firms will acquire ZapThink, as well as other SOA thought leadership firms, because we can establish the winning acquirer as a global SOA leader

I wasn’t so much surprised that ZapThink would eventually be acquired, but I was surprised at the public announcement. Now, I’ve never been an entrepreneur, have never been involved with a startup, and have never gone through an acquisition, but a statement like this in an open forum sent out to ZapThink’s mailing list (beyond paying ZapThink clients) would seem to indicate one of two things:

  1. An acquisition is already in the works.
  2. The company is struggling and has just raised a huge banner saying, “We’re for sale. Please come save us.”

I’d be very surprised if it was the latter case, as a public statement like this would seem to kill any negotiation position. So, I’m going to assume that the former is the case and that it won’t be long before this “prediction” is reality.

It certainly brings up an interesting topic for companies in the SOA consulting space, one area where I do have past experience. Obviously, consulting companies make money by having billable resources. If you’re a consultant and you’re not billable, the revenue is not coming in to pay your salary. The owners of the company ultimately want your salary to be paid by clients, not by them. At the same time, this makes the development of intellectual property very difficult when the consultants are 100% billable. While intellectual property is certainly an indirect source of revenue, as it can help close deals, it’s not a direct source of revenue. So what’s a consulting firm to do? It would seem that bringing in a set of experts in intellectual property development that also have experience in creating non-consulting revenue streams (training, vendor marketing) could be a very potent combination that gets around the revenue challenge. The risk here, however, is that the “vendor neutrality” that an independent ZapThink has provided becomes challenging, given that many consulting firms get deals through their vendor partnerships, and it’s difficult to be a partner to competing vendors. Even ZapThink themselves have recognized the challenges of consulting and vendor relationships in Dave Linthicum’s recent post on his InfoWorld blog. We’ll just wait and see what the future holds for ZapThink. I wish my friends Ron, Jason, and Dave all the best in 2008.


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