Bringing it back home in 2005

In 2004, radical changes shook the corporate IT world. Corporate business-process componentization and transformation, along with the cost savings of outsourcing and out-tasking, led to internal reassessment. Business processes became integrated with corporate software. More corporate workers became mobile and untethered, using home or wireless access. Security, policy and management became major issues instead of afterthoughts.

Partners, suppliers and even customers became required to integrate with the corporate network and IT applications. Packaged applications software became dominant in an industry once centered on custom software development. Blade server hardware sales began to eclipse chassis-based server sales. New respect developed for server consolidation on the mainframe.

All communications, with the exception of carrier-supplied bandwidth, began to commoditize based on industry-wide standards. And the industry began to focus on new IT technology such as grids, on-demand/utility computing, service-oriented architecture (SOA) and software componentization.

Why the sudden focus on corporate IT change? Corporate business motivation has shifted away from pure profit to revenue and growth. This is an important fact that is driving our current economy. Since the late 1990s, corporations have drained every bit of excess fat, including management, employees, inventory, process redundancy, overhead and facility assets, to achieve increased profitability. With profit engines in place, companies now must shift gears and focus on revenue.

To achieve ever-increasing revenue, they must focus on customers and grow organically or through acquisition. The effect on IT organizations is simple yet profound: make do with less budget and staff, yet accommodate growth. This cannot be accomplished without radical change. IT technology is now an integral part of all businesses and, in some cases, is the business.

One significant outcome of this re-evaluation of the IT function is the return of the services concept. IT is the keeper of the corporate assets and has assumed the responsibility of providing all technology services required to meet revenue goals. Outsourcing of IT technology has reached its maximum profit and must be tempered with ever-increasing “insourcing” to accommodate maximum revenue growth. This takes on the form of a hybrid IT organization that mixes outsourcing and insourcing, integrated through industry standards, to deliver whatever technology services are required to meet business needs.

Two examples of this trend come to mind. The first is the use of on-demand/utility computing to support corporations. If constructed properly, computing, storage, application software and network resources can be added or subtracted, yet integrated with existing corporate resources to accommodate business growth without major capital expense or time delay.

The second example is even more intriguing: Through the use of an SOA and software componentization, software development and maintenance can be performed within a corporation rather than be outsourced. Industry standards-based modeling and development tools that use the Unified Modeling Language and Business Process Execution Language within a model-based software development SOA front end will let intellectual property owners or developers internally replace rather than outsource programmers.

What does that leave for 2005? Educating management and staff, hiring, planning, conducting analysis, evaluating technology and selecting vendors for future implementations.

Dzubeck is president of Communications Network Architects, an industry analysis firm in Washington. He can be reached at