IT Ecosystem!!! Adapt the Changes?

Innovation will come from an ecosystem of pervasive computing so natural and all-encompassing that it disappears into the background.

We always use to coin the term ecosystem but what is it exactly. The term "ecosystem" was first used in 1935 in a publication by British ecologist Arthur Tansley. Tansley devised the concept to draw attention to the importance of transfers of materials between organisms and their environment. Tansley regarded ecosystems not simply as natural units, but as "mental isolates".

Ecosystems are controlled both by external and internal factors. External factors, also called state factors, control the overall structure of an ecosystem and the way things work within it, but are not themselves influenced by the ecosystem. Ecosystems provide a variety of goods and services upon which people depend.

In the same way, there is an IT ecosystem also exists. An IT ecosystem is "the network of organizations that drives the creation and delivery of information technology products and services." The IT ecosystem is strong in all three of the most important sectors of hardware, software, and services. There are currently significant levels of innovation in IT services. Ecosystems are a key ingredient to grow existing markets and competing effectively.

These ecosystems offer solutions comprising a larger system of use than the original platform owner created and solve an important technical problem within an industry.

An ecosystem puts our customer’s end-to-end journey at the center of the experience. We can see then how this quickly creates the need for service providers to work together with one another, and more importantly, how this fact shapes a customer’s overall relationship with the company. The future of ecosystems will require the platforms they operate in to be open, dynamic, and therefore integrated. In that way, they can be functional in real-time.

Outsourcing IT has become a top priority agenda since the 1970s. It started an outsourcing boom that now extends from single tasks to complex processes and which has considerably changed the structure of whole industries. This change will continue and IT outsourcing will remain to be a good predictor of where outsourcing, in general, is heading. It is majorly divided into IT Staff Augmentation and Project Outsourcing.

We were in discussion about both of these terms of the IT ecosystem since our last few articles. If you would like to pick those conversations up, the links are below this article.

Before analyzing in more detail what IT outsourcing is, we will first briefly address the question of what outsourcing generally stands for. The term itself is an artificial construction composed of the words “outside”, “resource” and “using”.

Today outsourcing affects nearly all organizational functions. It has become rather a cross-functional activity, which satisfies the organizational hard- and software needs. In the early days of outsourcing, the focus was primarily on short-term cost reduction.

IT outsourcing arrangements have changed quite dramatically over the last couple of years. While some organizations still follow the traditional path of conventional outsourcing, many have begun to use IT outsourcing as a strategic tool to complement missing internal capabilities, to exploit the full business potential of new technologies, and to even achieve partial or complete business transformation.

Traditional considerations of IT outsourcing view IT components as an extensive overhead cost burden. With the growing importance of information and communication technologies though, many organizations have realized the critical role that IT nowadays plays for business success and the potential it carries to achieve strategic goals.

This increasingly strategic importance that IT has gained for many organizations has given IT outsourcing a new direction. Emphasis has moved from contracting out IT hardware and IT facilities towards intellectual based forms of outsourcing, to complement missing internal capabilities and skills, to realize possible benefits of new IT, and to gain access to knowledge and innovation of “best of breed” suppliers.

In such an approach, IT outsourcing also plays the role of a ‘technology catalyst’ to strengthen resources and flexibility, to focus organizational direction, and to re-focus business-critical activities, while the outsourcing provider supports routine IT operations. Strategic IT outsourcing is also implemented in a way to either breakthrough radical innovations or to “innovate processes, skills, and technology while mediating financial risk to achieve competitive advantage”.

Also, in an environment of growing global competition and increasing uncertainty, strategically outsourcing IT can enhance flexibility in a rapidly changing marketplace and act as a differentiator to competition. The changing structure of the IT outsourcing market and the continuously developing business models have had a significant influence on the type of outsourcing relationships.

There is “a relatively new concept of how relationships can be formed, such that the relationship itself, and especially the trust engendered within it, effectively substitute for the ownership of assets” and can be defined as “purposive strategic relationships between independent firms who share compatible goals, strive for mutual benefit, and acknowledge a high level of mutual interdependence”.

These new types of relationships are an investment that ties outsourcer and provider together and determines a fit which makes it more beneficial to stay with this partner than to continuously having to establish new connections.

We will discuss this further in my next article. Be connected ….

Article 1: - Staff Augmentations; One of the Smartest Business Model

Article 2: - IT Staff Augmentation Benefits

Article 3: - When and why to flip the coin?

Article 4: - The Original Breed Selection