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Commoditization or specialization of IT with a skills shortage?

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As is usually the case there are several triggers for this post reflecting current news, events, and other posts in the blogosphere. Right back from when Nicholas Carr started the debate with his famous article ‘IT Doesn’t Matter’ the question as to whether or not IT is a commodity has raged on. You certainly can make an argument that for common back office tasks universal automation based on the same handful of enterprise applications means there has been a loss of the ability to differentiate in this area. You can add to this that legislation and compliance has further eroded this and given rise to the high levels of growth in the Business Process Outsourcing, BPO, market which assumes commonality as the basic starting point for the market.

It’s generally accepted that for many technology vendors half of their product portfolio will change in a two-year period. Actually, I strongly suspect but can’t prove that if we could add up all the start-ups currently active in the market and introducing entirely new products for use in previously unrecognized areas on ‘true’ cloud technology this number would be higher. Now add to this a recent article in the business section of a good quality UK newspaper in which it stated 12 to 14% of all vacancies in the UK are for people with IT skills (sorry, I can’t find this as an online piece). Do they mean skills in legacy i.e. products introduced to support back office enterprise IT, I wonder, or is it a challenge to find hands-on highly skilled people for new technologies used for new front office business and delivered with new methods in faster timeframes?

From what I see of the market it’s a mixture of some on-shore legacy maintenance, and a lot more new high value hands-on Agile style delivery working in short bursts with the business team. In short, our installed base may have commoditized and some big piece of support work may have been handed off-shore, but that new mainstream activities are demanding new skills that are in short supply. These don’t have to be start-ups either; the big software vendors are there ahead of you with re-skilling and certification schemes.

Capgemini has just gained Diamond Status with Oracle and it makes a good example of this. By the way, just to be fair we have also been through the same with other major players such as qualifying as one of SAP’s three global partners, specializing in Azure with Microsoft and so on. To get the coveted Diamond Status an Oracle partner has to be able to prove they have reached the following criteria: Approved Status in 22 Oracle Specializations with more than 2,700 Oracle certified specialists, and a core knowledge of the major Oracle building blocks such as Oracle Database, Oracle Fusion etc.

There are a lot of new products, and they require a lot of new skills to be acquired to deliver them, so where’s the commoditization element in all of this? My answer is that it’s in the role or requirements side, meaning that conventional back office IT in terms of automation of core operational requirements in a manner that satisfies auditors and compliance has become a non-differentiating commodity now based on cost. But look around at the creation of whole new markets using technology starting from music, moving through online shopping, adding car navigators, and…Well any and every industry is in the middle of ‘innovating’ the manner by which they service their customers and markets, and that innovation is truly differentiating!

Are the skills to change your company’s share of a market place, or increase its revenues, even add to their margin areas, where there is an abundance of skills, and therefore price pressure? I don’t think so! Not from what I can see or what business managers are reporting as their top issues. Quite the reverse in fact and that’s driving the big technology vendors to bring in new tough certifications to sort out who they can rely on. And it’s a challenge for the smaller vendors to find energetic, technically proficient partners able to help them provide the kind of game-change capability some are indeed capable of.

So the last wave may be a commodity in some aspects, though it’s also thoroughly necessary to operate an enterprise and won’t be going away, but the new wave is marked by a skill shortage!

About the author

Andy Mulholland
Andy Mulholland
Capgemini Global Chief Technology Officer until his retirement in 2012, Andy was a member of the Capgemini Group management board and advised on all aspects of technology-driven market changes, together with being a member of the Policy Board for the British Computer Society. Andy is the author of many white papers, and the co-author three books that have charted the current changes in technology and its use by business starting in 2006 with ‘Mashup Corporations’ detailing how enterprises could make use of Web 2.0 to develop new go to market propositions. This was followed in May 2008 by Mesh Collaboration focussing on the impact of Web 2.0 on the enterprise front office and its working techniques, then in 2010 “Enterprise Cloud Computing: A Strategy Guide for Business and Technology leaders” co-authored with well-known academic Peter Fingar and one of the leading authorities on business process, John Pyke. The book describes the wider business implications of Cloud Computing with the promise of on-demand business innovation. It looks at how businesses trade differently on the web using mash-ups but also the challenges in managing more frequent change through social tools, and what happens when cloud comes into play in fully fledged operations. Andy was voted one of the top 25 most influential CTOs in the world in 2009 by InfoWorld and is grateful to readers of Computing Weekly who voted the Capgemini CTOblog the best Blog for Business Managers and CIOs each year for the last three years.

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