After being burned by the first generation of outsourcing deals, many companies now have a range of technology options to share the load, including going offshore. Mark Hollands explains.

by Mark Hollands

Technology has become so complex that nobody can do everything. In a world of increasing global competition, business leaders know they should never dedicate strategic and managerial resources to computer systems instead of their core business.
This reality began to dawn on executives of Australia's business community almost a decade ago, and since then the nation has transformed itself into one of the world's most mature markets for technology outsourcing. This transition has had its pain, however, and senior executives continue to tread a long and sometimes unprofitable path towards the nirvana of a perfect outsourcing deal.

	I have clients who just go overboard. they squeeze and squeeze outsourcers on price and service levels. They play the competitors off against each other.

Outsourcing has changed dramatically since the early days. Simplistic, flat-fee deals have given way to a raft of buying options. The industry is now moving towards an on-demand model in which buyers pay only for what they consume, either in the form of manpower, computing power, transaction, network bandwidth or number of transactions.
Many executives are searching for the right deal and outsourcing, despite its management difficulties, continues to be a growth industry.
The research company Gartner believes the market will stand at $A336.7 billion ($US235.6 billion) worldwide by 2007, having achieved a compound annual growth rate of 7.8 per cent since 2002. Some 39 per cent of that spend will be dedicated to desktop support and another 28 per cent will focus on network management.
The determination by companies to change their deals today has become apparent according to figures from the rival research house, META Group. It claims that 70 per cent of buyers will dramatically change their deals when contracts come up for renewal, and that the same percentage of top 2000 global companies will also obtain an independent evaluation of their arrangements 18 months before contracts are due for renewal.
There are other opportunities too, such as using so-called offshore service providers in emerging economies. They can undercut Western prices by up to 70 per cent because they operate in low-cost labour environments such as India, the Philippines, Eastern Europe and South America. But even with this depth of discount, the Australian market has been slower than competitors in North America and Western Europe to embrace these offshore service providers.
Chief information officers (CIOs) - the executives who usually take responsibility for technology outsourcing deals - say repeatedly in surveys that they are more interested in the quality of work than the price. Their attitudes, while softening as offshore providers improve their skills and service levels in the Australian market, have some of their roots in recent history.
Outsourcing was sold in the mid-1990s - the early days of these technology relationships - as a mechanism to take cost out of the information technology (IT) budget. Deal after deal, especially within the government sector, was based on the belief that cost could be reduced by giving service providers the opportunity to look after large-scale infrastructure.
The theory was simple: IT companies could use their global resources and expertise to run infrastructure at less cost than an individual enterprise. That view was too simplistic. A raft of challenges emerged, ranging from integrating staff from the user company into the IT outsourcer, updating ancient technology and implementing critical business and technology processes that might even have existed previously. Delivering savings amid such tumultuous change was almost impossible for most service providers.
At the end of the first generation of deals, it was obvious that the cost-cutting promise of outsourcing was a dangerous fallacy. Many organisations not only discovered that they were not saving money, but were in fact spending more than ever.
This was precisely the experience of the Federal Government, which rushed into engagements with myriad multinational companies.
The finance minister at the time, John Fahey, had promised that his outsourcing strategy would deliver $1 billion in savings to the taxpayers over three years. That money never eventuated and outsourcing in Australia had made, at least politically, a disastrous start.
Business leaders learn quickly, of course, and today they recognise that saving money is a priority loaded with risk in the outsourcing arena.
Commercial relationships crash on the rocks of anger and despair when a customer squeezes the supplier's profit margins too hard. The same result occurs when the supplier charges above market rates. Success in an outsourcing arrangement is a balance between the client receiving market value for the services it receives, and the supplier being able to make a necessary degree of profit that is essential to stay in business. The fun part, of course, is striking that balance in negotiation.
The common perception is that suppliers have all the power in the negotiation and they will make a big, fat profit regardless of whatever contract emerges.
But independent consultants working at the sharp end of these deals say this is an unfair assumption. Buyers have become aggressive negotiators - a strategy that can backfire on them. One adviser in a multinational consultancy says: “I have clients who just go overboard. They squeeze and squeeze outsourcers on price and service levels. They play the competitors off against each other.”
There is a widely held view among consultants interviewed for this article that in the most extreme cases, user organisations set their service providers up for failure, believing they have legal recourse if service levels are not reached.

	You cannot afford a hiccup, or a mistake, in most industries because it will be the customer who will suffer. When things start going wrong at the consumer end, then deep-seated problems start to set in.

“Those companies are in the minority,” says one consultant. “However, they do exist and I sometimes think outsourcers are crazy to accept some deals.”
Moreover, the momentum for a deal is often created by the commitment of so much of the vendor's time and resources, which can skew their view of what makes good and bad business.
“There is a certain compulsion on the suppliers' parts to win the deal, especially after they have invested so much in the negotiations,” says another consultant. “Really, many of them should step away but they don't. They accept a tough deal in the hope they can use the relationship to sell more services and products later on. When they figure out a couple of years down the track that that is not going to happen, things go sour really quickly.”
Signs that the outsourcer is out of sorts soon become obvious. Instead of taking a long-term view of the relationship, immediate profit becomes their focus.
The levels of service plummet. Depending on the nature of the deal, the user organisation starts to see reductions in the number of help-desk staff, software development projects miss deadlines as staff move to more profitable work, or network problems arise because proactive maintenance falls away. “
When a relationship reaches this point, we are in very dangerous territory,” says Gartner director and consulting lead, Mark Probyn. “Usually, the client is apoplectic. The executive who is in charge of the deal will be facing serious internal complaints and pressures about the supplier. On the other hand, the supplier just does not want to be in the relationship any more. Basically, they want out because there is no profit, and they can move their people and skills elsewhere and make more money.”
Clawing back the situation when it becomes so dire is hard work. A few home truths on both sides need to be expressed and understood. “The relationship can go one of three ways at this point,” says Probyn. “They can recast the deal, go their separate ways or the client can go legal, which is becoming an increasingly familiar outcome.”
Senior Gartner analyst Craig Baty, a recognised global expert on outsourcing trends, says his research shows that one in 10 Australian companies are unhappy with their outsourcing deal.
“Most local executives in that situation are pragmatic enough to not phone their lawyers as a first reaction, and try to work through the problem,” he says. Everything comes back to the way the commercial relationship is established at the start of the negotiation. If you do not get that right, if each party does not understand each other's needs and motivations, then there will be issues down the track.”

Dynamic Outsourcing

To find the right reasons for outsourcing, it is important to understand the dynamics of the technology industry and the difficulty of running an IT department. It is a rare CIO who does not need to balance increasing business demands and technology innovation against the constraints of tighter budgets and rising wages.
Most IT departments in Australia are faced with the challenge of managing a budget in which more than 60 per cent is already allocated simply to “keep the lights on”. A recent survey by the research company ITR found that 29 per cent of local IT teams actually had more than 80 per cent of their funds pre-allocated.
With so many demands being placed on the department to improve business processes and support the growth goals of their organisation, CIOs are turning to outside partners to supply the skills and resources they cannot afford to employ on their own.

	One cio remarks that a long-term commitment to one player ‘can feel a little bit like a hostage situation' if the relationship hits a bumpy part of the road.

CIOs are not only struggling to handle the next level of complexity of systems but also the lightning pace at which they continue to evolve.
The emergence of new software such as “web services”, the popularity of the Linux operating system, moves to Voice over the Internet Protocol (VoIP) telephony, merging of data and voice networks, plus the demand for wireless connectivity into corporate systems all combine to challenge the capabilities and resources of the average IT team.
Resources are further stretched by the demands for regulatory compliance around fiscal reporting, privacy, spam and a host of other issues that affect companies regardless of their industry or profile. New industry mantras such as on-demand computing - the strategy to use technology to reduce inefficiency across the business - also pile pressure on the CIOs to perform beyond where their budget might reasonably take them.
This increasing complexity is one of the key reasons why analyst companies are predicting significant growth in the global outsourcing market over the next five years.
So despite the early failure of companies to gain cost savings from their previous outsourcing arrangements, they are coming back for more. However, they will not be making the same mistakes twice.

The Next Generation

Consultants and analysts alike talk about the “next generation” of deals in which user organisations are taking a very different view of their contracts.
The greatest change in the Australian market is the move by the buyer to end large deals with a single service provider and fragment the contract into smaller deals to limit exposure. One CIO remarks that a long-term commitment to one player “can feel a little bit like a hostage situation” if the relationship hits a bumpy part of the road.
The executive, who is reassessing his company's outsourcing arrangements says, “I think we all learnt lessons from the last contract. Some of the expectations we had never eventuated. This time we are determined to select a small number of providers and give them pieces of the pie - not the whole lot. This means that if something goes wrong with one supplier, then they will be easier to replace.”
This is becoming an increasingly popular model. While it seems to make sense, challenges do arise. CIOs multiply the relationships they must manage, which is expensive and time-consuming. Gartner's Probyn says there are too many clients who simply do not recognise, or will not acknowledge, the added complexity of multi-vendor management. Perhaps the greatest sacrifice is the dilution of the CIO's ability to negotiate price discounts on the basis of volume from one supplier. This would be a difficult strategy for the CIO to sell internally, especially with the demands being made on the IT dollar.
In the past couple of years, CIOs have been forced to take cost-cutting measures wherever they can find them. However, the hard lessons learnt from that strategy have made them more pragmatic and willing to balance big-picture needs against budget frugality.
New-look outsourcing structures are founded on two levels. Organisations are splitting away infrastructure tasks such as desktop support, network and systems management, and giving them to separate suppliers.
On the next level, suppliers are being invited to bid on a project-by-project basis, rather than enjoying a lucrative long-term contract as a primary supplier of services such as software development, architecture design and technology implementation.
One new dynamic has entered the market to provide extra choice and competition in the outsourcing sector. Australian CIOs are now looking seriously at embracing offshore outsourcing - a concept whereby they can save tens of thousands of dollars by using low-cost labour centres in countries such as India and the Philippines.
Some of the largest companies, including Telstra, Qantas and the ANZ Bank, are using offshore sites to develop software code, freeing up significant chunks of budget to be invested in other parts of their IT infrastructure.
The emerging local presence of Indian companies offering offshore services is the strongest sign of this trend becoming a mainstream strategy for Australian companies. Leaders such as Wipro, Infosys and Birlesoft are now growing their local staff quickly after a slow start.

Outsourcing Traps

As business leaders rethink their approach to outsourcing contracts, it is important that organisations do not continue to fall into six familiar traps, which have been identified by Gartner analyst Lorrie Scardino.
These “mistakes” are drawn from Scardino's 10 years' experience in focusing on research and consultancy in outsourcing. They are:

• Short-term focus - Executive management seeing outsourcing primarily as a way to cut costs in the short term, with no regard for the long-term implications.
• Poor communication - Failing to keep staff informed about plans, which can cause morale to plummet and lead to an exodus of valued employees.
• Inadequate service levels - Failure to set sufficient levels of service to ensure business units are supported sufficiently. Conversely, the opposite approach of being too hard on the supplier can be equally damaging.
• No benchmarks - Without these, there is no mechanism to judge appropriately whether sufficient services are being delivered. A lack of benchmarks is often the reason why expectations are not met and relationships are destroyed.
• Rejecting risk - Enterprises should not assume that, just because they have outsourced some or all of their IT needs, the risk of failure does not exist for the buyer. Both parties to the deal must consider risks and decide how to mitigate them.
• Insufficient resources - This is an important element in the next generation of deals, as organisations begin to split large deals and offer smaller contracts to more service providers. Scardino says enterprises must have sufficient budget to manage outsourcing deals. They should never assume that once a contract is signed that demands on internal resources go away.

	Everything comes back to the way the commercial relationship is established at the start. If you do not get that right, if each party does not understand each other's needs and motivations, then there will be issues down the track.

Business leaders and visionaries are fixated on the need to focus on core business. The dynamics of cultural and commercial globalisation, such as the rising tide of consumerism in emerging economies, have forced countless management teams to rethink their strategies.
The commoditisation of so many services and skills that were once considered elite, and the evolution of communication and the Internet, have thrown down challenges of change to companies of all sizes and in all locations.
Gartner's Probyn says that any organisation with more than 500 users should be seriously considering outsourcing arrangements to leverage the skills and cost scales of industry suppliers. “Outsourcing is a strategy that is adopted for a number of reasons,” says Probyn. “Often, an enterprise does not want to go to the expense of building an internal capability. IT skills are expensive and can be difficult to find.”

Sourcing Solutions

Companies outside the eastern seaboard capital cities often struggle to attract top quality IT professionals, Probyn adds. As a result, finding an outsourcer that will provide the necessary personnel and infrastructure takes away the logistical pain of providing world-class IT services to the business.
“Organisations looking to refresh their technology, which means updating not only personal computers but also internal systems and even their strategic IT direction, should look to tap the global expertise of outsourcing companies,” he says.
These suppliers don’t necessarily have to be household names but could include local players such as Volante, Kaz, Telstra and Atos Origin, which have a natural empathy for local challenges, including the demand to support branch offices with limited bandwidth over great distances.
However, Probyn acknowledges that CIOs are justified in thinking twice about an outsourcing strategy. Once a strategy is rolled out, it is very difficult for an organisation to roll it back in again, even if the engagement is seen as a failure.
Companies surrender significant amounts of IT skills, intellectual property and internal knowledge when they hand over their systems to a third party. Deciding to bring everything back in-house is not only time-consuming, but also expensive and potentially high-risk.

Horses For Courses

Many CIOs reject outsourcing because it is too expensive or they are worried about the commitment of vendors, who can quickly switch their own business strategies and focus. Research by ITR has also found that CIOs do not like the idea of being too dependent on services companies, or losing management control to third parties. The elements of an IT infrastructure that should be outsourced often depend not only on the size of the company, but also the industry within which they operate. The manufacturing sector is an especially hot arena for data centre outsourcing, network management, help desk and repeatable business processes and transactions such as issuing invoices, credit and debtor control, and call centre operations.
However, manufacturers are slower off the mark when it comes to outsourcing functions such as storage, data warehousing and “application development”, an industry term that refers to software design and creation for specific in-house functions.
While manufacturers’ motivations to outsource is often based around driving inefficiency out of the business, competitors in the financial services sector see the strategy as the best way to improve the speedto- market of products and services, as well as sharing or leveraging expensive IT resources.
In the finance sector, the outsourcing of high-maintenance tasks such as managing data centres and storage - both massive challenges for data-rich industries - doubled in value globally in 2003, according to Gartner research.

	At the end of the first generation of deals, it was obvious that the costcutting promise of outsourcing was a dangerous fallacy.

In the Asia-Pacific region, the finance sector has seen many mid-tier institutions use outsourcing as a strategy to level the playing field against their technically richer first-tier competitors.
In Australia, there have been a number of highprofile outsourcing deals as well as strategies such as those of the National Australia Bank, which vowed in mid-2004 to cut its $1 billion technology budget by $A400 million.
Banks around the world are notoriously sophisticated users of technology. With the exception of ANZ Bank, those in Australia have been slower to deploy offshore outsourcing than American counterparts such as Citibank or JP Morgan.
Many financial institutions from North America and Western Europe have also deployed business process outsourcing (BPO) - a strategy in which low-level activities such as call centre management are conducted in countries such as India, the Philippines and even Australia, which is a comparatively low-cost environment with an abundance of language skills.
BPO is a business rather than a technology engagement, and it attracts global multinationals who are looking to reduce the costs of low-level tasks by giving them to workers living in lower-wage environments. Technology outsourcing and BPO often get confused because IT must be intimately involved in ensuring that offshore providers have the right technology infrastructure to get the job done.
For most companies, outsourcing focuses on help desk services to help staff with PC and connectivity issues, network and telecoms management, plus application development and associated system design and implementation challenges.

Winning Deals

Striking the right balance to achieve a fair price for buyer and seller alike is the essence of a strong outsourcing relationship. There are many ways in which companies are approaching this challenge. Increasingly, buyers want flexible terms of payment for what they use. These models include:

• A flat fee;
• Usage-based fees - measured on bandwidth-usage for network and infrastructure contracts;
• Term contracts - usually between three and five years;
• Transaction-based fees - popular for BPO and e-commerce infrastructure deals;
• Licence fees; and
• Shared revenue - calculated on the basis of the value of the transactions processed; a shared-risk model that, again, is popular for BPO and e-commerce deals.

The concept of so-called “on-demand outsourcing” is gaining in popularity, although it is still in its formative stages. The phrase is well known in the IT industry. It is meant to convey the commercial legitimacy of being able to access the IT infrastructure immediately as you need it - and ultimately paying only for what you use.
Clients are offered large discounts if they use standard architecture, processes and hardware technologies, which essentially plays to the strengths of the outsourcer. This has the familiar tone of a vendor strategy to lock in buyers, yet the research company META Group believes this is the way of the future. It claims that the on-demand outsourcing market will increase to $A14.3 billion ($US10 billion) by the end of 2006, of which $A590 million ($US400 million) will be taken directly from traditional arrangements.
It also predicts that as this methodology gains ground, vendors will turn on clients and begin to charge premiums for those who want to run infrastructures and technologies that are not standard fare for the outsourcer.

	Outsourcing relationships are like marriages. They have a honeymoon period and unless you invest and manage them carefully, they can spiral towards divorce.

While META is generally well regarded for its views, this sounds far-fetched. The market would have to spin 180 degrees for vendors to start refusing work or start placing premiums on supporting legitimate technologies. It is hard to accept that the vendor will ever hold sufficient strength in the market to be able to dictate terms in such a demonstrative fashion.
As Gartner’s Probyn points out, outsourcing companies see their future in the specialisation of vertical markets. This will give them not only a competitive position to retain or gain market share, but will also ensure they are able to hit any technology curve ball that a company can throw at them. “Vendors are becoming more sophisticated,” says Probyn. “And they are trying hard in order to gain deep industry expertise.”

Perfect Pairing

Industry expertise and cultural empathy is essential for forging a strong outsourcing deal, says Virginia Graville, director of outsourcing at Alcatel Australia.
Her company has specialised in a “multi-vendor offering” in which Alcatel supports any network regardless of the technology or who built it. Competitors, such as Ericsson, focus on providing outsourced skills based around its own network technologies.
Graville says that outsourcing deals remain the domain of the C-level executive. “It is an aggressive sale and it is not about putting in a box of features,” she says. “You must understand the client’s issues and their business vision. As an outsourcer, you must pervade the company and really understand what makes it tick.”
In the telecommunications industry – probably the last bastion of the 10-year outsource deal – client empathy is essential. Carriers, particularly those that are second- and third-tier providers, are struggling to take a huge variety of technologies to market. Deep expertise and support are needed for the ICT market alone.
In that niche, there are products such as CDMA, 2.5 and 3G networks built around technologies from companies such as Siemens and Nokia, among others. They offer services such as Multimedia Message Services (MMS) and Simple Messaging Services (SMS), while on the back-end video gateways and data storage are supplied by companies such as EMC, Hewlett-Packard, Hitachi Data Systems or IBM. Even with this spaghetti of technology to support, and there are plenty of other industries that have equal, if not greater diversity, Graville says “the real challenge is cultural mapping”.
“If this element is opposed, then the buyer is never going to get the vendor to understand the grand vision,” she says. “You can work through certain behaviours and even a fall-off in service levels, but your outsourcing partner needs to get the big picture from the start.”

Early Challenges

Graville, who has worked at a range of IT and telecommunications companies as an outsourcing specialist, says she has seen too many deals revolve around the personalities of individual executives.
“This is an easy trap to fall into,” she says. “People who like each other tend to look after each other and ensure a workable deal. But when one individual leaves for another company, it can be devastating. The flexibility that kept the relationship on track can disappear overnight.
“Everyone must understand that you have to negotiate a sustainable solution for the business and that cleans up any emotional issues that might be attached.”
Some of the largest outsourcing contracts can enforce dramatic change on the workforce of the client. In some deals staff are re-employed by the outsourcer.
Graville says that this is where everything collides, and getting it wrong can push the deal off the tracks before it has started. “
No one can afford to pay lip-service to the issue of transition,” she says, “especially if it involves the transfer of staff. How the first few months are handled will set up the deal for success or failure.”
She recommends that both parties use executives who have experience in change management to help them through the early stages of a big outsourcing deal. “
You cannot afford a hiccup or a mistake in most industries because it will be the customer who will suffer,” she says. “When things start going wrong at the consumer end, deep-seated problems can set in.”
One of the most effective strategies is to quickly invest in training programs for individuals, and to plan their career now that they work for the outsourcer. “
Sometimes it is advisable to set up a separate company to ease the anxiety of staff who are leaving their old employer,” she says. “It helps ease the pain. More importantly, you have to treat people like adults. I know that sounds like a stupid thing to say, but you would be amazed at how many companies feel they do not have to communicate in these situations.”
Outsourcing relationships, says Graville, are like marriages. They have a honeymoon period, and unless you invest and manage them carefully, they can spiral towards divorce.
She warns against either party installing their “best technocrat” to handle the relationship, saying that individuals who focus too much on contractual detail in the early days can turn a promising relationship into a shouting match. ”If you pull out a contract, then I promise you that the conversation ends in argument,” says Graville.

Settling Arguments

Meanwhile, Gartner’s Mark Probyn says there is an “art and craft” to contract negotiations designed to ensure the longevity of a deal rather than set parameters that either party may not be able to meet.
“I would never recommend termination unless the marriage cannot be retrieved after every avenue has been explored,” he says. “Changing suppliers is very expensive and can cause a lot of trouble for staff on both sides of the fence.”
Rawdon Simon, managing director of the independent consultantcy Compass, is often called in to arbitrate between warring parties. Simon and his colleagues offer benchmarking services, which can measure a vendor’s performance and can settle arguments about whether service-level agreements have been met. His preferred engagement is to be invited to participate at the beginning of a deal rather than when daggers are drawn, but that does not always happen.
“It is best for each party to accept the concept of an independent benchmark before the contracts are signed,” says Simon. “Given the strictness of contracts these days, vendors now realise they have to be benchmarked. But it is important to agree on how the different services should be measured.”
Simon says he is constantly surprised by the vagueness of contracts and by the fact that buyer and seller alike will argue over what is a contracted service, and what has been provided out of scope. “There can be millions of dollars at stake,” says Simon. “It is inconceivable that contracts can be so flawed as to insufficiently describe the services to be provided. In really big deals, you can have several different contracts – and some of them actually contradict each other. It is no wonder that so many outsourcing deals dissolve into argument.”
Simon says that the advent of second- and thirdgeneration deals is also heralding a more mature attitude towards benchmarking services.
“The vendors have realised that the result can go either way,” he says. “Sometimes, we find they have over-serviced the client, which gives them an opportunity to go back and ask for more money based on the increased level of service.”
Benchmarking is also used to help determine rates for the upcoming financial year – again, providing both parties with an independent assessment that should provide a win-win situation.

	While australian companies and government agencies begin their secondor third-generation deals, more innovation and new methodologies are sure to come along over the next five years to challenge conventional thinking.

Simon says arguments can be avoided if the user organisations conduct a baseline analysis of the environment they want to outsource, and use that information to frame the scope of the contract.
“Vendors tend to charge for doing things differently,” says Simon. “But this analysis can stop them in their tracks. It also stops the buyer from getting bitter and twisted about the vendor’s attitude and general performance.”
However, Simon also says that while the buyer should come up with the desired Service Level Agreements (SLAs) they should not be prescriptive about how the vendor actually provides the services. “That is not the buyer’s problem, and they should keep their sticky fingers out of it,” he says.
“One way of ensuring that this can happen is to appoint a business person to manage the vendor relationship rather than an IT professional who thinks they could do the job better.”
While Australian companies and government agencies begin their second- or third-generation deals, more innovation and new methodologies are sure to come along over the next five years to challenge conventional thinking.
Gartner analyst Rolf Jester believes the market will change dramatically over the next decade. “Ultimately, buyers will influence the shape of the outsourcing sector,” he says. “But they can only accept or reject what suppliers are prepared to offer.”

	Future Directions Rolf Jester has identified more than 100 changing facets of outsourcing that will determine its direction over the next decade. The two overriding factors are: Adoption of a real-time enterprise strategy: A commitment by an organisation to use new technologies such as web services to instill greater efficiency in IT systems and create business value; and The types of service that enterprises will outsource from now until 2013: myriad services will be on offer but buyers must decide which they should keep in-house, such as security, and which should they should pass on. These two factors will determine one of four future scenarios for an IT department. The scenarios are: IT Inertia. Despite technology advancements, organisations hang on to outdated and slower methodologies that exist today. Process Islands. A sub-optimal state in which departments inside an enterprise look after themselves, diminishing the relevance of the CIO and IT staff. IT-Centric Real-Time Enterprises. Organisations will improve the speed of their systems but continue to put technology achievement before business priorities. Virtual Enterprise. Organisations are “real-time” by nature, stick to core business, and buy external services for all non-core activities. One of these scenarios is likely to be true for every medium-to-large organisation in 2013,” says Jester. “It would be smart for IT executives to begin thinking about which scenario they would like to create for their organisation, and compare it with the one that is evolving right now.” Jester stresses that one scenario is not necessarily more desirable than another for an organisation. “The concept of ‘process islands’ might be acceptable in some enterprises,” he says. “However, the world will move towards either a ‘virtual enterprise’ or an ‘IT-centric real-time enterprise’.”

Reprinted with permission from ABIE publication