Paul A. Strassmann

If all your neighbors lose their jobs, you call that an economic recession. If you lose your job, you call it a depression. The same reasoning seems to apply to the enormous attention that computer people are suddenly giving to outsourcing.

In a talk in March, John Chambers, the knowledgeable CEO of Cisco Systems Inc., noted that the U.S. Department of Defense is emerging as a pioneer in systems architectures. The DOD has become an innovator in supporting real-time responsiveness across an enterprise.

The time seems ripe to check whether the CIO position has acquired greater permanence.

The most frequent reason companies turn to outsourcing is the need to increase profits. But are those companies that outsource a hight percentage of their work the most profitable?

In 2000, the CIO Magazine Tech Poll reported a 22 percent annual growth rate in IT budgets. The same poll has recorded growth rates below 2 percent from January 2002 to the present.

In July, the General Accounting Office published what I consider a rare insight into IT spending. The agency broke down the US$26 billion Department of Defense IT budget into the following categories: business systems, $5.2 billion; business infrastructure, $12.8 billion; mission support (including its own separate infrastructure), $8 billion.

We're at the end of corporate computing as it has been practiced for the past 50 years. From now on says a columnist, billions of computers will only be network peripherals. Corporations will stop building and maintaining their unique hardware and software capabilities as fixed costs.