The END of IT Services
The ERA of IT Services as highly customized, time-consuming, complex and expensive investments is fast drawing to a close. Now, businesses want IT services that are simple to understand, easy to implement, aligned with business objectives, and above all, directly linked to the return of investment.
If you’re like most businesses, you’re probably refocusing your efforts on top line growth, after a recent bout of aggressive cost-cutting and right sizing. But you’re also looking upon a landscape that’s increasingly volatile and complex.
Why the turbulence? Thomas Friedman argued that technological forces had the most significant part to play in the rapid transformation that’s taking the world by storm. The dot-com bubble provided telecommunications companies with massive amounts of capital to lay fibre-optic cable across ocean floors giving us extremely cheap global phone calls, internet connections and data transmission as a result.
Then, when the bubble burst, companies had to cut spending by off shoring or outsourcing business processes to countries that could perform them at lower rates. As a result, china is now regarded as the factory of the world, producing more than 30% of all manufactured products consumed in the US; while IT services and back-office work in India will swell to a $57 billion annual export industry by 2008. And everywhere, businesses are forced to change their strategies to cope with these dramatic developments.
New realities call for new models yet, in a recent study of CEOs conducted by IBM, most business leaders viewed these massive changes not as threats, but opportunities to be embraced. Three key themes emerged out of the study:
1.While products and services innovation remain important, businesses that could innovate their business models would have the most competitive edge.
2.To create truly innovative business models, external collaboration is indispensable. Instead of reinventing the wheel, find external partners who can do it better, faster and cheaper. They could also be your best sources for new innovative ideas.
3.Before innovation can take root, the underlying IT systems needs to be aligned more closely with business. To truly capitalize on technology’s full potential, it must be combined with business and marketing insights.
Four business implications of the findings from this study are readily apparent:
First, you no longer want technology for the sake of technology- you want business solutions. In fact, business leaders are now getting involved in the purchasing decision, with 90% or more of IT buys being made jointly between IT and the business management team.
Furthermore, businesses want IT solutions that are modular, pre-integrated, and cost effective, with most of the tedious testing and assembly work already done but the It provider before implementation. Finally, external IT partner can provide the innovative thinking, best practices and 24x7 levels of service provision needed to support new IT models.

A rethinking of IT services is needed so while IT services will become even more important and relevant in the new business landscape, IT services in their current form will not be able to meet these challenges. Was there anything wrong about the old IT Services model? Not at all highly customized IT service provision delivered “exact-fit” solutions that gave businesses exactly what they needed. It services providers also provided the necessary brain power to help organizations manage the complexity of their IT systems.
But times have changed. Today, both the business and technology landscapes evolve so quickly that none of us can wait up to a year for the benefits of IT services to kick in to deliver flexibility and innovation. IT services need to be:
  1. Discrete, so that the scope and deliverables can be easily defined, and easily measured;
  2. Cost-effective, so that the investment can be more easily justified;
  3. repeatable, so that successes can be quickly replicated to other parts of the business that require them;
  4. Standardized and pre-integrated. So that they can be quickly “snapped on” to other existing IT systems or services;
In essence, IT services need to become a lot more like products, which are easily defined by tangible traits, features and capabilities.