The phrase Make or Buy has been part of the business lexicon and business decision-making for a very long time. Small companies have to buy almost everything as they don’t have the internal resources. When they grow, they may bring more activities in-house. As a company gets much bigger, their economy of scale can tilt towards the Make decision as they will have calculated it to be lower in cost and able to deliver customisation to suit their business. The former #1 Car manufacturer, General Motors, made its own steering gear, transmissions, seats, electronics, manufacturing equipment etc. It was a great model for them for a long time. Then they suffered terribly in terms of cost competitiveness and flexibility when things got rough. When I worked for them in the mid 80’s (EDS), GM thought it was big enough to create it’s own alternative to Ethernet called MAP (Manufacturing Automation Protocol). I still keep in touch with the guys who worked on it. It was a great idea and well executed. Ultimately it failed as a Make decision due to the weight of the external market and lower cost to Buy. A great current example of a Makedecision that is working well for someone is Google. They are now likely the 5th largest server maker according to Intel (http://www.wired.com/wiredenterprise/2012/09/29853/ ) and they don’t even sell any of those servers to external clients.
The main topic of this post is to explore Make or Buy in the context of Information Technology Service Delivery, the business segment in which my employer, Richardson Eyres successfully operates. The debate for in-house vs. externally sourced IT is not new either. Service Bureaus, Turnkey Solutions, Application Development vs Off the Shelf, Outsourcing, ASPs and the now omnipotent Cloud Computing are the historic technological representations of the classic Make or Buy decision when it comes to IT. Some of these historic models came and went because the underlying technology was not flexible or scalable enough for customers to adapt a service to their specific needs and resident skill sets. A big issue would have been the concern around the absoluteness of handing over the keys to the farm and the tendency of such arrangements to stifle innovation. Companies have always talked about focusing on core competencies and repurposing staff to more strategic initiatives and IT vendors have always spent eye-watering amounts of marketing funds trying to convince those companies that their products/services would enable just that if purchased.
Make or Buy has a new breadth and refinement in this era becoming dominated by Cloud Computing and Social Business. Taking a step back, it could never have happened without several outstanding modern technologies: server & storage virtualisation, advances in security, low cost memory, multi-core CPUs, affordable WAN bandwidth and other very clever software including open source technology. The combination of these technologies has meant that Cloud service providers can build an infrastructure platform that is scalable, flexible and affordable. Customers can select and adapt offerings to their specific needs. Today, Make or Buy is no longer an either/or, it is much more of a sliding scale decision and that sliding scale is most certainly tilting in the direction of Buy.
Today IT decision making is scaled along how little to Make and how much to Buy. And that is great for business customers in terms of choice and cost reduction. The 3 main as a Service categories of Cloud Computing are arguably Infrastructure (IaaS), Platform (PaaS) and Software (SaaS). There are many others subsets and variations: Backup, DR, Business Continuity, File Sharing & Collaboration, messaging, archiving, Software Development, application delivery… can all be bought as a Service without the keys being handed over because Cloud, by its very nature, ensures a great level of portability. So business are able to hand over as much as they wish to and make solid decisions about what to make and what to buy comfortably knowing that they won’t be stuck if needs change quickly. There are a fantastic number of new businesses offering very mature cloud-based services for specific infrastructure, platform or application requirements; in specific vertical markets; and for both general and specific business needs. With Cloud Computing, companies can easily find their rightful place on the Make or Buy scale technically and commercially. The business can then achieve goals of retaining core competencies and focusing key staff on strategic initiatives.
One of the things of which I am most proud about our company, Richardson Eyres, is our ability to adapt our company (sales, engineering marketing and management) and solution offerings to the shifting business models for IT service delivery. Traditionally we have helped our clients execute on the Make decisions with our expertise in Data Centre infrastructure, Enterprise Storage and Virtualisation Technology. Now we still contribute to customer project success in that traditional fashion, but we also offer scalable and flexible ITaaS through our own re cloud express platform and our outstanding Cloud Services vendor partners. I am convinced that our traditional Data Centre technology expertise provides us with perspective and advantage we now apply to help clients arrive at the right decision on where to place themselves on the Make or Buy scale.
My advice would be to get out there, get what you need as a Service to achieve the current goals of the business and devote your thinking to the more important strategic concerns because you won’t be locked in. We’re happy to help.
How soon will the phrase “Nobody ever got fired for buying…” be used in a sentence with flexible IT as a Service? Not soon enough! Shame that it just doesn’t seem to have the same ring to it as in the old IT parlance.
No comments:
Post a Comment