Insourcing

There was a great article by Horace Dediu on his Asymco blog on Monday looking at some of the causes of how big organisations went from being early adopters of information technology to be late, or even laggards, in the past 10 years.

My paraphrased take is that whilst the tech world has shifted from the world of heavy capital expenditure in the data centre era, consumerisation and commoditisation have pushed technology consumption into the realm of operating expenditure as we purchase services not things. However four or five decades of refinement have left big enterprises with procurement and investment processes that are geared for big, and therefore are necessarily slow. Two worlds collide, and the result is what Dediu describes as the “Information Denial” department.

What this highlights for me is something that I’ve been banging on for for some time – that the changes that organisations need to make to react successful to the new realities of IT and digital aren’t particularly about the tech, but much more about the structural, process and strategic requirements that are necessary to make this new world of tech be consumed effectively within organisations.

Partly this is an issue of control: in the world of cloud services you need to give up the idea of controlling things (not that fixing problems of your own creation was ever that valuable an activity) and instead think about controlling code, data and suppliers (but in new ways to the monolithic Systems Integrators of old). All of this becomes even more challenging as organisations are pushed to deliver more of their services through digital channels through customer demand.

This for many organisations requires a rebalancing of the people and skills required to successfully manage technology, to consider new models like DevOps, and most fundamentally stop thinking that IT (and it’s bedfriend Digital) are things that can be outsourced lock, stock and barrel. In the private sector this is starting to happen – in some cases by plan, in others by subterfuge.

In the public sector this poses more of a challenge: insourcing or outsourcing of skills within the civil service isn’t something that can be left to rational choice to meet strategic objectives; outsourcing is an ideological necessity for the small-state Right, and insourcing (in the form of nationalisation) the corollary for the Left. Appropriate circumstances and strategic approach don’t necessarily come into it.

This interaction between politics and technological and management necessity is going to make for some interesting conversations in the coming years…

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