Managing Offshore IT

Here's a missing angle: value. The packaged software approach is is not new but repackaged overambitious, 'bigger is better' run amok. It is destined to follow the same dismal ROI of SAP and other ERP systems that try to be all things to the enterprise and focus on market share and revenue not crafting more elegant enterprise software.

Apply this phenomenon to offshoring and it careens into the reality that offshoring customers still trust the 'bigger is better' mantra for vendor selection, and thus this would seem to align with other market realities and give the "packaged software" idea more legs. To me, it reeks of absorbing innovation and specialization (ala Microsoft in the 90's) in favor of market control. Real solutions do not promise to span the entire enterprise and delve into every nook and cranny of conducting business without admitting openly that the REAL work of such massive alignment is years of process analysis, custom development and very often pushing through multiple failures. Now, once the Big 4 and there Indian challengers get fully on board we'll have the same collusive consulting (where software decisions are made before engagements even begin) that got us to where we are today with bulky systems underachieving and slowing the true digitization of the enterprise.

Do forgive my cynical mood, but I see no reason that business customers should be excited about the merger or the packaged software phenomenon on or offshore.

Well Michael,
Very interesting views here, though I am not really sure about the “collusive consulting” angle.

When it comes to products, customizing and build-vs-buy decisions, I hear the argument “our business is unique” a lot more than we really should.

Consultants have the responsibility to try hard to ensure that all the data-points are leveraged to avoid issues of “collusive consulting.” We (consultants) generally have an opportunity to objectively advise clients and stakeholders on the best possible solutions (under constraints). Of course, by stakeholders, I also mean our internal stakeholders and alliance partners. :-)
I will muse on the topic further and blog about it.

Not the perfect example to back up my point (I was specifically thinking of undisclosed Big 4 incentives to promote specific ERP and CRM vendors in the past), but the dynamics of "collusive consulting" and the dangers of always believing "bigger is better" are more than adequately covered in this tale of woe:

http://www.kuro5hin.org/story/2005/9/27/95759/4240

I am an independent consultant and a realist. One size fits all is an illusion and an impediment to the real work of enabling business through software. To truly honest consultants, ERP should appear what it is: an expensive and risky proposition that is hyped and heralded but only delivers satisfactory business results slightly more than half of the time. Adding BI as a new sales target for SAP is about market control of a growing and lucrative sector in the enterprise software marketplace. Yet, when viewed objectively from the perspective of a customer, I would argue that it is bad news. It is interesting to Wall Street, but not to the average IT manager struggling to demonstrate ROI and maintain trusted relationships to meet the demands of business customers. I see “packaged software” as similar: it will benefit vendors, but is dubious from a customer perspective.

In a slightly different context, is what I am asserting any different than multisourcing in its wisdom? As I am sure I do not have to tell you Mohan, multisourcing is widely promoted as a best practice nowadays in the arsenal of tools for managing successful outsourcing/offshoring relationships. Why? If you fall into a one stop shopping relationship with a client, you will eventually be taken for granted as a revenue stream, and treated accordingly (second rate resources/poor performance/loss of customer focus to name but a few). If you tweak the relationship on an ongoing basis by sending business elsewhere you avoid the pitfalls of "bigger is better" in a variety of ways I do not have the time to detail here. Truth is, it is a dynamic should appear common sense to anyone who participates in a market of any kind. A monopoly or anything close to it is a powerful thing to avoid at all costs as a consumer of goods and services.

I stand by my warnings in my first comment, but am more than happy to debate it further. In fact though, I think you euphemistically concede the point in the last paragraph of your response calling the risks of bias "constraints". If there were any doubt to what you meant, you clear it up with a reminder that "stakeholders" include a consultant’s employer, as well as preferred vendors ("alliance partners"). In other words, you say that consultants “generally have the opportunity to objectively advise clients” but then hopelessly complicate that objectivity by including the latter two stakeholders. Are a client’s interests always aligned with the goals of “internal stakeholders and alliance partners”?

A final point: I am also humanist, and know many who navigate these potential conflicts of interest with great professionalism and a genuine desire to provide tangible business value to clients. I also know it’s tough to move mountains, and I am writing from an idealistic perspective in light of the current market picture. Nevertheless, my comments are directed at the structural problems and the lack of sound market based incentives when a company (for example) buys ERP, BI and consulting from a single behemoth. A salesman will tell you this will reduce “integration” issues, but I would urge savvy IT decision makers to heed the durable latin warning: caveat emptor (buyer beware).

Well, competetive technology is just one side of the coin, the other side is how well the business processes have been designed, how well it's been adopted in the organization and how well it's integrated with other functions. This is where one company can differentiate itself from the other. So it's not just the Technology/Package per se, it's more of how savvy the business is in implementing it and ready for ushering in changes within their organization. Another important aspect is that technology is never static, and how effectively/quickly companies can bring in newer technologies can make a difference also.

Yes, I do agree that with the availability of ERP/CRM packages, it's become a commodity, but there is immense scope of diffentiation through better adoption, change management and remaining current with the emerging trends.