July 2008 Quick Hits – News, Trends & Analysis

What to Make of HP’s Purchase of EDS

I attended a National Outsourcing Association event in May with about 50 delegates. For the first time they used a new technology to run live surveys as the event progressed. Interestingly enough some of the results were quite surprising. In light of HP’s acquisition of EDS, 68% of respondents thought that this trend of consolidation will continue in the outsourcing market, but only 23% think is good news for HP & EDS clients in the short-term, but that in the long-term clients will benefit. Furthermore, 75% of respondents believe the globalisation of the outsourcing industry will mean Indian players will buy any large European or American providers. You can try and make predictions of who, when and where, but one thing is certain the landscape of outsourcing is changing monthly, so companies that are not embracing this change will soon either be bought or go out of business.

How IT Can Help Reduce the Carbon Footprint
In our previous newsletter we highlighted the significant growth in green IT and how some vendors are using environmentally friendly policies to differentiate themselves. We are also seeing large UK businesses trying to think of new ways to become more green. In recent newstories on computerweekly & computerworlduk it was noted that Tesco’s IT operations are directly responsible for three to four per cent of the their total carbon footprint, yet IT is seen as the primary driver in its efforts to be green. So how can IT help reduce the other 96% it is not responsible for? Mike Simons from computerworlduk spoke to the CIO of Tesco’s to hear more about the initiatives. Some potential strategies included the following: IT can run efficient back-ups so they can switch off some of their 30,000 tills that are normally on for 24 hrs. IT can virtualise more servers in its datacenters, and insist suppliers only replace existing systems with new ones that are more efficient. IT could help develop a centralised building management systems for their large outlets to monitor and reduce energy wasted.
I believe that if IT, often seen as a barrier to change, can lead this initiative, they can help the entire organisation reduce their carbon footprint.

When Will Everyone Pay for Google?
Rob Enderle recently quoted in computerworlduk “the irony that what we’ve seen with Google is that as time goes on, even though it’s positioned itself as the anti-Microsoft, it’s kind of been reading out of Microsoft’s playbook. In many ways, Google is much more proprietary than Microsoft is, and they actually used open source software to get there. So unlike Microsoft, which started off proprietary and has gradually been opening its stuff up, Google starts off getting other people’s open stuff, turns it proprietary and then makes money off it. It kind of redefines ‘pirate'” Google provides an ever-expanding catalogue of “free” services – such as Google Maps, Web Analytics and Documents, steadily increasing our dependency on their “generosity” with each new service. If goggle were to begin charging a nominal fee for some of these services (or, more likely, “enhanced” versions of their services), its likely that many of us would comply. Even if they continue to rely on advertising and specialized services for the majority of their revenue, it forces us to wonder how much longer can they avoid being perceived as the monopoly that they are.

What is Outsourcing?
Here are two of the many definitions available on the web. Search CIO: Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Wikipedia: Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. Most definitions agree on one point: Any time you source anything that could potentially do yourself, you are outsourcing.

So what would you consider outsourcing? Surely the mass migration of your IT function to an outsourcer fits the bill, but what about:
– Paying maintenance on a software package
– Hiring an advertising agency
– Using a professional recruiter to fill a position
– Bringing on a few project management contractors
…or on a personal level
– Having your oil changed at a service station
– Sending your children to school

By definition – these are all examples of outsourcing. You are hiring a third party to provide a service that you could technically be doing yourself. Ultimately, outsourcing does not represent a highly specialised segment of sourcing or procurement – rather, it embodies the essence of sourcing in general – and virtually all of the processes and methodologies that comprise an effective sourcing program can be shared with outsourcing.