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To the Barricades! Annulling the Revolution

by Rolf Jester  |  February 25, 2013  |  3 Comments

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  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.

Until now.

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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Tags: it-services  

Rolf Jester
Vice-President, Distinguished Analyst
16 years at Gartner
46 years IT Industry

Rolf Jester researches the business of IT services, particularly business and marketing strategy and best practices for IT services providers. He focuses on the IT outsourcing business globally, and also on the IT services market and service providers in the Asia/Pacific region. Read Full Bio

Thoughts on To the Barricades! Annulling the Revolution

  1. Dean Larkin says:

    Good blog Rolf. We definitley believe the revolution is already here. Particularly for those enterprises looking to use their IT as a competitive advantage and not just an ever growing cost center.

  2. David Walton says:

    Good article, and I agree with you that traditional IT service providers haven’t moved nearly quickly enough to automate. This is for a few good reasons and a few not so good reasons, though. The good reasons include that it’s not easy, and that most IT outsourcing situations are inherited, not greenfield. Let me explain: IT outsourcing has traditionally been about taking on a going concern and then trying to bring about service- and cost-improvement through transformation. But the business case for transformation never seems to be as compelling after the deal is won and transition has completed. And mythical factory models with lots of automation only work if you’re rolling out standard products and services; retrofitting a going concern into a so-called factory model has apparently been so difficult and the business case so weak that in the majority of cases it just hasn’t happened. And the not so good reasons are, as I’ve just hinted, that many IT service providers talk a good story about their factory models and automation tools, but in reality these do not exist in a shared, leveraged, fully integrated and maintained model, but are deployed in various configurations with various software versions on a per-client, heavily customised basis. I do believe that companies will develop more and better IT service management automation capabilities, but they will still face the same barriers and constraints that I’ve covered above.

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