Sunday, February 19

"Doughnut effect" in Enterprise IT

For decades enterprise IT was the queen bee around which all cutting edge technologies were developed. But just like many cities in the United States were subjected to the “doughnut effect”: the city centre becomes “hollow” as population moves from inner suburbs to the outer suburbs in search of newer, larger or more affordable houses, enterprise IT is going through a similar hollowing out effect.

Consumers & Clients drive technology choices

Today consumers external to enterprise boundaries have access to more choices, more powerful, richer technologies than enterprises. Earlier era was dominated by “processing industries”, where enterprise IT was characterized by “islands of automation” and that was ok as long as the islands supported the critical internal processes. Today with the growth of knowledge based economy, organizations cannot afford to lag behind in terms of being able to connect with stakeholders using latest technologies, where transactions, processes & relationships with all stakeholders, especially those external, need to be rich, dynamic, and adaptable, subject to constant reinvention. Ubiquitous connectivity and pervasive computing throws open unbounded opportunities for innovation across the enterprise. Consumers can now migrate from passive recipient to active co-creator of value.
Yet there is a rapidly widening technological schism between technologies within the enterprises and technologies consumers have access to. Rapid adoption rates of new technologies mobile phones, web based services, communities, blogging etc. is in sharp contrast to the way enterprise IT is stuck in legacy traps and is generally resistant to and suspicious of all new technologies even in the face of obvious end user adoption. In a competitive marketplace IT departments will have lead the way and move fast to close this gap to provide information and interact with consumers on their chosen technology platforms.

Software as Service

SaaS represent another dimension of this technology doughnut effect, where huge monolithic applications are being replaced by external web service providers. SOA & SaaS (Software as a Service) is gathering huge momentum; the buzz on the web is overwhelming. has now morphed into Appexchange with all kinds of services available. . MS has released Office live beta. Google is providing “customized” hosted email service. Rather than look SOA from internal Enterprise IT perspective, the disruption is applications being replaced by “outside-in” services. While conservatives would point to security, data ownership, customization challenges, I believe there are enough instances of Global 2000 going for “Outside-in” services solve the legacy trap issue in single sweep. While the trends are not new or unknown, the tipping point is approaching faster than earlier thought.


While nothing new, earlier outsourcing contracts were designed as a “all or nothing” total outsourcing deals, that essential transferred employees, sold assets to the outsourcer, changing little else. Infosys was among the earliest to promote Modular Global Sourcing where executives have to work hard to “modularize” IT into strategic and logical components that can then be distributed geo-locationally, to perform them where it creates the maximum value. Since then subsequent large outsourcing deals have confirmed this trend where companies have started thinking very strategically about how exactly outsourcing can/should add value.

Innovation Networks

Innovation and continous innovation is critial and this can only be supported by a market ecosystem i.e. Innovation Networks — that matches an enterprise demand for innovation with worldwide supply. "Innovation Networks will let firms fluidly weave internally and externally available invention and innovation services to optimize the profitability of their products, services, and business models. Innovation Networks will deconstruct vertically integrated invention-to-innovation cycles in software, finance, and CPG industries" ( Enterprise will have to facilitate complex webs of relationships among firms, universities, and other organizations for generating and sharing knowledge relevant to innovation.

While intimidating I believe these trends offer a unique unboundless opportunities to “Enterprise IT” leaders to go beyond “business-IT alignment-subservience" to leading businesses to horizons they could never see.

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