A New Approach to Portfolio Solution Provision?

You are probably familiar with the scenario. After a period of strategy definition, soul searching and navel gazing, there you have it: the programme of work that will lead to a step-change in the IT service you provide your customers. Great! The only problem is that, well, it’s quite large and expensive, and you don’t have the products, skills and people to deliver it. So you’re going to need help – and fast! Especially as your neck is now on the block!

At this point, assuming the programme isn’t so closely knit and inter-related that it makes implementation of a major ERP solution a ‘no brainer’, there are two routes that you might choose to take. The first is to call in one of the major Systems’ Integrators (SI) who profess to be able to tackle just about everything. And in a world where traditional IT boundaries of expertise are being broken down, there are now more and more companies who play in this space: “Cloud? No problem! Hosting? No problem! Business Process consultancy? Six Sigma? Off-shore development? No problem!”. Life’s a treat!

The second route could be to break up your portfolio into its component projects, create teams for each of those, and then send them out into the world in the hunt for the illusive, mythical and vacuous ‘best of breed’ solution.

Both of these approaches are valid. How valid they are will depend on the nature of the programme of work you need to undertake; the size of the in-house IT organisation; your philosophy in relation to things like outsourcing; the skills and knowledge you have at your disposal now – both IT and business; whether you are breaking new ground; the size of your budget etc. etc. The list of things that affect your route is enormous – which means that there is probably no ‘right answer’.

And there might be no ‘right answer’ for other reasons. Take the SI route. SIs are filled with knowledgeable, talented, committed people. Time and again, they deliver a good end product to their clients. However, there are potential challenges if you take this path:

·         People & Skills. It turns out that the SI doesn’t have all the people and skills that it actually needs to deliver to you, so they go into the market themselves and potentially hire the same people you might have been able to secure directly. They may also subcontract much of the delivery, so the “Hosting? No problem!” scenario only works if the SI themselves doesn’t actually do it. These two things alone imply that there could be questions over the quality of service you get, and/or your control over that service.

·         Cost. SIs can be inherently expensive. Often this is valid because you are paying for top-drawer people, but that’s not always the case. And if they do go out and hire a contractor at £500 a day, will they charge you that (plus a modest mark-up) or their standard £900 rate?

·         Existing relationships. It is possible that the SI may have an ‘understanding’ with certain other IT organisations, despite protestations of impartiality and bias. When they suggest a component to fit your ‘best of breed’ goal, they may effectively be selecting from a shortlist of one.

·         Niche players. In the SI scenario, it is entirely possible that perfectly adequate, low-cost, functional solutions that would meet your needs perfectly well are never brought to the table – possibly because the SI doesn’t know about them, if for no other reason.

So let’s avoid these potential issues and take control of it ourselves, and follow the internal teams route. Well, I’m afraid that there are a new set of pitfalls that could be awaiting you there too:

·         People & Skills. You need the right numbers of people with the right skills to tackle your portfolio. This probably means you have to hire, and – as you know – recruiting people takes a lot of time and effort. A lot of time and effort…

·         Knowledge. Even if you have the people you need, many may have no experience of the kind of major undertaking you are considering, so they’ll be learning on the fly. Additionally, if you get into Requests for Proposals (RFPs) and all that implies, including the commercials, do you have access to adequate contract and legal ‘nous’ to get you over the line? Far too often there are people playing out of position here. We’ve probably all done it, or seen it!

·         Time. Without the kind of head start that an SI can potentially give you, your programme of work could run and run. And who’s to say that when you’re half way through, it is still the right thing to do?

·         Cost. Yes, the SI may be expensive, but when you add up the costs of this route – recruiting new people, building skills, time – your internal option could be pretty pricey too.

So, there are challenges – and there may be no ‘right answer’. And for the other people who could help you, the plethora of small- to medium-sized IT companies who have the solutions that might just be what you need, in this binary world of SI vs. Internal portfolio delivery approaches, they could be suffering. Not only might they not get a look in, but they could be spending a significant amount of money not getting a look in! The relative cost of getting new customers is likely to be high; they may need to make major investments in sales and marketing activities to try and punch above their weight. And in a crowded marketplace, getting their message across can be difficult.

Is there an additional option therefore? I think there could be. Call it Federated Solutions, or Composite Solutions. Call it what you like.

Think about Amazon. Amazon is no longer a bookseller; it’s a trading hub. It has provided many thousands of small niche retailers access to a global audience at very limited cost. You go to Amazon because you know you can get just about anything there; but what percentage of the end product is now provided by Amazon versus those who occupy spaces in their market place?

Why couldn’t IT solution provision work in the same way? Wouldn’t it be great if you could go to “Get-IT-Sol” with your requirement – say for a new Business Intelligence (BI) solution – knowing that they had access to a whole range of BI service providers, large and small, and that they could facilitate some of that up-front filtering, selection process for you? Then, having helped you short-cut the process, they could hand it back to the internal IT team to run the project. Or say you needed some help with internal governance and controls, or maybe COBIT-related processes. Wouldn’t it be nice to get to specialists who have been there, do it, got the scars in the just the way that’s relevant to you?

Of course, an SI will say that they can do all of this, and many will be able to. But it will more likely be an end-to-end proposition, under their jurisdiction and control. And of course you may say that you can do it with your team. But take a look at some of the players in the Amazon marketplace you’ve probably used personally in the past. How would you have found them without Amazon – and how long would it have taken you?!

A facilitated composite approach, if available, could provide an alternative route to simultaneously delivering a portfolio of IT ‘solutions’. If you consider some of the potential negatives of the SI and Internal models, this option could offer mitigation in the areas of People, Skills, Cost, Bias, Knowledge and Time. And for the smaller, niche players, it provides them with a way to get access to a larger customer base at a lower cost.

 Is this a new business model? Perhaps. But perhaps it is more about creating a new channel for IT service and solution provision / identification to complement those already in existence. Of course there would be major challenges in setting up such a ‘federation’ with a long list of pitfalls to avoid, but it could prove to be a winner not only for those who build and operate the ‘marketplace’, but for its customers and suppliers too.

 

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Ian Gouge is widely experienced in business-driven Information Technology, culminating in significant achievements majoring on organisational and process change, and with a proven track record in turning around / re-engineering IT functions. He possesses in-depth experience of change, transformation, IT delivery, customer and supplier engagement, and broad International exposure. Also the author of management books on the topics of IT strategy and project management, the impact on IT of e-business, and the IT organisation.

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