Two recent media reports on automation in IT services highlight some old advice and a major shift in the business of IT services.
Ten years ago I applied a “counter-revolutionary” approach to the offshore revolution. The conclusion of my research was that traditional, non-offshore providers should adopt a two-pronged strategy. First “absorption”, which could be described as “if you can’t beat ‘em, join ‘em.” The second, longer-term part of the strategy was “annulment”, making the revolution irrelevant by undercutting its basis. In the case of offshore IT services, the idea was to automate the process as far as possible, thus making labor-arbitrage less relevant.
That was published in 2003 in http://www.gartner.com/resId=400171. It was based on a model developed by Professor Richard D’Aveni, published in “The Empire Strikes Back: Counterrevolutionary Strategies for Industry Leaders,” Harvard Business Review, vol. 80, no. 11. The model is still valid.
Of course the traditional IT service providers did adopt our advice, whether at our suggestion or not, and did “join ‘em”. The major global providers have huge offshore service centers now. But the idea of annulment by automation was treated a bit more sceptically.
The Economist of January 19th, 2013, had a special report “Rise of the Machines”. It describes two fascinating companies that are automating parts of the processes of IT service delivery. Blue Prism, a British startup, provides tools to allow non-engineers to robotically automate certain business processes. And IPsoft, a remote infrastructure management firm uses extensive automation to drastically reduce the labor content of infrastructure management services. Its Eliza program is well described in Meeting Eliza – Livemint.
So the counter-revolution has kicked in. Or is this the next revolution already? I’d be glad to hear from service providers as to what they’re doing about it.
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