Recently I wondered about how enterprise IT stacks are morphing from a product stack to a services stack and that we are on a path to Prefabricated IT. Let us now look at how morphing of technology, enabled by a new delivery model could change IT and the outsourcing business.
Prefab IT Aligns with Outsourcing
The prefab IT stack comprised of service elements shown earlier also needs IT management, process automation software, and enterprise IT operations and business processes to turn the technology stack in to a usable platform that supports the business. Portions of building and operating this IT stack had always been outsourced to IT outsourcing (ITO) firms. Similarly, entire business processes had been handed off to Business Process Outsourcing (BPO) firms.
The XaaS building blocks on the right already have removed the need for certain traditional “build and manage” activities by enterprise IT, by putting service-wrappers around the technology building blocks on the left. Hence, XaaS by virtue of its services business model has brought technology building blocks closer to the outsourcing business model. This has interesting implications. For one, it seems to nudge the enterprise from a “Do IT Yourself” (DIY) world to a “Get IT Done” (GID) world. But that itself is not the only nudge.
Outsourcing Business Enabled by Cloud
Traditional outsourcing itself is being re-jigged to utilize cloud-based delivery. The promise of XaaS for outsourcing providers will include the use of IT management and business process management or automation software (themselves delivered as a service) to manage the services building blocks in the new prefab IT stack.
So what does this transformation of an old business model mean for customers? It is more than a change of label.
Business by Cloud
The dual push of prefab IT building blocks and XaaS-powered outsourcing promises efficiency and cost-savings from standardization, customizations that were prohibitively expensive or took long to do until now, or even new ways to reengineer processes. It is an exciting prospect that will have us all asking more questions on core vs. context. It is going to force us to not just passively move from DIY to GID, but compel us to actively GID better.
Before we get giddy with that prospect, many seas will need to be crossed, but ultimately compelling economics should part them. Every core-context decision morphs value chains and supply chains. IT supply chain is headed there too.
Also published on Medium.