Forced Into Do

By John Parkinson  |  Posted 12-05-2005 Print Email
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The $50 billion club has responded by accumulating some impressive engineering talent, and by building research and development partnerships with key suppliers; in effect, these companies have become world-class IT service providers in their own right. In many cases, these companies are so good at it that service providers can't offer them much in the way of ideas, skills or capacity—a further disincentive for the technology industry to work to meet their needs.

Talk to their executive teams, however, and they all tell essentially the same story. "Sure we know that there will always be some areas we have to handle for ourselves. But why do we have to devote so much scarce talent and energy to areas that should be routine? Our only difference is related to our scale. Surely it isn't that hard to respond to scale?"

Perhaps, but it's not that simple. There are a few businesses where scale is the only factor, but most of the $50 billion club are complex, have very high performance and availability demands, and operate in very specific, often highly regulated markets. Scale may underlie their challenges, but solving scale alone won't solve all their problems.

Is it inevitable that the largest corporations will have to go it alone? I have been looking at this question (and discussing it with most of the major vendors) for almost 20 years, and I have just about concluded that they could do something about it, but they probably won't.

It's not that there has been no progress: Quite a lot has been achieved with both scalability and availability engineering. It's more that the key technology players (who have to be committed to and involved in any effective solution) don't see the need, even though two of them—IBM and Hewlett-Packard—are club members themselves. As far as I can see, the largest technology players make more profit supplying "inadequate" technology than they would if the technology truly met the business need. Instead of investing once to create a platform that was sized for the largest users, they would rather sell perpetual customization and support services that, in a sense, perpetuate the problem.

The major technology suppliers all have very impressive and, generally, very effective collaborative programs to develop new software and service capabilities. As soon as a vendor creates a workable offering, however, it is virtually always refocused on the mainstream market, where there is much greater potential return on the investment. The largest businesses simply get another component to customize and integrate into their unique environments.

Sometimes the customers themselves are part of the problem. On a number of occasions over the past decade, I have been involved with proposals to build large-scale platforms on an industry consortium basis.

None of these efforts has come to anything, though it hasn't been because of their technical infeasibility, or even economics. Mostly they fail because the industry players won't work together well enough to hammer out what the core specifications should actually be. Even when there is no credible competitive issue involved, ego and politics often get in the way. After all, you don't get to be a member of the $50 billion club by being shy and retiring.

Nevertheless, I remain hopeful that some combination of industry players and technology partners will team up to solve this problem in the same way that big oil and SAP combined to create ERP. We have the technology, tools and processes to serve small markets with high return potentials. All we need is someone with the vision and imagination to go after the solutions.

JOHN PARKINSON has been a business and technology consultant for over 20 years, advising many of the world's leading companies on the effective use of business automation.



 

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