Commoditization of IT Services

Are IT services such as application maintenance and operations heading towards commoditization? Are frameworks like ITIL going to hasten the journey towards commoditization? These & other related questions have been on my mind for a while. Upon further thinking, reading & discussions with colleagues I am still unable to decide anything conclusively. On one hand I agree with people who argue that application maintenance offerings have beginning to alike across a spectrum of vendors such as IBM, EDS, Infosys, Wipro, TCS, Accenture etc. All of them have well defined global delivery models and make good use of skilled manpower spread across their various delivery centers. They further argue that it is a matter to time when these vendors will start undercutting the prices of their competitors for tactical or strategic purposes. Customers too would start demanding price cuts as it would difficult for them to distinguish one vendor from another. People like Nicholas Carr support this line of thinking. Standardization is the way forward according to him.

Is standardization and commoditization the same thing? Yes and no. Yes, because one of the goal of standardization is to become independent of a supplier. No, because the other goals are to improve interoperability, reduce complexity & raise quality.

My colleagues who argue against IT services going down the commoditization route have a case in point. They believe two vendors maintaining an identical application using an industry standard framework such as ITIL can end up providing totally different end user experience. Their understanding and application of an industry standard framework makes all the difference.

The debate actually opens up lot of other questions. Can any service ever be commoditized? Which is a good example of a commoditized service? I am willing to pay an extra buck or walk for extra 5 minutes to buy a sandwich or coffee for a smile & personalized service I get at Pret. Products do not matter but service does! What do you think?

Forward Agenda

Few weeks back, I had the good fortune of attending a town hall of Mr. Tony Hayward, the enigmatic CEO of BP. Tony, as some of you associated with BP would already know, has launched an organisation change management program which he and his leadership team have named “Forward Agenda”. He is touring various BP locations and meeting BP employees and using town halls to communicate the objectives and guiding principles behind forward agenda he has set for BP. The town hall I attended was the one he held at BP office in London. People were listening to him with rapt attention while he first established the need for an organisation wide change and then went on to outline the priority areas and the timescales. Along the way he provided interesting facts about the global energy industry (growing importance of India & China, 80% of oil reserves with national oil companies) and the role of integrated oil companies such as BP would play in the future and hence the need to change and prepare for it. I came out of the town hall simply awestruck and completely mesmerised by his poise, honesty and frank answers to difficult questions like job losses.

But this article is not about BP, it’s CEO or his Forward Agenda for BP. Tony Hayward’s inspiring speech provoked me to think about my own forward agenda. The one remotely close to the definition was nothing but a collection of few tasks and activities such as giving shape to an internal initiative, working on the extension of the existing project, attending few training programs and taking few certifications exams. On the personal front I had planned for training myself for the big biking event in June/July and finish reading a few books. Needless to say it was too shallow and incomplete. All of the above activities would not take me beyond winter of 2008. What would I do in 2009 or for that matter in 3 years from now or beyond? Quite perplexed I spoke to few close friends and colleagues to check if I was the only one in this precarious situation. Frankly I was relieved to know many fellow colleagues and friends too were in similar situation barring a few who had spent some time thinking and charting out a tentative plan. Everyone seemed to be too focussed on few tasks and activities to be completed in the coming few months. Some would argue the futility of 3 or 5 years plans in today’s day and age where everything seems to be constantly changing at break neck speed. I would say that calls for a periodic refresh of our plans rather than not having one at all!

The Indian IT outsourcing industry too is busy studying the various factors that would impact its growth and shape its future. Enough has been written about the rising value of rupee, wage inflation, infrastructure bottlenecks, and supply woes; rising importance of domestic market therefore I would stay away from writing anything more on it. All the above factors will shape the Forward Agenda of IT companies operating in India. One item I would personally like to see on their agenda would be the focus on making technology work for the common man. How about technology making disbursement of pension easy, hassle free and transparent experience? The relief it would bring to the senior citizens of the country is beyond words. How about technology playing a role in bringing basic necessities such as primary education and healthcare to most deprived citizens of our country? There are several areas where technology can play a significant role, such as speeding up the legal system, making tax collection more efficient, simplifying land records, and getting the farmer a genuine price for his produce and many more. These areas have unfortunately been largely neglected by the IT industry barring pockets of brilliant work done by some for example echoupal by ITC, Bhoomi project by Karnataka Govt. with help from NIC (National Informatics Center).

Tony Hayward accidentally provoked me to embark on the journey to chart a Forward Agenda for myself. I do hope you would consciously make an attempt in the direction of preparing one for yourself.

Raise productivity - But how?

I have been reading several articles on IT industry suggesting increase in productivity will help the industry out of its current woes - unfavourable exchange rates, high attrition, wage inflation, shortage of talent, but none of these explain how the industry can attain this rather difficult goal. Of course everyone would like the productivity to go up - managers, employees and investors. Is the answer in increasing the number of work hours per week? Would employees produce more by staying late in office? No one can answer with surety. Can better teamwork help? Successful managers know that people perform and produce great results if they work like a team. Companies must invest in training & coaching to promote & enhance team work. Team players should be encouraged and rewarded. Mentoring too can come handy. A large proportion of employees are fresh from college and need help with their first brush with corporate life. They need to be moulded, guided & coached in order to bring the best out of them. A structured and well established corporate mentoring program can to wonders to employee morale and output. The young & energetic IT employees often make wrong career choices by changing jobs for immediate gains such as higher salaries & fancier designations. However if mentored appropriately these youngesters prove to be great performers.

How I wish there was a silver bullet for raising productivity!!

Application Development & Maintenance - Does ITIL Matter?

I think it does. People involved in application development & maintenance (a.k.a. 3rd line teams) often use CMMi framework to manage their day-to-day tasks & activities keeping service management best practices such as the ones documented in ITIL, at bay. They believe ITIL is for people fielding end user calls at the service desk or at best for people from 2nd line support teams. However a significant amount of their time is spent resolving incidents escalated to them by the 2nd line support teams. They are also required to participate in root cause analysis for problem incidents. 3rd line application teams are most certainly involved in analysing change requests and estimating effort which helps in prioritising them. Other ITIL processes such as capacity, availability & release too need their active involvement and inputs. In essence application development teams would do themselves & others who work/interface with them a lot of good by understanding ITIL. I believe IT service management & ITIL does matter for anyone in the business of supporting users be it the frontline service desk agent or the backend application developer.