CIO Update sat down with Michael Parks, the CEO of this diversified IT consultancy and software development firm, to talk about some of the major trends he sees in IT today and where things are headed.
CIO Update: Where is IT going today?
There has been a ton of IT expenditures in the last 10 years and when (companies) look at they kind of scratch their heads and say, 'You know, we have this $10 million dollar ERP implementation and we didn't get our bang for the buck.' So clients now are looking to maximize that investment.
"The last five years you know what CEOs say? 'I want more for less, I want more for less'."
But this has been the mantra for 30 years hasn't it?
"I don't think so. In the late '90s what you saw really was a massive rush to technology for technology's sake. You had the whole dot-com craze that was pushing companies into silly decisions. There wasn't a business case that clients asked us to build back then. They would just say, 'Hey, we need an ecommerce site, put it up quickly.'
And you start just automating bad processes. And what they should have been doing was looking at how they do business; looking at it from the standpoint of: 'This is how we do business now, this is how we should do it in the future.' They really didn't do that. They just started implementing technology.
Well, that never works. A technology-driven project; that's exactly what it is. You need business people driving it, business people taking ownership, and business people being hands-on involved with the engagement or you just won't be successful."
Is the job of IT/business alignment any easier these days?
"The technology piece is a much, much smaller component today than it was pre-2000 in everything. And with the standards and the sharing of more common platforms and stuff, companies are taking a look and saying, 'I'm thinking about standardizing on a platform as opposed to finding the best CRM package or the best back-office package or the best supply chain management solution.
In my opinion, there's only going to be three major platforms that survive and that's Microsoft, SAP and it's Oracle. So you have the open source movement vs. the .NET movement and unless there's some strategic reason not to, I'm going to look to standardizing on one of those platforms."
What other trends do you see affecting IT today?
"The other thing where IT is going is it is clearly getting more and more to an outsourced mode. Whether it's total IT outsourcing to where it's going to become more of a utility or whether its going to be just outsourcing certain aspects of the IT environment."
This kind of speaks to the Nicholas Carr argument doesn't it? That IT doesn't matter.
"That message has been oversimplified. The Nicholas Carr message. Some of those people have, and there's been other articles similar, I think they've oversimplified it. It's not as simple as the electric power generator analogy."
"I would say if you talk about CRM, which is your front office facing application; the way that service your customer, the way that you market to them, the way that you sell to them, everyone does that differently. And there's certain pieces that I feel are definitely mission-critical, that you should keep internally and keep them close to the vest and strategic and confidential.
What I'm saying is sales, marketing and customer service is a process you have to look at hard and say, 'Okay, what can I afford to generically outsource?' And, 'Can I keep the kind of service levels I need and still serve and sell and market to my customer?' If I can, then I would outsource it."
What parts of IT do you see being outsourced more than others?
"There's clearly some of the redundant maintenance, support, testing type functions, helpdesk, that you can outsource and it's not strategic. Generally speaking, infrastructure, telecom, the back office; unless there's some reason for security purposes that are really driving your business, I'd think hard about outsourcing it."
At what point do you stop? At the application layer?
"I guess the question would be what would concern you about outsourcing you ERP? So you lock them down legally, you lock them with SLAs. I would look at something like that and say, 'If I can keep the lights on my ERP system, and improve my service levels and cut my costs by 25%, it's a done deal.'"
What can IT today learn manufacturing when it comes to outsourcing?
"It's exactly the same concept and I think the lesson learned is specialization works."
But don't you become too dependant on this specialized, streamlined network? What happens to your operations if one aspect of this network goes down?
"They have to have a business continuity plan in place. That's another component of outsourcing IT; a major consideration in the post-9/11 era, and post-Katrina, whatever. You better have a disaster recovery and BCP in place and you better test it and make sure it works. And the time to be testing it to make sure it works is not right after a disaster."
How do you think about IT more strategically today?
"In IT it's all about the business problem you are trying to solve and you look at it from the standpoint of 'How can I make this business process better and more efficient.' We're all in the business of process improvement every single day in what we do."