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The people problem
June 24, 2005
Steve Andriole, a business professor at Villanova, argues in a Datamation column that labor shortages will increasingly push companies to outsource IT activities and, in time, shift to a utility model. Despite recent reports that "outsourcing does not save as much money as many people assumed," he writes, "the number of management information systems (MIS), information systems (IS), computer science (CS) and computer engineering (CE) majors has fallen so dramatically over the past few years that we’re likely to lose an entire generation of replacement technologists if present trends continue – and they show every sign of doing so. So as the previous generation continues to gray, there will be precious few new ones to keep the skills pipeline full. The obvious outcome is increased demand for the skills – wherever they happen to be."
Andriole also looks at my argument that we're approaching the end of corporate computing, as companies will increasingly shift from owning their own IT assets to renting most of the IT resources they need. "Long-term," he writes, "I think [Carr] is absolutely right. Initially, companies will purchase transaction processing services from centralized data centers managed by large technology providers, but over time companies will rent applications developed the old-fashioned way by the same old mega software vendors ... Eventually, as SOA proliferates, new software delivery and support models will develop from the old vendors as well as a host of new ones...The appeal of 'paying by the drink' is just too great to resist – especially since the alternative will still (and forever) require the care and feeding of increasingly difficult-to-find technology professionals."
Andriole's observations are in tune with what I'm hearing from some of the early adopters of the utility model. The CIO of one mid-sized company that recently closed down its data center and shifted its operations to an applications hosting company told me that while the move saved the firm about 20% of its IT costs, the real motivation lay on the people side. Finding, recruiting, motivating and holding onto skilled IT staffers had just become too much of a hassle. Another CIO, of a European financial services firm, said that he believes the best IT talent will inevitably move to the vendor side, where they have good prospects for advancing their careers. On the user side, he said, IT people no longer have many options to move up.
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