Jack and the 'candlestick' challenge

"Jack be nimble, Jack be quick." Just like the nursery rhyme IT shops everywhere want to be like Jack.

They want greater flexibility and the ability to change direction quickly to respond to changing market conditions. It's all about agility and speed to market.

Certainly a noble vision, but one not easily attained. This is particularly true for large enterprises with IT operations more akin to a big, slow sleeping giant.

That's right, those giants that emerge from the land of disparate systems and legacy apps which cost a motza to feed and maintain.

It is for this reason that so many organizations are embarking on the service orientated architecture (SOA) adventure.

They are keen to transform those apps into Web-based services and harvest gold from the disparate systems.

But this isn't the only road to greater flexibility. Some companies are pointing to outsourcing as the best solution.

Did Jack outsource? I'm not so sure. Admittedly, few companies are equipped to handle all their IT functions on their own, but few IT trends have been as hotly debated as outsourcing. So predictably experiences have been varied.

We are all familiar with outsourcing disasters that have ruined businesses, sunk careers, sent stock prices plummeting and created public relations nightmares.

While some say outsourcing has given them the freedom to be more agile, others claim it has bound them in red tape and has actually stifled flexibility.

In fact, one IT executive I spoke to last week made it very clear that contractual obligations with his current service provider would make the process of getting new products to market an extremely slow one. That is, if he relied solely on the outsourcer. As a result he sticks with a blended offering utilizing in-house resources and the service provider, claiming this approach allows the company to penetrate new markets quickly and enhance strategic capabilities.

It's about getting the mix right and it's all about strategy. So it's not surprising to learn that CEOs are taking a more active role in contract negotiations.

If companies have learnt anything from disasters of the past it's that a strong, strategic footprint needs to be firmly in place to realize the true benefits of outsourcing.

And when it comes to business transformation, CEOs need to be at the forefront of these initiatives.

We all know the outsourcing trend isn't likely to disappear anytime soon. Only this week LogicaCMG released a study of 1200 organizations showing that the outsourcing of IT and other business processes is likely to move from a 2005 average of 12 percent of organizational costs to 20 percent by 2008.

The study also identified CEO involvement as the key differentiator in successful deals.

The more CEO involvement, the more clients can dictate contract terms and service level agreements. CEOs acknowledge large outsourcing deals can affect an organization's market valuation so why let a supplier design your contract?

Today, clients are driving deals not providers, a trend that emerged during the tight fiscal climate post 2001.

So why is Jack so nimble? Because he is a skilled negotiator.

He is the new breed of IT executive. This executive has technical knowhow, is a bit of a lawyer (contract awareness), a bit of an accountant when it comes to cost cutting, a management guru (juggling multiple users and providers), and is also a futurologist (up to speed on industry trends). Phew! An agile player leading an agile organization. How nimble are you? Feedback to sandra_rossi@idg.com.au

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