Note: You are experiencing only the raw content of this site, without the intended layout and design. Either your browser has ignored the Cascading Style Sheet (CSS) files for this site, or you are using an outdated browser which does not support Web Standards. Learn more.

EDS' Next Big Thing Blog: Read and Respond to What the EDS Fellows Say About Technology

Read and respond to what the EDS Fellows have to say about the future of technology on EDS' Next Big Thing Blog on eds.com.

Reviewing The IT Value Stack

by Charlie Bess

I was reviewing The IT Value Stack the other day and in the process exchanged a few emails with Ade McCormack the author.

Although he does a great job describing the issues of value generation within IT the way it is structured today. There were some differences of perspective that I have to bring out:

Ade's discussion of outsourcing appears to be fairly harsh. He does not understand the real value of outsourcing. It is not about replacing workers, but about diversifying risk and contracting for efficiency. His whole premise seems to be that an in house team is always the right answer. I'd say that is a high risk proposition. As the industry moves into a more assembly based value creation approach rather than a hand crafted one, the need to have experts (for a short duration) in high value segments should increase. Outsourcers had better be able to apply those resources seamlessly and more effectively than any in house team could ever do. The changes in the IT industry will demand this ability to tap into a more diversified resource pool.
Even though Ade talks about the business value being based on the use of IT, he keeps pounding away that IT is separate and must be "entwined". I'd have bought that argument in the mid 90s when most middle management had little understanding of computers, but that does not hold up today. When he and I exchanged a note about how the "typing pool" has disappeared, I suggest the same thing is happening with "long tail" application development, through the use of mashups and other similar techniques. He does talk about the CIO being the evangelist or enabler, but it was a bit weak for me. IT's days as a separate entity inside the corp. are numbered. Everyone needs to take a hard look at the territory they want to claim for their corporation and prepare the IT organization to make it happen. In Ade's book there is a good tactical framework to do this, and it appears to be a valid means to an end. It's just the end state that I'm afraid could have been more thoroughly explained.
One other area that wasn't brought out in the book that I'd like to hear Ade's perspective on is: Cloud Computing. Most of the folks who are working in cloud computing can spell "cost" fairly well, but don't understand "value" and what the organizations will require to use it as an integral part of their business. We'll see how many lessons are going to be learned in that space before there are some changes in the market.

I do believe there was a great deal of useful material in the book and it should make the reader sit back and contemplate their ability to adapt and adopt the concepts, since in any shift like this the leader must ensure that there are followers.

Published Thursday, March 06, 2008 6:10 PM

Filed under: Vision, IT Services, Business Value Generation

Subscribe to this post's comments using RSS

Comments

Posted by Ade McCormack Tuesday, March 11, 2008 6:29 PM

Charlie,

Thank you for reviewing my book. I greatly appreciate your feedback. It has given me cause for thought. I am not locked into my views particularly if market evidence suggests otherwise.

To respond to your points:

1. I take the point about risk diversification, and agree, particularly where the in-house function has become lethargic and fails to operate as a keen supplier. The other extreme of course is that outsourcing all your IT to one organisation is perhaps the biggest risk. Again in-house is not the right answer where the IT department is beyond salvaging. My message is that they need to buck up if they are to compete with more commercially oriented suppliers like EDS, which is my view, an perhaps not good reading from an outsourcing perspective.

In my experience outsourcing as a model has gone in and out of fashion as it will continue to do so. I quite like the utility model some players are adopting, particularly for hygiene services. But in my opinion most buyers of outsourced services are looking at cost first. For many they see IT in much the same way as stationery, "where can I get it cheapest', hence India coming strongly into the frame, and hence the western outsourcers getting into India.

The big question for users of IT services, is whether IT is their core business or not. I would argue that core business for Citigroup and American Airlines IS and brand management. And if that is the case should they be handling that to a third party? Maybe yes is the answer. I agree however that slowly but surely IT is moving from craft to assembly. As that happens the likes of EDS can offer a number of things, not least economies of scale. But the slowness of the evolution of IT is making assembly line something of a romantic notion but for the most basic of applications. If that were not true then every IT project would be a success, which is far from the case.

2. I work with some of the biggest companies in the world and most middle and senior managers are clueless about what IT can do in respect of cost management, innovation and governance. So I am comfortable with the notion of a business-IT divide.

The fact that we have business/systems analysts patrolling the DMZ between the two parties attests to a serious rift. I agree that the IT department's days are numbered, I am pushing for it. In much the same way as the typing pool used to be a function now everyone does their own typing. So it will be with IT. Thus the IT department's days are numbered, but it’s a relatively big number, in my view.

My perspective on outsourcing is that many providers can do IT better than many end user IT functions. An alert-IT department has the advantage that they know their business processes much better than any outsourcer. As time marches on the technology piece will be trivial, the value will be in the business knowledge. But I accept that where an outsourcer acquires the business expertise then that is a heady combination. Some of the outsourcers have already got this message and have moved their proposition up the 'value chain' by presenting themselves as business outsourcers.

On reflection the book would appear a little harsh on outsourcers. I have no fundamental issue with it. I simply want the IT function to put up a better fight, for everyone's benefit. Your comments will certainly influence my presentations/writing and consulting activities to be more balanced on this.

3. I have only recently come across the term Cloud computing. It looks like an attempt to bundle grid, virtualisation and utility computing into business/media friendly concept.

That said, extracting better value from one's IT assets is to be applauded. Three years ago grid computing in particular was marketed by IBM but was still really a subject for comp sci academics. In the last year I have seen it turn into commercial reality, particularly amongst investment banks. But true grid computing whereby the user devices contribute to load sharing as well as the servers is some way off as the security implications and underlying architectural requirements are horrendous. But this may move forward faster than I expect because the concept at least is boardroom-friendly. I am sure the out sourcing community will put their shoulder behind it as it strengthens further their value proposition.

I have enjoyed responding to your thought provoking comments and would be happy to take the discussion forward. I have worked with EDS in the UK in respect of helping the IT recruitment function in respect of talent management.

These are interesting times!

Posted by James Taylor Friday, March 21, 2008 9:52 PM

I too read and reviewed the book. I liked it and I think the need for decision automation and management is clear.

Author of "Smart (enough) Systems"

Posted by Ron Dimon Tuesday, May 06, 2008 3:30 PM

I just finished reading Ade's book (based on James' review), and reviewed it here:

http://businessfoundation.typepad.com/bf_blog/2008/05/book-review-the.html

I think Ade is a very articulate, experienced IT/Business professional, with some provocative points of view, but his book is not one of the better ones I've read. Sorry.