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IT Outsourcing is traditional outsourcing of IT operations.

Happy Birthday, Ross

Posted by Susan Scrupski on June 27, 2007

Ross Perot

At the risk of alienating (confusing?) all my friends on Facebook and in the blogosphere… I’m taking a public moment to wish Ross Perot a Happy Birthday. If it were not for him, I would not have enjoyed the 20+ excellent years I have had in the technology business. I joined EDS as a young writer in 1986. Perot meant a great deal to the early employees of EDS. I will always have a place in my heart for him and his first management team.

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Posted in General IT Services, IT Outsourcing, Personal Commentary, Systems Integration | Comments Off on Happy Birthday, Ross

Fun with Outsourcing…

Posted by Susan Scrupski on November 20, 2006

Saw this on an outsourcing discussion group and had to share…  They’re talking about outsourcing architectural drawings to India.

Re: Paris??
so which projects you do can you send me a detail list in email so that we can mutually understand and exchange some projects..
 
 
Reply From: CB
Date: Nov/17/06 – 20:05 (GMT)
Reply
Re: Paris??
Here is our project list.
1.)Paris
2.)Paris surrounding areas

We would love to mutually understand and exchange but we have outsourced the
projects that were outsourced to us to an outsourcer who outsourced them to
another outsourcer who uses an exporter. It may take weeks to figure out
where Paris is.

We also may have difficulties in exchanging checks as we have sent our
checks to a Nigerian bank. We are trying to unlock the funds of the dearly
departed Mr. Smith. We have been assured that we will be rewarded kindly
for our help in the process by freeing 10 million dollars in funds from the
Smith estate.

Sorry we can not be of help now.

It’s Friday!!!!!

Posted in BP Outsourcing, HR Outsourcing, IT Outsourcing | 1 Comment »

¡Ay, caramba! Blogging is work.

Posted by Susan Scrupski on November 10, 2006

I’ve been posting on the new ZDNet blog. They tell me it’s live, but there’s a glitch in the technology that is preventing it from showing up in the blog roll. You can view it here. I’m very interested in off-beat IT Services stories, so please email me (susanATitservicesadvisoryDOTcom) with any interesting ideas.

Posted in BP Outsourcing, Consultants, General IT Services, HR Outsourcing, IT Outsourcing, Web Integrators | Comments Off on ¡Ay, caramba! Blogging is work.

Are We Eating Our Dead? Again?

Posted by Susan Scrupski on September 11, 2006

During web 1.0, I was a skeptic and pretty vocal about it. Before my research was finished, I presented in Atlanta (12/99) when market caps were high for the digital apostles I was tracking. Most of the presentation was tongue and cheek, but is somewhat prescient looking at it today. I wrote this column for Phil Wainewright’s aspnews.com site which was also published as an op-ed in Computerworld for the user community. When the back-breaking, risky 300-page market research report on what I called the “e-services” market was published in April 2000, I joined one of these start-ups myself. You see, through the course of doing the research, I became a believer too. I fell in love with the first Internet revolution and its massive societal-changing promise. Of course, like most companies in that first run up, the start-up crashed. I felt like I, in particular, should have known better than to have fallen for such an idealistic infatuation.

I read with interest Michelle Manafy’s editorial in eContent. This is the second time I’ve heard the Soylent Green, “It’s made of people!” reference in the web 2.0 crowd. This time it gets attributed to Ross Mayfield. I know when I have said, “It’s the people, stupid.” I’m not talking about cannibalism and annihilation; I’m talking about liberation. I’m not talking about overpopulation; I’m talking about a billion Internet users– sharing and doing. Interestingly enough, the tagline for our 2000 start-up was a question– “what happens when everyone’s connected to everything?” Less death. More rebirth.

So, maybe we should start considering a different indie flick? or maybe something more mainstream, if the mission is to turn perception positive on Enterprise 2.0, eh? Manafy’s a great writer and her community is extremely important to the new office generation. For instance, I just received the best presentation (a 100-slide deck) I’ve ever seen on web 2.0 yesterday. It didn’t come from Dion Hinchcliffe; it wasn’t something I found on techcrunch or wasn’t even something I could have gotten my hands on privately as an Enterprise Irregular. It came to me from Molecular, a consulting firm part of the Isobar network of Interactive Agencies. And oh, the reason I was reading Manafy is because Shiv Singh (Avenue A|Razorfish) referred to it in his blog.

Manafy writes:

Web 2.0 inside the firewall isn’t all work and no play, though. Singh has suggested to clients that there are fun ways to use the interactive processes for “prediction markets,” which harness group intelligence. For example, if a company has six ad campaigns under consideration, they can create a space where employees can “trade shares” on the ideas. “Then execs can see the activity that happens around an idea,” he says.

While Web 2.0 may or may not live up to its press, nobody can scoff at the ability of its underlying technologies to enable some of the Internet’s founding principles. As Singh says, “Collectivism is very big.”

Referencing the slide above… Now, one film we might consider could be Monty Python and the Holy Grail. The “throw out your dead” scene, in particular, is working for me. I was chatting with Cognizant’s Malcolm Frank Friday who is not dead (“Yes you are! No I’m not!”), and he was telling me that, in fact, Bob Gett, Gordon Brooks, and few others from web 1.0 are back in the Internet or IT services game. Of course, Jerry Greenberg has found Internet religion again. So maybe the Holy Grail is attainable in web 2.0. I’m not skeptical this time ’round. And it’s really early.

Incidentally, for all ITSinsiders who haven’t heard yet. the weirdest development for those with long memories, is last week’s announcement that Jim Sims was named to EDS’ board of directors. Can someone send that cart to Dallas? 🙂

Posted in Enterprise 2.0, General IT Services, Interactive Agencies, Irregulars, IT Outsourcing, Next Net, Office 2.0, SaaS, Web 2.0, Web Integrators | 2 Comments »

The Rebirth of the SI Market: Anyone in the Mood for a Fat Margin?

Posted by Susan Scrupski on August 31, 2006

I had a great briefing this week with IBM’s Dan Gisolfi of its Emerging Technology Group. I was able to clear up a few things. For starters, it’s not THAT easy to create a “long tail” micro situational app. Gisolfi says, “Today, it’s extremely hard unless you’re a programmer… and unless you know Ajax, Java script, and programming languages, you’re not going to create a mash-up.” But that’s where this IBM group is headed. With their web 2.0 class of tools– mash-up makers– ultimately, the high IQ guys and gals in IBM’s key installed base accounts will be able to create their own dashboards ad hoc and provision data across departments and groups without troubling anyone from IT at all.

Gisolfi and I waxed philosophically about the cultural trends that are driving Enterprise 2.0 and we agreed about the socio-cultural underpinnings. Now here is a guy who can fit squarely in both camps– traditional IT, wearing the IBM logo, yet can hold a respectable conversation on the latest in open source, or any web 2.0 technology. We agreed the new Enterprise 2.0 wave is not about technology. The technology is evolutionary and Gisolfi recounted many examples of initiatives IBM has been involved in for years that are now hyped as web 2.0. What’s different now, however, are the attitudes that eclipse the technology. He said, “Web 2.0 is a convergence of enablers… coming together at the right time, at the same time.”

We then talked about a possible rebirth of the systems integration industry– something I found intriguing. Gisolfi said, “For the IT guys, we’re not taking away work, we’re creating a new type of work. Instead of doing integration of monolithic applications, today, you’re going to create granular software components.” He used Sarbanes-Oxley as the perfect example of the need for a customized, daily mashboard. He described using a business analyst or consultant to define the data indicators and then pass it to a software guru to render it and provision it as a mashboard.

It’s at this point, I started thinking about the sweet-margin business of the late 80s: systems integration. I checked in with Graham Kemp, who tracked the SI market in those days. Graham said, “In the late 80s, SI margins were good… in the high teens… and FM (facilities management [outsourcing]) margins were fair (low teens). As the 90s came in, both dropped.”

On EDS’ Next Big Thing blog a few days ago, I read with some interest a post resurrecting the “I” word:

For a long time, the Fellows have been talking about the movement away from the Chief Information Officer to the Chief Integration Officer. The integration of process and information flow between and across the enterprise to enable greater flexibility is where all organizations need to be headed.

And as I just wrote recently to the head of analyst relations at CSC, before all outsourcers were called outsourcers, they were systems integrators. It might be time to ditch the losing battle in the ITO market, and start putting up recruiting booths on MySpace. There may be high margin opportunity introducing the Global 2000 to Enterprise 2.0.

Posted in Enterprise 2.0, Enterprise Mashups, General IT Services, IT Outsourcing, Next Net, SaaS, SOA, Web 2.0, Web Integrators | Comments Off on The Rebirth of the SI Market: Anyone in the Mood for a Fat Margin?

Seismic Shifts in the Software Industry

Posted by Susan Scrupski on August 24, 2006

I listened in today on NetSuite’s hosted Enterprise 2.0 and the Software Industry webinar featuring SandHill.com’s M.R. Rangaswami. I was amazed by some of the statistics in the presentation, but remember, I’m new to some of this stuff by five years. For instance, M.R. said Sandhill had done some research and is reporting that 90% of all software firms are now using offshoring for some element of their development. I also was surprised to hear that 80% of a CIO’s IT budget is already committed to maintenance before the year even begins… the point being a mere 20% is left for innovation. He also said Sandhill had counted over 500 Web 2.0 companies, but was quick to point out that, “None of these companies know how to make money.”

NetSuite, a SaaS app, and whose product looked very impressive, btw, said the webinar would be available on their site.

This issue about the IT budget is one where I’m not sure everyone is on the same Enterprise 2.0 page. A few days ago I was pestering poor, old Gary Fernandes (who is really neither) about this point. Gary used to trot out this slide back in the old days while I was covering EDS. It showed how, on average, the IT budget was a mere 10% of the operating budget of most corporations. As Gary was EDS’ Chairman of A.T. Kearney, and the BPO market was just beginning in those days, he was always interested in how EDS could get its hands on the other 90%. Enterprise 2.0 is Gary’s dream come true. The big opportunity here for tech companies is not with the IT budget gestapo, it’s selling directly to the lines of business that can produce real returns on small investments.

I tried to make this point to Vinnie Mirchandani today, who knows better. I know there will be a lot of push back on this issue. And, I’m a lover, not a fighter, but hey– it is a revolution whether you’re the revolutionary type or not.

Posted in Consultants, Enterprise 2.0, Enterprise Mashups, General IT Services, IT Outsourcing, Next Net, SaaS, Web 2.0 | 2 Comments »

Don’t count out the Big Guys…

Posted by Susan Scrupski on June 16, 2006

A press release issued today from my old friends at EDS caught my eye. EDS announced the company built a secure, web-based portal for its long-time outsourcing customer, Blue Cross/Blue Shield of Massachusetts (BCBSMA). According to the release, EDS integrated several of BCBSMA's internal systems in order to provide convenient and simple access to a host of administrative information and provider processes to BCBSMA's network of 35,000 physicians and healthcare providers.

I was just talking yesterday to Larry Bissinger who leads analyst relations for EDS, making the point that veteran IT Services players and outsourcers are in an enviable position to bring next generation technology to the best customers. Take the BCBSMA relationship for EDS. I remember a DATAMATION column I wrote in June of 1994 where employees who were outsourced to EDS sued BC/BS and received $9M in a class action law suit. It was a landmark case at the time. EDS and BCBSMA survived all the spectacle and strain that must have put on their relationship, and the relationship has been renewed and extended a few times since the first deal-signing. Joe Fraser, the EDS client delivery executive, has been there for 15 years. With those roots, it's logical that BCBSMA would turn to EDS first when they want to investigate technology improvements. Granted, some of the improvements are already in scope of their existing agreements, but EDS is more than the sum of its contract parts. My point here is, we should expect to see innovation and business model reinvention coming from old, familiar places. Not everyone will abandon their preferred vendors for the "hot shop."

Posted in General IT Services, IT Outsourcing, Web Integrators | 1 Comment »

Trust, Communications, Relationship-management…

Posted by Susan Scrupski on June 9, 2006

Frank Casale invited me to co-moderate a workshop yesterday at his Outsourcing Institute NYC Roadshow on "Outsourcing's Bad Rap: Playing Politics." Throughout the day, although the outsourcing market has changed so much over the past ten years, I heard the recurring themes of trust, communications, and old-fashioned relationship management. Buyers and sellers all have their war stories.

The day was excellent. A comfortable and informative series of workshops and presentations. OI holds a series of these workshops. If you're interested in outsourcing, definitely worth attending.

Posted in BP Outsourcing, General IT Services, HR Outsourcing, IT Outsourcing | Comments Off on Trust, Communications, Relationship-management…

The World is Flatulent

Posted by Susan Scrupski on March 30, 2006

So I went to my first outsourcing conference this week in New York after five years. If I hear one more reference to Mr. Friedman's book, I'm going to start to become disrespectful. Can we please move on to the next pop business fad? There was even an Indian offshore company raffling off the book as a giveaway at their exhibit table.

I have to admit the offshore phenomenon has thrown a wild curve into what used to be an apple pie, all-American business. When you got outsourced by EDS, CSC, or IBM, a Democrat might have lost their job to a Republican, but that was about the end of the political strife. It's a whole different ball game today. I'm exploring my conscience on this one. I haven't read Friedman's book, but I did break down and buy it this week. I hope I find some answers there; but my gut is telling me we're headed for a stormy season in rationalizing why this is a good development in our industry. Am I alone here? Am I missing the big picture?

I think I may be missing something because serendipitously, I sat at the conference (twice, in fact) next to this really well dressed, attractive guy. Now, please understand, really well dressed, attractive guys almost never go to outsourcing conferences (unless they work for a vendor like Oracle or IBM or something). The guy looked Ivy League or like he lived in Connecticut– you know the type. Glancing at his badge, I saw that he was from GAP (General Atlantic Partners), the venture capital firm. Of course, that made sense. When I saw him the second time, I had to ask him why he was at the conference. He told me he was there because one of his companies was presenting, Genpact. In fact, GAP has made investments in two large Indian offshore firms, the other being Patni. He told me he did work in Stamford and that he works with Jim Madden, who as you should remember, was CEO of Exult, another GAP company that was sold to Hewitt, which is a GAP company. Madden is now at GAP.

The bottom line is. I always take my clues from the smart money. If GAP is invested in India, then the offshore thing is not going away. I guess it's like I tell my 9-year old son when he doesn't like a particular outcome or development, "Deal." I feel like I'm reacting (albeit internally) the same way my 9-year old reacts.

Posted in BP Outsourcing, IT Outsourcing | Comments Off on The World is Flatulent

Class Wars

Posted by Susan Scrupski on March 14, 2006

There are a lot of rumors floating out there suggesting why the merger imploded. Interestingly, many are pointing the finger at EquaTerra– alleging that EquaTerra is unprofitable, has performance issues and debt problems on some major contracts. Now granted, I've been AWOL for a spell in this market, but I found it highly unusual that TPI, whose reputation has always been the epitome of inflexibility and well, ahem (nous parlons la vérité ici), arrogance– was looking innocent and victimized in some way. Huh? First of all. I have pretty solid information that EquaTerra is not unprofitable and there are no debt issues/repayments or credits being made to unsatisfied clients there. Whether or not there are performance problems on specific deals, who knows? Show me an advisor/vendor that doesn't have a dissatisfied client in the portfolio. That doesn't surprise me. What does surprise me is this spiraling negative spin in the market against EquaTerra. Where is it coming from? What is the motivation behind it?

As for as the intricacies behind the breakdown of the deal, our understanding (and we're pretty confident here) is that the deal finally broke down over distribution of equity on the part of the private equity class investors. For some of the terms and conditions to change the way some of the investors wanted it, TPI recognized it would create problems– they knew the combined company would ultimately fail if they moved forward under the PE investor's scenario. Remember, Monitor Clipper Partners (MCP) had the lion's share of the deal, as they are the owners of TPI (important fact). Oak Investment Partners could have equally been difficult, but certainly had a fraction of MCP's interest. Our calculated guess is it was MCP that was the final coagulant in the deal and forced the hemorrhaging.

So, in the end, as I was getting closer to what actually happened in that last week– leading up to what I believe to be an amateurish, unprofessional dis-engagement in the form of their hostile breakup release, I started feeling sorry for the principals of both firms. Even Denny. Who still hasn't returned my inquiries on this. On the one hand, it started getting very complicated to follow how these M&A transactions work with their preferred positions in the stock and their investor rights, etc. On the other hand, I started to feel like this was a private affair and I really shouldn't be meddling in their business. (Weird. I really felt that way.)

So what does it all mean? Not much. The question that remains is what will TPI (read: MCP) do now? Where will they go from here? TPI can't pull off an IPO on their own without more bench strength. EquaTerra is a young company. Their options are more varied. Their greatest challenge right now appears to be an image problem. That's fixable. The wild card is MCP. Interesting. What do you think?

Posted in HR Outsourcing, IT Outsourcing | 1 Comment »