Remember the children’s story about the little chicken that ran around warning, “the sky is falling, the sky is falling;” all because an acorn fell† out of a tree on her head? We can take heart† though, that tale did end happily, despite the histrionics. The bird was proved wrong, nothing happened, and the ozone layer remains intact to† this day, albeit a few holes here and there.
The year 1999 was rampant with horrendous predictions about “Y2K”. The doomsayers warned us that our computer- based civilization was going to experience a “melt-down.”† Computers would shut down because they couldn’t transition electronically to the year 2000.† Ergo, society’s infrastructure would crumble as vital services failed.† What did happen that fateful night? As Shakespeare once wrote…it was “much ado about nothing!” † Just another acorn falling!†
Even wrong perceptions cause ripples.
But, according to Mike Jones, CEO and President of (i)Structure, Inc., because of that latest acorn, something did happen to the manner in which many companies viewed and conducted business into the first few months of the New Year.† (i)Structure, Inc., is headquartered in Omaha, Nebraska and is a wholly owned subsidiary of Level 3 Communications, Inc. The company provides services in Infrastructure, e business and Applications. Jones asserts that many businesses were hesitant about seeking outsourcing services after all the media coverage of the possible “Y2K” ramifications. Executives were engrossed in developing strategy and formulating direction. While that mode was prevalent, (i)Structure, Inc saw very few contracts for their services signed and initiated. It was actually around July or August before the majority of agreements were inked and executed.
A trend that Jones observed, and moved to meet, resulted in the partnering of (i)Structure with application service providers in furnishing the computer platforms for their customers.† He cites the example of an organization already having in place an HR and payroll structure.† The buyer wanted to outsource the in-house “care and feeding” of the existent function. An ASP was brought in to provide application services, not create a new system, and Jones’ firm provided computer infrastructure.
Companies are increasingly devoting time and budget expenditures to their core business efforts and migrating away from applications.† Outsourcing is the logical, and most cost effective, answer to this developing trend.
A significant trend for outsourcing.
According to Jones, many companies with mainframe computer platforms of mid-size capacity are face to face with a difficult decision to eschew.† Should they sign new software agreements that would involve significant capital expenditures, or consider a different direction. Companies with medium to large mainframe computer environments encompassing all the processors, discs, operating systems and applications are truly in a quandary.† More than likely, they’ve been in a strictly maintenance mode through out the entire “Y2K” period. For the last year their management has made little change or investment in the computer infrastructure. This defensive posture was adopted until it could be determined if the dire forecasts were merely “acorns” falling, or pending meteor collisions. Now the year 2001 is looming on the horizon. Software licenses are coming due and new technology has overtaken the marketplace in both discs and processors.
What to do?
Should a business opt for renewing existing software agreements and inking a contract for new hardware equipment?† They could find themselves making a costly commitment to the existing computer platform environment for the foreseeable future. The question that each company must ask itself is, does it want to be locked into that position and not have the option to change course if market circumstances, or technological advances, warrant it?
Jones opines that outsourcing is the best and least expensive route to follow in such a situation. In addition, outsourcing will allow the flexibility for corporate management to make direction changes rapidly if needed.
Many of the smaller mainframe companies will make the transition down to the smaller AS 400 platform, Jones believes.† He states, “there exists a lot of uncertainty in the outsourcing and management services area on how to determine economy of scales in the UNIX and NT or open systems environment.”† Companies that own the more complex computer infrastructures are beginning to experience a shortage of in-house engineering talent to operate the platforms.
Where are the “tools?”
Jones says, “the ‘tools’ just aren’t there to effectively operate the proliferation of complex, open systems type of computer environments.” He defines “tools” as systems management, operations management and server provisioning. More and more organizations are realizing that in order to fulfill mission critical activities they will have to reach out to outsourcers. Outsourcing firms that have a wealth of engineering talent and management experience on staff will reap the benefits of being able to spread their “tools” over a diverse array of customers.
Large organizations will be in the best position to keep sufficient in-house staff to operate their computer environments at a 7/24 pace–cost to do so will be of less concern.† Smaller companies, however, will have to outsource their needs. Jones believes that a great percentage of the available pool of engineering and management talent will be drawn to outsourcing firms.† They will be attracted by the employment opportunities inherent in outsourcing.† The diversity of activities will be a major motivator and the sameness of day-to-day tasks will be a thing of the past.
Lessons from the Outsourcing Primer:
- Outsourcing is cost effective and “acorn” free.
- Apply the 7/24 criteria to a prospective outsourcing firm.
- Gauge the effectiveness of an outsourcer’s “tools!”
- Outsourcing can keep an organization abreast of technology.