Readers respond to discussion on whether enterprise IT is "strategic"
Dear Vorticians,
The past couple of postings have centered on a debate between me and Tom Foremski of SiliconValleyWatcher.com over whether enterprise IT is strategic or even slightly interesting. You can read those posts here and here.
As I had hoped, readers weighed in on the discussion and I'll share some of those responses here. Look for more to come.
Now, my mother always told me never to answer a question with a question, but I'm going to do that here. Vortician Shahin Khan wrote the most succinct note, saying: "Good discussion you guys are generating. So, let me ask the inevitable: what do/should we mean when we say “strategic?”
Well, that's a good question Shahin. But, I'll let you - and other readers - answer that. What does it mean to be "strategic" when it comes to deploying IT?
Vortician Peter Relan wrote: "John, the thing that struck me about your blog and Tom's is the missed nuance about business process being SEPARATE from IT. I think there is a tendency to treat IT as 'infrastructure'. IT stands for Information Technology, not Infrastructure Technology, and increasingly the most important part of IT is not infrastructure, which is becoming dial tone; it is applications. Even Cisco's big new initiative - is guess what - AON, or Application Oriented Networking.
"Business processes are fundamentally tied to the applications in an enterprise and as long as business process innovation leads to competitive advantage, applications and their data will continue to be extremely important to the enterprise. The single largest cap-ex spend category in the US in IT is not hardware, not networking gear, but software. In your Churchill Club panel, one of the panelists said very clearly that IT groups in Cisco report into the LOB's. Well those IT groups are not the network guys, they are the apps groups. Cisco's corporate networks do not embody business process or competitive advantage. Cisco's LOB's and business processes and applications do.
"Here is how I see the enterprise software industry playing out:
1. Business processes will continue to drive competitive advantage: Business managers will demand more agile, more efficient and more revenue generating processes. This is Core.
2. IT groups will clearly be demarcated into the technology infrastructure service provider (insourced our outsourced), which is Context and the LOB IT groups, which will be both Core and Context.
3. Context LOB IT applications will tend to be outsourced to ASP models. Did you know that today the largest ASP is not Salesforce.com (possibly Core for some companies) but SuccessFactors, which hosts an HR employee performance management application (Context for all companies).
4. Core IT groups will remain insourced, or be outsourced to very strategic partners who have industry specific domain expertise. These groups will buy/build/integrate enterprise software. This enterprise software will increasingly be delivered as an enterprise software appliance in order to deal with the issues of complexity and TCO. This is also where the LAMP (Linux/Apache/MySQL/Perl or Python) stack will play.
"While other scenarios are possible, this is the likely scenario. And in the process our industry will change to adapt to this scenario. The good news is that there will be room for ASP's, smart software companies, and professional services firms with vertical domain expertise: all in the applications space. And, BTW, corporate enterprises will continue to grow and the new dot.coms will continue to challenge them; and there will be the occasional Google or Yahoo that changes the game. But like Microsoft did not eliminate IBM, Google and Yahoo will not eliminate advertising agencies."
Peter's use of Core and Context is in reference to Geoffrey Moore's ideas around things that truly differentiate your business (Core) versus things that may be important but don't separate you from rivals (Context).
Vortician Rich Janow wrote about the yawn factor of enterprise IT but also cast doubt on Tom's idea of New Rules Enterprises: "Dear John, Tom is right that IT is deadly boring, because it's now a mature technology in which there is incremental but no exciting innovation and substantial but slowing growth (Internet years are equal to seven calendar years, no?). Most importantly though, no talented person would now enter the field for any reason but to make a lot of money, fast. So Tom is all wet in his rules - anyone who plays by them will have to give away ownership to contributors, if not venture folks. Employees are a bargain because you buy their labor wholesale and sell it retail. Tom's rules are not new: literally millions of small time shop owners since the 19th century played by those rules and overwhelmingly vanished."
Thanks Shahin, Peter, Rich. I encourage others to share their ideas on what you've written and what got Tom and I trading blog entries. Drop a comment here or share your thoughts to jgallant@vortex.net.
Bye for now.
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