In uncertain times, what companies want is certainty April 26, 2012
Posted by Mark Hillary in Current Affairs, Outsourcing.Tags: analyst, bpo, certainty, cost, dutch, euro, IT, netherlands, ONS, Outsourcing, price, recession, spain, statistics
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According to the Office for National Statistics (ONS), the UK is now officially in recession as the economy has contracted for the past two quarters. It is interesting to observe that many leading economists don’t believe the ONS data is correct, but these are the official numbers so we have to deal with what they present to the country.
Back when the present economic slowdown really began in 2007/08, many technology analysts predicted that a slowdown – or full recession – would be a good thing for the industry. If companies wanted to reduce outgoings they would look increasingly to offshore outsourcing as a way to achieve this.
But it never happened, and looking back it was quite obvious really. Any IT outsourcing programme has a lot of expense up front. Transition cost, training cost, consulting cost, auditing cost… there is a lot to budget for meaning that you have to commission a large piece of work, make sure it runs to plan and only once you get to the future business state can you hope to start making savings.
This meant that offshore outsourcing declined during the initial slowdown. It recovered and the market is growing again, but take a look around Europe right now. The UK is now in recession, Spain is about to go back into recession, the Euro currency lurches from one crisis to the next with the continuing reality that not all countries using the Euro now will be doing so at the end of this year.
The Dutch Prime Minister just resigned because his people refuse to adopt an austerity plan and the French are veering towards a new socialist president for similar reasons.
The level of political and economic uncertainty is so great that it would be foolish for any service supplier to still be selling the ‘reduce cost’ model of business. Now if they can start selling outsourcing based on a ‘we can tell you your costs for the next 5 years’ type model then in this present climate I expect there will be a lot more takers.
The last economic slowdown showed how unattractive the simplistic model of slash and burn offshoring really is. If we are heading into deeper economic uncertainty, that approach should not make a comeback.
Photo by Anders Vindegg licensed under Creative Commons
Optimism for the future of sourcing November 23, 2011
Posted by Mark Hillary in IT Services, Outsourcing.Tags: age, health, IT, ito, Outsourcing, security, terrorism
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There has been an air of optimism in the IT service provider community recently, quite at odds with what we all read in the press on a day-to-day basis. It seems that there is still a lot of work to be done in the international outsourcing community.
Partly, this is driven by the global nature of the market. Economies such as China and Brazil are becoming huge consumer cultures and growth there is creating a need downstream for more and more IT services – to support the retailers, logistics firms, and other industry sectors all experiencing strong growth.
But this optimism remains tempered by a sense of foreboding, that the IT services industry has to change if it is to grow and succeed in the long term. There is an emergence of some important new markets, being driven by what might be termed ‘mega-trends’ in society – trends that go beyond the geographic alone.
While some service firms can only hope for a recovery in retail or banking, it’s going to be these mega-trends that really shape the future of the industry.
First, the ageing population in developed ‘western’ societies. By the middle of this century it is estimated that fewer than half of all Germans will be economically active. The majority will be either elderly or children, neither contributing to government finances. So how can a developed country like Germany continue to expect economic growth at the same time as maintaining the existing social welfare standards – all with fewer people working and contributing to the economic welfare of the nation?
Second, sustainability is back on the agenda. European governments have been implementing a system of carbon reduction commitments that will force companies to audit and reduce their carbon use. This push from government will change corporate culture across the entire European region – and beyond.
Third, international terrorism is not going away just yet. We need better security systems that are smarter, and yet still affordable.
These three major trends are going to change the shape of IT services in future. But how many executives on the buy or sell side of the outsourcing equation have considered just how much their own marketplace might change this coming century?
Staying alive – retaining innovation in IT September 22, 2011
Posted by Mark Hillary in Internet, IT Services, Software.Tags: apple, commodore, dos, excel, google, ibm, imagine, innovation, ipad, IT, microsoft, nokia, office, operating system, pr1me, tablet, technology, wang, windows, word
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The history of information technology is littered with the names of companies that were once great and fell on hard times. Whatever happened to Imagine Software, Wang, Pr1me, Commodore, and many others?
Of course one of the greatest success stories in IT, and possibly in any business environment, is Microsoft. They grew from small roots, and a fortunate licensing deal to install their operating system on IBM PCs, and the rest is history. Now, almost all new PC-based computers come with Windows pre-installed.
But the world is changing. Microsoft has been talking publicly about their ideas for Windows 8 and it does not seem clear whether the world is listening any longer.
Almost 4m people in the UK use a tablet-based device and the dominant operating systems are from Apple and Google – with their Android system that is also becoming the key smart-phone operating system.
It would be wrong to suggest that Microsoft is finished because they don’t seem to be able to compete in the tablet and telephone market, but the entire computing market is changing. For years Microsoft has enjoyed the twin cash cows of Windows and their Office platform of office automation software – Word, Excel, and so on.
Windows is clearly becoming less relevant and valuable, but so too is the shrink-wrapped software market. Office automation tools are available free, in the cloud, from people like Google and at a low cost from other suppliers.
How do once dominant companies react to such changes in the market? If anyone can do it then Microsoft can. They have cash, intelligent people, and an attitude that focuses on innovation.
But do they have the will to entirely change the company? One only has to look at a company like Nokia to see that ignoring a changing technology market can bring industry giants to their knees. For the sake of the industry, let’s hope that Windows 8 really is as revolutionary as the Microsoft bosses suggest.
Switching to the cloud March 15, 2011
Posted by Mark Hillary in Hardware, IT Services, Outsourcing.Tags: cloud, Hardware, IT, Software, utility
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The cloud causes a great deal of confusion.
There is little consensus over what the term really describes. Data centre vendors will tell you how you can buy storage from the cloud, with servers switched on and off effortlessly and remotely. Software vendors will tell you that it is all about access to centralised software via the web, allowing you to use complex software without installing or maintaining a single package. Security vendors will tell you that it is an accident waiting to happen.
In many ways, the cloud is really a bit like the computer system represented in Hollywood blockbuster ‘the matrix’ – though without the Neo sunglasses.
The concept is that services should be accessible remotely without the customer needing to understand or care about the exact resource required to deliver it. It should also be possible to pay for only the services you use – for example, just paying for the storage you actually use rather than paying for a server and paying someone to maintain it.
The point is that you don’t need to understand the cloud as a new business concept to use it because consumers inherently understand how it works. When I switch on a power socket at home, I expect electricity to flow. I have no idea how many people worked in the power company to ensure that happened, but it happens and I pay only for the power I use.
When I turn on a tap, I get water and I similarly have little understanding of how much effort goes into ensuring that this tap produces fresh water, but it does. I also pay only for what I use. Apply these concepts from the home into the world of business and suddenly it looks a bit silly to buy banks of servers that are redundant 99% of the time, tying up capital in the equipment and needing to spend on facilities to house it all and people to maintain them. Or buying software that needs to be installed, maintained, upgraded, and paid for whether users are actually using it or not.
When the business users or technology services start thinking about the cloud in the same way they think about their utilities at home, then they will understand not only what it is, but also the immense potential.
Who is the customer? February 24, 2011
Posted by Mark Hillary in IT Services, Outsourcing.Tags: bpo, buyer, cio, customer, hr, information, IT, manager, purchaser, reboot, technology
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Possibly the most important discussion I had at the Nasscom event in India recently was around the changing role of the CIO, and how this changes the whole relationship between the client and the service supplier.
The CIO is an evolving role. It is becoming more strategically significant and is focusing more purely on information use and flow – which means that there is less emphasis on the purchase of IT systems.
At the same time, services are getting easier to buy. Companies are offering complete solutions that can be delivered using a web browser so absolutely no infrastructure or software is required – beyond Internet access.
So business heads are getting far more involved in specifying what they need and even going to the market and purchasing it without any involvement from the IT department. In fact, if there is no IT infrastructure requirement then why would the IT department need to know what is being purchased or used by the business?
This has always been the case in BPO. The person buying a new HR system was the HR director – not the CIO. They might purchase a system in communication with the CIO, but ultimately the decision was that of the business line head.
Now the same is applicable for a wider variety of systems – even technical systems that would previously have needed agreement from the CIO.
Does it make the CIO redundant as a function? I don’t think so as there still needs to be a strategy around infrastructure and security, but this does signal a complete change in the way companies use IT. The business user not only has the budget, but the power to buy, install, and maintain their own systems without any IT department interference.
Ada Lovelace Day 2010: Dame Wendy Hall March 24, 2010
Posted by Mark Hillary in Uncategorized.Tags: ada, ada lovelace, ald10, bcs, computer, IT, programmer, southampton, wendy hall
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Ada Lovelace Day is an international day of blogging to celebrate the achievements of women in technology and science. The first Ada Lovelace Day was held on 24th March 2009 and was a huge success. It attracted nearly 2000 signatories to the pledge and 2000 more people who signed up on Facebook. In case you are not aware of who Ada Lovelace was, in short she is regarded as the world’s first ever computer programmer.
And what are the pledges for? It’s a pledge to write on your blog about an admirable woman in technology or science and to then submit the blog to the Finding Ada website, so there is a large collection of stories about women in technology.
I’d like to name Dame Wendy Hall as one of my female technology heroes. Wendy was working at the University of Southampton on hypermedia and multimedia in the mid-1980s – long before the World Wide Web came along. She became the first ever professor of engineering at Southampton in 1994, and went on to head the computer science department from 2002 to 2007. Until July 2008, she was Senior Vice President of the Royal Academy of Engineering, is currently a member of the UK Prime Minister’s Council for Science and Technology, and is a founder member of the Scientific Council of the European Research Council. She was President of the British Computer Society (2003-4) and an EPSRC Senior Research Fellow from 1996 to 2002.
Since 2008 she has been president of the Association for Computing Machinery. But this would read more like a CV if I just listed Wendy’s achievements and posts held. The really admirable thing about Wendy is that she is a true technology visionary. She was using a version of what we know as the web, about 15 years before the rest of us caught up, and now she is leading international research efforts into the semantic web, the next generation Internet.
So, invoking the spirit of the first ever computer programmer, Ada Lovelace, Dame Wendy Hall please take your place in the Finding Ada roll call!
