Commoditization of IT services – More than just cost savings
No business model can last forever. Signs are already showing that a lot of IT services would get commoditized and would be easily available over the wire at fraction of cost and much faster than the traditional development model.
Easy availability of Internet bandwidth and awareness of technology has made things far easier. Questions are being asked, when an ordinary citizen can go online and make his train and airlines ticket booking with ease, what is stopping corporate to adopt online systems for their use.
Many organizations are already leading the pack, although most of them are small and mid size companies who cannot afford or do not feel the value for money in investing for their own Data centre and sizable IT team. Change is slow for large organizations, but is just waiting to happen.
After huge success of Salesforce.com, several IT service providers started making their software available on pay per use. Even SAP is moving to E Availability of their suite which may help them multiply faster. Ramco – an Indian ERP provider is already available online and is able to provide real value for money for their customers.
Google, Microsoft, SAP and Oracle are all moving big way to make the change happen for IT from just a service to commodity based out of service. Standardization of such services would also lead to reduction in cost of maintenance as availability of manpower with those skill sets would be easier.
The challenge for IT teams and CIOs would be that these services would question the need for local IT support teams. In reality, it can be a direct interaction between business and the service provider. It is therefore evident that with more commoditization of IT services like ERP, ESS, HR Systems, Finance systems, Procurement systems and likes CIOs will have no reason to keep IT staff to keep these systems operational. It would help organizations in reducing cost but would certainly pose a threat to a lot of jobs which exist today just because the better method is still to become popular.
It is not wrong to estimate that in next three years, almost all small companies would be using IT services in a commoditized form and sharing the IT load with some other departments. Larger companies will continue to keep away from such services in a big way but this change resistance has to give way sooner or later for everyone.